2017 SUSTAINABILITY REPORT 2017 SUSTAINABILITY REPORT 04 A WORD FROM OUR PRESIDENT & CEO 06 THE MSC GROUP 10 MATERIALITY ASSESSMENT & STAKEHOLDERS

SOCIAL INCLUSIVE TABLE OF CONTENTS 16 APPROACH

MSC’S COMMITMENT SUSTAINABILITY 32 TO THE ENVIRONMENT

HEALTH AND REPORT 46 SAFETY

BUSINESS ETHICS 58 AND PROTECTION OF HUMAN RIGHTS

70 ABOUT THIS REPORT A WORD FROM OUR PRESIDENT & CEO WHEREVER WE OPERATE, ON LAND OR AT SEA, OUR PEOPLE REMAIN OUR GREATEST ASSET.

In 2017, MSC successfully maintained its leadership In addition, we have demonstrated how these pillars are position in the global economy, despite slow trade strictly linked to our support towards the Ten Principles of growth and high operating costs that have created the United Nations Global Compact and our contribution in uncertainty within the international container shipping joining global efforts for the progressive realisation of the Capt. Gianluigi Aponte Mr. Diego Aponte Mrs. Alexa Aponte Vago sector. Achieving such economic performance did not United Nations Sustainable Development Goals (SDGs). Group Executive Chairman Group President & CEO Group Chief Financial Officer come without challenges at all levels. Yet, we pursued Yet, above all, we have acknowledged the engagement our goals by remaining true to our roots and our core and dedication of our 70,000 employees who bring to family values, promoting a sustainable business model life our sustainability approach and our Group family that goes far beyond a “business as usual” approach. values. This is what makes us so successful today and Regardless of the challenges and transformation we what, at the same time, creates not only countless might face in today’s business world, our approach does opportunities but also great responsibilities. and standards that take into account real economy situation to limit environmental damage and protect not and will not change: we have a genuine passion for We are running our activities and operations at a time imperatives, financial implications and operational lives. No amount of technological progress or digitalisa- the sea, an unparalleled nautical heritage and a strong of increasing environmental policies and regulations, challenges. This can certainly contribute to reducing tion, it seems, can help fix this relatively simple problem commitment to our employees and communities. such as the 2020 global cap on sulphur content in marine barriers and promoting the respect for human dignity in our industry. Wherever we operate, in both developed and develop- fuel oil, which our technical teams started to prepare and decent long-term working conditions for all employ- I sincerely hope that sharing more about these topics ing countries, both on land or at sea, our people remain for in 2013. We should not forget that reaching these ees as well as the next generations of employees, in line and challenges with our customers, employees, suppli- our greatest asset. Our strategies focus on building ambitious environmental goals and targets represents with the 2030 Agenda for Sustainable Development. ers and our wide range of stakeholders will deepen and maintaining strong and reliable relationships with a financial commitment of billions of dollars. In this Similarly, we continue to rely on our stakehold- our strategic partnerships and strengthen our concert- our stakeholders, communities and business partners respect, we continue to invest in retrofitting, the optimi- ers to further engage in promoting safety at sea and ed actions to advance social and environmental as well as securing continuity and long-term employ- sation of bulbous bow and propellers, ballast water support our ongoing efforts to prevent potential risks performance. ment opportunities for our employees. We do this while management, new build programs and latest availa- to the health and safety of crew members as well as We look forward to continuing to join forces to foster a making significant investments in low-carbon technol- ble technologies to reduce greenhouse gas (GHG) and environmental accidents. We are very active in indus- sustainable and responsible approach to doing business ogies and promoting integrity and ethical practices sulphur oxide emissions. By doing this, in 2017, we try associations and forums to highlight our concerns throughout our sector and beyond.

