Eimskip and Social Responsibility

Eimskip was established in Reykjavík in 1914 and has since then connected Iceland and the rest of the world with its transportation services. The Company has played an important role in Iceland’s history and the fight for its independence. It realizes its responsibility and is committed to maintaining its presence and services.

The Company operates an efficient and responsible transportation system in the North Atlantic and offers worldwide forwarding services. Its mission is to be a leading transportation company in the North Atlantic with connections to international markets and to specialize in worldwide freight forwarding services. Eimskip’s vision is excellence in transportation solutions and services.

To attain this, Eimskip strives to provide its customers with the most efficient and sustainable transportation solutions combined with outstanding services, while securing a good return for its shareholders and being responsible towards its employees and society, including the environment.

Eimskip defines society as one of its stakeholders. Other stakeholders are the Company’s shareholders, customers and employees. Corporate social responsibility plays a large role in its operations and environmental matters are important. Eimskip‘s values are Achievement, Cooperation and Trust. These are the employees’ guiding principles in the Company’s endeavour to work for a better society, preserve and protect the environment and to be a role model when it comes to responsibility and trust.

Eimskip signed the Reykjavík Declaration on Climate Issues in November 2015 Eimskip was also one of many companies that signed a joint declaration on responsible tourism in 2017.

Eimskip wants to contribute to a better and safer society wherever it operates and responsibility towards the community is an integral part of its corporate responsibility policy. Eimskip supported a variety of community projects and non-governmental organizations in 2017. The Company gave priority to improving sea safety, supporting environmental projects, charities, sporting activities, culture and innovation and, last but not least, projects centered on youth and children.

The Company is especially proud of its bicycle helmet project, which began in 2004 in cooperation with Kiwanis. The Company has given all six-year-old children in Iceland bicycle helmets and safety reflectors to contribute to youth safety. Eimskip has given helmets to about 69,600 children.

In 2018, Eimskip continued working on Corporate Social Responsibility. The Company focused on implementing the Company’s CSR policy within the group and on developing CSR measurements and goals. We also worked to further reduce the Company’s ecological footprint.

Eimskip is a registered participant of the UN Global Compact, the United Nation’s initiative for social responsibility with respect to human rights, labor, environment and anti-corruption. The Company has committed to manage its business operations so that the UN Global Compact and its Ten Principles become a part of the Company’s strategy, culture and day-to-day operations.

CORPORATE SOCIAL RESPONSIBILITY POLICY
Eimskip’s Corporate Social Responsibility (CSR) Policy is based on the Nasdaq ESG Reporting Guide, published in March 2017. The Nasdaq voluntary reporting guide focuses on 33 environmental, social and governance (ESG) performance indicators. Eimskip’s CSR policy focuses on the environment, society and governance.

 

CSR POLICY

Eimskip‘s measurements in accordance with the ESG guidance from Nasdaq is accessible on the Company’s website.

 

Environment

DECLARATION ON CLIMATE ISSUES

The world is becoming increasingly aware of the negative impact that the use of fossil fuels has on nature. Global warming, ozone-layer depletion, and acid rain are just some of the consequences of fossil fuel consumption. The United Nations has led an international campaign to set goals for sustainable development and combat climate change for decades. They provide the necessary framework for all communities, large and small, to take action. A vital part of that program was the Paris Climate Conference, held in 2015, otherwise known as COP21. The aim of the conference was to unite the world in keeping global warming below 2°C.

Iceland bases a large part of its economic foundation on harvesting natural resources from the ocean in a sustainable way. The changes associated with global warming and pollution of the ocean leave all the key components of its modern economy utterly exposed, in addition to threatening the quality of life for future generations. To support global and local environmental initiatives, Eimskip signed the Reykjavík Declaration on Climate Issues in November 2015. The agreement includes reducing greenhouse gas emissions, reducing waste, monitoring the results of these measures, and regularly reporting this information.

Eimskip decided to use advanced software technology and change management to enable the Company to meet future environmental challenges related to environmental compliance, energy and waste efficiency, and knowledge dissemination.

The Company’s environmental management solution is a digital data collection and environmental compliance solution, covering the energy and waste management of the vessel fleet, truck fleet, terminal assets, warehouses, and office space for Eimskipafélag Íslands hf., Eimskip Ísland ehf. and Faroe Ship. The solution is based on digital platform technology, connecting the Company digitally to its supply chain and to its customers. The software company Klappir Green Solutions works with Eimskip on smart environmental management and certifies its environmental management solutions.

Eimskip has developed a carbon calculator for both sea and land transport as an environmental service to its customers. The carbon calculator and the Company’s Environmental Report are accessible on the Company’s website.