through capacity-building efforts and training. proudly achieved an 11% reduction in CO2 per tons of to our customers. We believe that more accuracy and In our 2017 Sustainability Report, we further illus- cargo moved on a per mile basis, compared to 2015. transparency is needed. It is imperative that shipping trate how all these elements are an integral part of our However, it is important to acknowledge that our companies are well informed on what is being transport- decision-making process and therefore embedded in tremendous progress in energy and operational effic­ ed in containers in order to safely manage dangerous or MSC’s four fundamental sustainability pillars: the promo- iency is also achieved thanks to the daily efforts and potentially dangerous cargoes. The public may assume tion of social inclusion and a shared value approach, our outstanding expertise of our dedicated teams working the shipping line is at fault – it is our logo on the ship – respect and care for the environment, our continuous at the Headquarters, in our technical offices and MSC’s but many of the tragedies that occur in our sector are focus on occupational health and safety and our strong Agencies worldwide. down to incorrectly declared cargo. And where there commitment to promoting respect for internationally So, we continue to rely on governments to provide clar­ have been accidents at sea, we have always taken all Diego Aponte recognised human rights principles and standards. ity with practical and meaningful legislation, regulation necessary actions and moved promptly to rectify the President and CEO

4 A WORD FROM OUR PRESIDENT & CEO MSC SUSTAINABILITY REPORT 2017 5 CONTRIBUTING TO THE SUSTAINABLE OCEAN ECONOMY THE MSC GROUP Headquartered in Geneva, Switzerland, and privately-owned,­­­­ the MSC Group is a recognised world leader in the maritime sector, serving millions of customers around the globe. Our innovative, flexible and unique approach to shipping has led to impressive growth in terms of volume and fleet capacity. This has enabled us to diversify our portfolio of activities, from a one-vessel operation in 1970 to a successful and sustainable global business today.

Today, the MSC Group encompasses a Cargo Division respect for human rights and environmental standards with MSC Mediterranean Shipping Company (MSC), at an international level. Terminal Investment Limited (TiL), MEDLOG, and a The Cargo and Passenger Divisions have different materi- Passenger Division with MSC Cruises and Mediterranean ality and due diligence assessments, mainly due to the passenger ferries, Grandi Navi Veloci (GNV) and SNAV diversity of their respective activities, missions and business (Società Navigazione Alta Velocità). strategies. For instance, the relevance of internal and exter- Through our wide range of companies, we contribute nal factors and their prioritisation in decision-making,­ risk to connecting people and countries by offering a global management and risk assessment processes vary. integrated and holistic network of transportation and These factors include the international standards and logistics solutions by land and sea. We are engaged in regulations that each division is assumed to comply the promotion and development of key ocean industries, with, specific stakeholders’ interests and concerns, such as maritime transport and tourism, which are essen- broader social expectations and the capacity to exercise tial for fostering economic growth and social welfare. influence on upstream (such as the supply chain) and We have built our long-standing reputation with our downstream (such as customers) entities. customers and stakeholders by providing sustainable In this respect, this report intends to cover the MSC and resilient transportation services and infrastructure, Group Cargo Division, highlighting progress made while promoting inclusive and lasting social benefits towards the implementation of the United Nations wherever we operate. (UN) principles-based approach and the promotion of We significantly contribute, in a responsible way, to the the UN Sustainable Development Goals (SDGs), in line growth of shipping-related services, operations and with the company’s commitment to the United Nations business activities, in both developed and developing Global Compact and the Global Report Initiative (GRI) countries. Additionally, we facilitate the development of standards. international trade and contribute to fostering countries’ Some initiatives are described as Group initiatives competitiveness by providing access to our global network. when core topics have relevance for both Divisions and Being a family-owned business, the companies of the promote a strategic common approach to protecting and MSC Group are guided by common Group values and a supporting human rights and our strong commitment long-term vision promoting fair business practices and to environmental stewardship.

*Source: “Ocean Economy in 2030”, OECD, 2016

6 THE MSC GROUP MSC SUSTAINABILITY REPORT 2017 7 CARGO DIVISION PASSENGER DIVISION

ORGANISATIONAL STRUCTURE

CARGO DIVISION PASSENGER DIVISION MSC is a transportation service provider carrying physi- The MSC Group’s Passenger Division is comprised of cal commodities from one point in the world to another. cruise and ferry businesses. The company operates a fleet of 510 vessels, calling at MSC Cruises is the world’s largest privately owned 500 ports. Headquartered in Geneva, Switzerland, MSC cruise company and the number one cruise line in has 480 offices in 155 countries and employs 47,000 Europe, South America, South Africa and the Gulf people for its shipboard and ashore activities. Region. A game-changer in the world of cruising, the Shipboard operations are largely monitored by third company has achieved 800% growth in its first ten years parties due to certification requirements and routine by building one of the youngest cruise sea fleets and a inspections set out by local port authorities and other global reputation in the industry. The MSC Cruises fleet entities. MSC local agencies are responsible for ashore is currently made up of 15 ultra-modern, highly innova- activities. tive and elegantly designed ships that welcome around MSC, through its Terminal Investment Limited (TiL) two million guests per year. subsidiary, has interests in 54 terminals within 29 With an ambitious investment plan of EUR€11.6 billion, countries across five continents. TiL invests in, devel- the MSC Cruises fleet is set to expand to 25 mega-cruise ops and manages container terminals in strategic ships by 2026. It has recently designed six new ship global locations, providing essential infrastructure for class prototypes that will push the boundaries of naval ­international trade. architecture and design. MSC Cruises’ services are sold MSC’s logistics arm, MEDLOG, offers a variety of ser­­­ across the globe through a distribution network in 70 vices to customers in over 50 locations around the countries. The company employs over 23,500 people world. These services include transportation by road, worldwide, both ashore and on board its ships. rail and barge, off-dock storage, container maintenance In addition to ocean cruises, the MSC Group’s Passenger & repairs (M&R), warehousing & distribution, project Division includes GNV and SNAV, two leading ferry cargo and reefer container services. MEDLOG direct- companies that connect a large number of ports in the ly employs more than 6,000 employees and generates Mediterranean Sea all year round. approximately 2,000 indirect jobs around the world. The technical management of MSC vessels and crews is handled by MSC Shipmanagement Technical ­offices, located in Limassol, Cyprus and Sorrento, Italy respectively.

8 THE MSC GROUP MSC SUSTAINABILITY REPORT 2017 9 MATERIALITY ASSESSMENT Our values Our values shape our culture and WE ARE A WE HAVE & STAKEHOLDERS FAMILY PASSION ­define the character of our company. COMPANY They guide how we behave and make decisions, they influence recruitment of The commitment of the founding We are passionate about what PROMOTING SDGs AND SUSTAINABILITY employees, and they are fundamental Family inspires us with dedication­ we do, we challenge ourselves SUSTAINABILITY CULTURE GOVERNANCE to our operations. and trust, increasing our sense of to achieve excellence and belonging. we are tenacious in overcoming MSC is strongly committed to achieving economic perfor- Sustainability Steering Committee Sharing the family’s entrepreneur- obstacles. mance while promoting ethical business throughout its In 2017, MSC enhanced the role and structure of its ial spirit leads us to act proactively, Working together with passion and value and supply chains. For this reason, environmen- Sustainability Steering Committee. courageously and responsibly in enthusiasm, we provide a unique tal and social considerations are equally important to Led by the Aponte family and executives from the the best interest of our customers experience for our customers. and our Company. us and embedded in our decision-making process and Headquarters in Geneva, the Committee is respons­ business models. We work responsibly, implementing ible for providing strategic guidance on matters such sustainable practices, procedures and policies based as environmental protection, occupational health & on good corporate governance, integrity and care for safety, sustainable development, human rights and the environment. These are reflected in the way we take social welfare. WE ARE IN WE WE BELIEVE IN decisions, interact with one another and behave with One of the key strategic decisions taken by the Committee CONTINUOUS CARE FOR EQUAL our customers and stakeholders. Since the signing of is to strengthen the ongoing harmonisation efforts in EVOLUTION PEOPLE OPPORTUNITIES the UN Global Compact in 2016, we have increased order to better monitor compliance with our ethical efforts at Group level to further promote our responsi- and good governance practices throughout our value Our tradition, expertise, We believe that each person brings Our mission is to provide our profession­alism and ambition unique value. people with personal fulfillment ble approach to business throughout our organisation and supply chains. To do so, we have planned to drive the Company’s fast and We develop authentic relation- and enrichment. and in our day-to-day operations, in line with the Ten further improve internal processes and cross-transver- sustainable growth. ships built on ethics, respect and We are committed to sharing our Principles of the United Nations. In addition, we have sal cooperation among relevant departments and local We strive for the most innovative team spirit. knowledge, delivering training reinforced the way we mainstream our Group values and agencies. This will contribute to enhance an organisa- solutions to embrace change, We truly care about the satisfaction and support enabling our people’s sustainability into our internal and external communica- tion-wide coordination process led by the Headquarters, always respecting safety and the and loyalty of our customers and professional growth. environment. employees. We ensure fair opportunities tions by ensuring a cross-departmental­ collaboration at while maintaining local specificities and further refining providing long-term career HQ level between the Marketing and Communications business activities and operational strategic actions to development, embracing diversity Departments of both MSC and MSC Cruises. advance specific goals. The newly established Global and valuing all cultures. Human Resources Department will also play a crucial role in this respect. A COMMUNICATION TOOL Sustainability Working Groups Our Sustainability Report aims to describe our best To effectively mobilise all departments in implement- We support the UN Sustainable practices as well as challenges related to the implemen- ing approved strategies, in 2018 we plan to create ad Development Goals We believe our approach to tation of the United Nations’ Ten Principles approach and hoc Sustainability Supporting HQ Working Groups the business and our values will the SDGs. We also wish to raise awareness of the SDGs composed of in-house subject matter experts who will help us contribute to a more among our employees and stakeholders, and facilitate be responsible for supporting the integration of sustain- sustainable supply chain. the understanding of our approach to sustainability. ability into the daily work of the MSC value chain. They Significant case studies highlighted in our reports will will also underpin the ongoing efforts at HQ level to be regularly updated by our local agencies via the MSC monitor progress and track sustainability performance official website to show that continuity is an integral part in strategic priority areas. of our business model, and to enable our employees and stakeholders to follow our progress with regards to our activities and broader sustainability-related initiatives.