Eimskip will continue focusing on reduced emissions and improved waste disposal, and, at the same time, increase the transparency of its ecological footprint throughout the supply chain. The focus in 2019 will be on the continued monitoring of emissions and waste from the supply chain by collecting electronic data from all emitting sources and streaming it automatically to a common data warehouse. Digitalization of emission and waste-registration data from the supply chain enables continuous monitoring of measures and provides reliable and transparent information on the status. In January 2017, Eimskip signed a contract with a shipyard in China on the manufacture two 2,150 TEU ice class Polar Code container vessels, with expected delivery next fall. These vessels are built in line with environmental standards and are designed to be fuel-efficient.

CARBON FOOTPRINT

Eimskip defines its ecological footprint as a combination of carbon footprint and waste disposal. The operation of the Company’s vessels is the main contributor to its carbon footprint.

The Company respects the environment and recognizes the effects that climate change could have on society and its business activities and the need for a low-carbon economy. Minimization of the environmental load from its operations focuses on achieving full clarity regarding emissions and waste from each emitting source in the supply chain. To make this possible, use of data and analytics was stepped up in 2016 and the biggest steps yet made in 2018, giving Eimskip a better overview of its ecological footprint and reduction opportunities.

The calculation of the Company’s carbon footprint is presented in the graph below, which shows accumulated results of carbon intensity per ton of transported units, compared to the base year 2015.

 

CARBON INTENSITY PER TON OF TRANSPORTED UNITS
Accumulated results compared to the base year 2015

The accumulated reduction of Eimskip’s carbon footprint in the year 2018 was 12%, compared to the base year 2015, calculated per ton of transported units. The Company’s aim is to further reduce its footprint in the coming years, with a goal of 19% accumulated reduction in 2022 (compared to the base year 2015), 32% in 2027 and 40% accumulated reduction in 2030. This goal of total reduction is compatible with Iceland’s decision to join the European Union and Norway in their common goal of 40% reduction of emissions by 2030.

ENVIRONMENTAL POLICY AND AIMS

In 1991, Eimskip became one of the first companies in Iceland to establish an environmental policy. Since then, challenges in this field have developed rapidly and the transportation industry, as well as others, realizes how important environmental issues are for the world today.

ENVIRONMENTAL POLICY

Eimskip respects its environment and seeks to limit its impact on the ecosystem.
Protecting the environment and environmental awareness are reflected in the
Company’s operations, management and day-to-day work of its employees.

Much has been accomplished since 1991, and Eimskip continues to take further steps towards improving its environmental performance and aligning to global and international initiatives.

EIMSKIP HAS THE FOLLOWING ENVIRONMENTAL AIMS:

  • Identify and control potential environmental risks posed by the Company’s operations
  • Manage the Company’s operations according to applicable laws, regulations, and international conventions
  • Recycle and minimize waste
  • Improve energy efficiency of the Company’s vessels
  • Improve energy efficiency of the Company’s fleet of trucks and other equipment
  • Work on savings and improving efficiency in energy consumption on the Company’s premises
  • Set yearly goals on environmental issues
  • Provide employees and customers with regular training on environmental issues

Identify and control  potential environmental risks posed by the Company’s operations

All the Company’s vessels are operated according to a certified Safety Management System complying with the ISM (International Safety Management) code. This includes environmental risk assessments and applicable procedures to control and mitigate environmental risks as carefully as possible. It also includes emergency procedures for each vessel and the office to ensure proper response to incidents that potentially could harm the environment.

Eimskip operates a loss prevention team. One of its tasks is to monitor and identify potential environmental risks anywhere inside the Company and with regard to its operations and to highlight them to the applicable managers and/or employees.

Manage the Company’s operations according to applicable laws, regulations, and international conventions

New rules will come into effect on January 1st 2020, regarding Sulphur emissions from vessels in international waters. The rules oblige shipping companies to use fuel with a Sulphur content of no more than 0.5% in international waters.

Eimskip’s ambition is to be a leading transportation company in the North Atlantic and a leader in responsibly fulfilling global environmental requirements. The new regulation is intended to have a positive effect on the environment. Eimskip will meet those new regulations by installing scrubbers in the new vessels, currently under construction in China. “Lagarfoss” will also have scrubber installed.

Recycle and minimize waste

For many years, Eimskip has categorized and recycled the majority of waste from its operations. In recent years, the focus has been on recycling waste as far as possible, and this will continue.

According to MARPOL Annex V, all vessels are to have a garbage management plan and a garbage record book. To further improve the monitoring, recycling, and reporting, Eimskip digitized the garbage log and started streaming the data to the environmental data warehouse in 2016. The solution was further developed in 2017, with digitalization of MARPOL Annex I and MARPOL Annex VI. Through this, waste has become a part of the supply chain footprint calculation and analytics. This also increases the possibility of further creating value from the waste.

Improve energy efficiency of the Company’s vessels

As a front-runner in the industry, Eimskip started to explore the use of new energy management technologies in 2005, with the intention of increasing the energy efficiency of its fleet. Energy management solutions in shipping were new at the time and the technology was in its infancy. Today, energy efficiency is an integrated part of the operation of the vessel fleet. Based on the positive results, Eimskip will continue to on improve energy efficiency and decrease the environmental impact of its vessels.

Improve energy efficiency of the Company’s fleet of trucks and other equipment

Eimskip operates about 144 trucks in Iceland, which are connected to a monitoring system for improved energy efficiency.

The Company operates mobile harbor cranes connected directly to external electrical power at three of the Company’s terminals in Iceland: Reykjavík, Grundartangi, and Reyðarfjördur on the east coast. They were made by Konecranes/Gottwald and were originally designed to be able to run either on diesel engines or by being connected to an external, electrical power supply. The cranes use 1.2 MW power at 11 KV, which is similar to the requirements of a village of 500 to 700 inhabitants. Their operation is environmentally-friendly since they produce no emissions when running on electrical power. By operating cranes with electricity, Eimskip reduces carbon dioxide (CO2) by 340 metric tons per year. This amounts to what a 17-hectare forest is able to bind on an annual basis. In addition, pollution from noise and dust is reduced at the terminals. Five harbor cranes were taken into operation 2015 to 2017 and three of them are fitted for an external, electrical power supply. In 2019, the rail mounted STS crane in Reykjavik from 1984 will be replaced with another STS crane running on 11kV external power when the terminal moves to a new quay.

Work on savings and improving efficiency in energy consumption on the Company’s premises

Most of the Company’s premises and storage facilities use electricity for lighting and operation of refrigeration systems and electrical loading stations. The harbor lighting also consumes electrical power. The focus of 2016 and 2017 was to obtain full transparency regarding electrical power consumption and its distribution between various consumption units by streaming power data into the environmental database for analytical purposes, the aim being a further reduction of energy use.

Set yearly goals on environmental issues

In 2015, Eimskip decided to take a vast step forward in improving its overview of its ecological footprint by implementing its own electronic Environmental Management System using data analytics and connectivity solutions. This allows the Company to link together various categories of data collected from the entire supply chain. Crews and office personnel are now provided with high-quality information on environmental performance in a user-friendly format.

Eimskip’s Environmental Management System utilizes the data collected from the various data sources in the supply chain. The system employs in-built predictive analytics, data preparation, and user dashboards. This supports monitoring of the footprint throughout the supply chain, including all users, and indicates where improvements are needed. Data from the entire fleet is now streamed into one Company-designed data warehouse. Other emitters, including trucks and electrical power users, were also connected to the data warehouse in 2016.

Provide employees and customers with regular training on environmental issues

Training crew members has been a crucial part of implementing the energy management solutions on the Company’s vessels and has resulted in a strong teamwork with goals for each week of the year. Specific training sessions have been carried out on the vessels in using a Ship Energy Efficiency Management Plan (SEEMP) as a tool for efficiency improvement, in using the onboard energy management system, and in working with fuel changeovers when sailing into ECA zones. The focus in 2019 is to further follow up on the energy efficiency efforts on the vessels and the applicable registration. With regard to garbage, the focus in 2019 will be to continue working on further categorization and recycling.

Tax footprint

The economic value generated by Eimskip's operations in the year 2018 amounted to EUR 689.7 million, consisting of revenue, gain on sale of assets and finance income. Economic value has been contributed in many different ways to the societies in which the Company operates including, salaries to employees, payroll taxes to authorities, purchase of goods and services from suppliers etc.

TAX FOOTPRINT
EUR million

 

The total tax footprint of Eimskip amounted to EUR 64.1 million in 2018 of which EUR 24.8 million was born by the company and EUR 39.3 million was collected on behalf of local authorities. For comparison, the Company's total tax footprint was EUR 63.7 million in 2017.

The Company's taxes borne include employment taxes in the amount of EUR 16.8 million, corporate income tax of EUR 3.2 million, property taxes of EUR 2.0 million, VAT of EUR 1.1 million and other expenses of EUR 1.7 million. Collected taxes include employment taxes borne by employees amounting to EUR 31.2 million, and other collected expenses of EUR 7.9 million.