10 INTRODUCTION TO THIS REPORT MSC SUSTAINABILITY REPORT 2017 11 SHARED VALUE APPROACH ENVIRONMENTAL PROTECTION Marevivo We have also further strengthened our long-term MSC’s decision-making process and shared value One of our main material topics is and will remain our partnership with Marevivo, an Italian marine conserv­ approach are both based on a strategic framework strong commitment to preserving the environment and ation association founded in 1985 that works worldwide, consisting of four main pillars: social inclusion, protec- biodiversity, in accordance with SDGs 7, 12, 13,14 and supported by a scientific commission, legal commission, tion of the environment, occupational health & safety, 15. Our extensive investments in the latest available territorial delegations, a diving division and an extensive business ethics and protection of human rights. Within low-carbon technologies, energy efficiency practices and network of volunteers and members. Recently, Marevivo’s this framework, in 2017 we began to assess existing operational efficiency systems are regularly assessed to advocacy efforts led to the Italian government’s decision practices, policies and gaps relating to each of those ensure that they meet current and future international to pass legislation banning microplastics from cosmetics pillars against a number of criteria to better identi- regulations. In line with SDG 17, we are actively involved by 2020 and removing plastics from cotton swabs by 2019. fy our material topics and enhance our sustainability in the Clean Cargo Working Group (CCWG) and we are Since 2015, MSC Cruises and Marevivo have joined strat­egy on key strategic areas. a founding member of the Global Industry Alliance forces to increase environmental awareness among MSC’s business model promotes social inclusiveness (GIA), which is supported by the International Maritime young people. Educational programmes include topics in line with SDGs 1, 2, 3, 8 and 10. We aim to contrib- Organization (IMO) and promotes energy efficiency and such as marine biodiversity, sustainable development ute to long-term socio-economic growth in the countries low-carbon maritime transport systems. In addition, and restoration of marine protected areas, as well as where we operate through community involvement and MSC is part of the board of the World Shipping Council combatting pollution and illegal fishing. local recruitment, especially in developing countries. Our (WSC), whose goal is to provide a coordinated voice for In 2017 Marevivo and MSC worked on three projects: massive investments also focus on the latest environ- the liner shipping ­industry on matters such as these. • The ‘Guardian Dolphins’ youth programme is an initi- mentally friendly cooling technology such as refrigerated ative implemented in primary schools on ten Italian containers, depots and warehouses. This helps to reduc- islands, which aims at fostering greater aware- ing food losses, ensuring quality food, encouraging PARTNERING ness about the conservation of marine resources. responsible consumption in line with SDG 12 and enabling FOR WILDLIFE CONSERVATION Key impact: 700 students; 60 teachers, operators and small farmers to enter global food markets. We seek to AND MARINE BIODIVERSITY experts; 19 schools; 1,400 adults in ten minor Italian improve inland connectivity, including in landlocked islands (Eolie, Egadi, La Maddalena, Palau) countries, by investing in cross-border transport Our constant efforts to minimise our environmental impact • Nauticinblu, an educational programme ­targeting solutions, logistics services, storage facilities and trans- and carbon footprint include our participation in sever- future seafarers focused on the incorporation of port infrastructure, in partnership with public and private al local and international initiatives and partnerships to environmental conservation and marine sustain- stakeholders. In line with our people-centred approach, promote the protection of wildlife and marine biodiversity. ability in Italian naval academies’ curricula. our training programmes are an essential element of In 2017, MSC reiterated its strong commitment to the Key impact: three maritime academies: San Giorgio our investment strategy, as illustrated by the recently United for Wildlife Buckingham Palace Declaration, in Genoa, Volterra-Elia in Ancona and Nino Bixio in approved MSC Academy project to be launched in 2018. which aims to combat the illegal trade in endangered Sorrento; 210 students (70 per institute), 30 teachers. This will promote the alignment between business goals animals by breaking the transportation link between • #Mybluewave Experience on sustainable develop- and people-related objectives by focusing on key areas suppliers and buyers. ment. This project includes on-board activities during such as people development, learning programmes and cruises, ranging from “edutainment” games to learn- internal mobility. The departments of MSC HQ have also ing moments and species-sighting activities to educate enhanced their collaboration to improve and harmonise children about the environment in which cruise ships sail. existing practices and procedures throughout the organ- Key impact: in 2017, 200,000 children participated in the isation. The global harmonisation process is intended to activities dedicated to the sea on board MSC Cruises’ assist our subsidiaries and branch offices worldwide to ships. further align their ongoing strategies and country-­specific or region-specific corporate social initiatives with the company’s overall sustainability strategy promoted at the HQ level.

12 MATERIALITY ASSESSMENT & STAKEHOLDERS MSC SUSTAINABILITY REPORT 2017 13 MSC Headquarters, Geneva, Switzerland

HEALTH BUSINESS ETHICS AND SAFETY AND PROTECTION OF HUMAN RIGHTS

MSC considers occupational health and safety a funda- Finally, it is MSC’s objective to conduct its business mental material topic. In this respect, we promote ­activities in a responsible and ethical manner. We personal, environmental and navigational safety in line support the UN Global Compact’s principles-based with SDGs 3, 8 and 14, applicable international quality approach in the areas of human rights, labour, environ- shipping regulations and other relevant international ment and anti-corruption, promoting a culture of instruments. One more area of concern relates to proper integrity throughout the organisation and within our cargo-handling and management. sphere of influence. In the last ten years, we have increased our offer of Furthermore, in accordance with SDG 16, we ­actively training programmes in soft and technical skills to engage with other companies and international stake- further promote a culture of safety among our crew holders to advance collective actions aimed at fighting members and ensure rapid response capabilities in bribery and corruption. We also participate in the discus- case of emergencies and unexpected events, ­especially sions of the International Chamber of Commerce Business natural disasters. Action to Stop Counterfeiting and Piracy (BASCAP). Our ship recycling practice is another important area As part of our commitment to the protection of human of emphasis for MSC, as it is strictly related to labour rights, MSC strives to provide its employees with a safe standards, environmental protection and human rights, working environment, offering stable financial revenues in accordance with SDGs 8 and 12. We strive to ensure through long-term career paths. In line with SDGs 1, 5 that the recycling of materials and other ship compo- and 10, MSC also focuses on women’s empowerment nents is performed at yards without any unnecessary by promoting the elimination of gender disparities in risk to human health, safety or the environment. Our employment, both on board and offshore, and by invest- responsible practices are fully supported by MSC top ing in technical and managerial training for women. management and only recycling yards with IMO HKC We promote local recruitment wherever we operate, yet standards, ISO 14001 (environment), ISO 30001 (ship our commitment to bringing value to local commun­ recycling management) and OSHAS 18001 (Health & ities goes far beyond compliance. Following SDGs 1, Safety) standards are selected for recycling at the end 2, 3 and 16, we seek to contribute to peace-building of the useful life of a ship. efforts deployed by international actors on the ground, by contributing to humanitarian relief actions, including for victims of natural disasters. Whenever possible, we transport emergency humanitarian aid cargoes to areas of conflict, within the framework of international regula- tions and international humanitarian laws.

14 MATERIALITY ASSESSMENT & STAKEHOLDERS MSC SUSTAINABILITY REPORT 2017 15 MEDLOG employees in San Pedro, Côte d’Ivoire

CREATING SUSTAINABLE VALUE SOCIAL INCLUSIVE APPROACH

16 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 17 MEDLOG employee, San Pedro, Côte d’Ivoire

ADAPTING BUSINESS STRATEGIES effectively integrate and benefit from global supply TO GLOBAL SOCIAL TRENDS chains. We are therefore promoting the realisation of the 2030 Agenda for Sustainable Development, and Being a global player in the international shipping sector its wide range of interrelated SDGs, by building solid, with 70,000 employees and operations all over the world, enduring partnerships with all of our customers and we are committed to ensuring a positive social impact stakeholders. For MSC, loyalty and continuity, together wherever we operate, while promoting the sustainable with our long-term financial investments and invest- use of oceans, seas and marine resources. ment in people, are essential elements to achieve In all our strategies and business models, we strive to sustainable development. create conditions for increased prosperity and wealth both on land and at sea, despite the challenges of a highly competitive market. Yet, new developments CREATING JOBS FOR currently affecting transport and trade are influencing A FAST-GROWING POPULATION sustainability considerations in our sector, and freight transport systems and patterns in general. Therefore, The United Nations Department of Economic and Social for us, understanding ongoing as well as future global Affairs (UN DESA) 2017 Revision of World Population A GLOBAL BUSINESS and local challenges is a must in today’s changing world. Prospects foresees a dramatic increase of world popula- WITH A LOCAL APPROACH We are proud to continuously seek to transform those tion from today’s 7.6 billion to 8.6 billion in 2030. This challenges into opportunities through our inclusive, trend is expected to bring new challenges with regards We pride ourselves on our ability to adapt business expectations of workers as well as the way we benefit sustainable and long-term investment strategies. In to domestic labour markets, levels of inequality and solutions to the local needs of communities, national­ from the use of new technologies. In this respect, in this respect, we continue to promote local recruitment, supply chains, on both a local and global scale. Those authorities and other stakeholders. With 480 offices line with our social inclusive approach, our investment multi-cultural working opportunities and the develop- challenges might be exacerbated in developing and least across 155 countries, our customers can rely on our in innovation promotes the safety and expertise of our ment of ocean-based and shipping-related industries all developed countries, if economic growth will not create in-depth understanding of the local markets, the dynam- employees, not their replacement. We continuously over the world. As a global service provider, we care sufficient jobs to match the demand of a young popula- ics of specific trades and any factors affecting the transit encourage e-learning, especially among women, and about our customers and their cargo. This means that we tion and a growing labour force. In this respect, our of cargoes. Our approach supports our focus on invest- support employee mobility and the diversification of do not forget that our customers and business partners approach will continue to focus on supporting govern- ing responsibly in each country of operation, including career paths. While digital connectivity can provide also have responsibilities towards their own customers ments to address poverty and unemployment rates in least developing countries and emerging markets, new opportunities for countries to increase domestic and consumers. through the promotion of decent work opportunities for promoting business models, services and operational growth and enter the global economy, traditional trade Our transportation solutions are commercially all segment of the population, without discrimination. activities tailored to ongoing and future local and global costs related to physical connectivity can still represent viable, environmentally friendly and comply with We will also further invest in programmes and training challenges. These include today’s digital and technologi- a significant barrier for the delivering of goods. This is the highest health and safety standards. We work aimed at improving the soft and technical skills of our cal developments and their impact on transforming jobs why our strategic focus will also remain on increasing in partnership with governments, business partners employees all around the world, to enhance our contri- and trade patterns. our global logistics network and promoting connec- and other relevant stakeholders to increase local bution to inclusive capacity-­building efforts. We must acknowledge that globalisation and digital- tivity among populations and countries in line with trade competitiveness and countries’ ability to isation have played a role in modifying the social national strategies and country-specific needs.

18 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 19 CASE STUDY AFRICA Facilitating maritime trade of sustainable development. Positive trends, such as to tackle food insecurity the development of local industries and the agricul- The MSC’s strategic choice to invest in Africa’s devel- ture sector, can certainly support Africa’s growth in opment aligns with the increasing commitment of most the long term. In this respect, there is no doubt that African countries to foster trade exchanges within the the private sector, and especially the shipping sector continent and beyond, also through the promotion of and its supply chain, has an important role to play in the maritime economy. In particular, we appreciate the addressing some of the obstacles that prevent local recent efforts put forward of several African countries African products from reaching more lucrative global that led to the adoption in 2016 of the Charte de Lomé markets or meeting food insecurity challenges. MSC and the expected implementation of a Continental Free will therefore enhance its network of storage facilities, Trade Area (CFTA). further increase its offer of an integrated network of OUR COMMITMENT The benefits of a free and efficient flow of goods and inland and cross-border transportation solutions and trade extend far beyond the ships and ports themselves. support cold chain development throughout the conti- TO AFRICA’S SOCIAL An effective interface between them can improve the nent, in line with its commitment to the promotion of INCLUSIVE DEVELOPMENT lives of people everywhere, especially in the context the SDGs.

MSC continues to support a holistic and long-term social Lomé Container inclusive approach within the African continent. Since Trucking services Terminal, Togo the launch of our first route between the Mediterranean connecting remote areas and East Africa in 1971, we have invested extensively in and landlocked countries local recruitment, transport services and infrastructure to bring inclusive economic and social development and global trade opportunities to local players. Today, our local MSC agencies serve 40 African countries, helping to enhance their role and potential in the global econo- my. Our liner services, calling at 60 ports every week and at port terminals in Togo, Côte d’Ivoire, Nigeria and Morocco, ensure connections between Africa and the rest of the world. We also invest and manage state-of- the-art terminals, which, working in collaboration with our logistics teams, can take any cargo to any location. Our overall market share, currently at around 21%, continues to grow significantly year on year, showing our full support for the development of the continent’s future.

20 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 21 MSC Daniela (built 2008), 14,000 TEU. Terminal of Valencia, Spain

Investing in infrastructure in recent years we have reinforced our commitment to improve connections to Africa through dialogue and partnerships with key West African ports are currently enjoying an ongoing stakeholders at a national and international level. positive trend of expansion, modernisation and inter­modal Nevertheless, challenges for the business communi- transportation linkages. We observe a continuing rise in ty remain, as structural projects, such as infrastructure infrastructure investment from both the private and public projects, and private investments need to be support- sectors to link all capitals by road, high-speed rail and air. ed by key reforms on good governance and innovative This constitutes a positive outlook for growth, as infra- financial guarantees to become sustainable in the long structural development is essential for enhancing African term. Yet, we are confident that ongoing global efforts countries’ competitiveness, facilitating trade and achiev- and initiatives will continue to address current barriers ing sustainable development. to further investments from the private sector. These Our investments will continue to focus on terminals initiatives include the G20 Compact with Africa, which and related infrastructure, as well as on developing a is supported by African governments, the internation- sustainable and integrated transport network, including al community and Multilateral Development Banks in landlocked countries (LLCs). This will further facilitate (MDBs). the transport of goods and services across and between African countries, including between urban and rural/ remote areas, as well as from the African continent to the global market. As an illustration, in 2018 we plan to launch in Le Havre ro-ro operations from Europe to West Africa, which will complement our existing dedicated contain- er services.

Engaging stakeholders to overcome common challenges We have reinforced The African Union launched a depth transformation our commitment across the continent to further promote local produc- tivity and long-term economic growth. We observe a to Africa’s new paradigm shift that encourages the participation of development the private sector in strategic plans to foster sustainable development in Africa. To this end, structural changes through enhanced have been considered as necessary and the dialogue partnerships with between the public and private sectors has been enhanced and revitalised to ensure that local needs, key stakeholders as well as ongoing and future global challenges and at a national and broad development issues facing African countries, are taken into account in business models. In this respect, international level.

22 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 23 Terminal of San Pedro, CASE STUDY Côte d’Ivoire LANDLOCKED COUNTRIES

UNLOCKING THE GROWTH POTENTIAL

In the past 45 years, MSC’s logistics arm, MEDLOG, MSC and MEDLOG have jointly provided door-to-door through its subsidiaries, has invested heavily in the logistics solutions to local branches of internation- development of inland infrastructures and the creation al automotive companies for the ­delivery of knocked of corridors by using and improving existing logistics down vehicles from South Africa to assembly plants resources all around the globe. in Rwanda. As an illustration, thanks to more than 550 dedicated Moreover, MEDLOG has supported the improvement trucks, about 50 lifting equipment units, 15 warehouses­­ of Rwanda’s overall infrastructure by transporting and a presence in 23 African countries, MEDLOG has bitumen containers to Kigali for building a new inter- built up an integrated network of road and rail solutions national airport, which will foster incoming tourism and to connect landlocked countries (LLCs) and remote areas air freight flows. to ports. The services provided have helped to support In West Africa, MEDLOG is also offering crucial logistics the development of logistics-related services, enhancing solutions for the refurbishment of Gao Airport in Mali employment opportunities and local economic growth. by ensuring that specific bitumen containers reach Gao We have also improved food supply and socio-­political after being discharged in the port of Cotonou (Benin). stability in collaboration with the International Committee Similarly, in Niger we participated in projects relating of the Red Cross (ICRC). Furthermore, we have contrib- to the construction of a new national road connecting uted to local operations and programmes promoted by Tchadoua and Mayahi. the United Nations in a number of countries, such as MEDLOG’s assets in Côte d’Ivoire and Senegal (trucks, South Sudan, Mali, Cameroon, Togo and Central African trailers, advanced methods for storage, conditioning Republic. and containers’ preparation) guarantee that agricultur- In East Africa, the MEDLOG network ensures that coffee al products are stored in the best possible conditions exports from landlocked Burundi, Rwanda and Uganda before their intermodal shipment to or from landlocked reach the rest of the continent and the world. In addition, Burkina Faso and Mali. MEDLOG dry port in Mali offers a flexible option to local importers.

24 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 25 CASE STUDY Contributing to food logistics environmentally friendly reefer fleet in the world, in FOODCASE LOGISTICS STUDY With the aim of gaining deeper insights on how can compliance with the international rules on freight con- logistics equipment and services, through its subsidi- specific trade was accessible mainly by big players with we improve our services to food producers, export- tainers, road and rail transportation like ISO 1496-2, REDUCING POVERTY ary MEDLOG. MSC also operates one of the youngest, high volumes to trade. Additionally, the reefers support THROUGH FOOD LOGISTICS largesters andand most cons environmentallyumers, we are pafriendlyrticip reeferating ifleetsn the cueconomiesrrent TIR of andscale, UIC as provisions.fresh commodities In 2017, can we reach transported over in theglo worldbal d iaandlog compliesue on fo withod tec allhn relevantology, internaalso b-y takdifferenting trade1.41 millionareas, securing TEU of foodreefers supply worldwide, availability of which 40,000 tionalpa rrulest in mrelatedajor f otoo freightd indu containers,stry fairs s roaduch asand F rrailuit Loregardlessgisti- TEU of the adopted season. Thisthe meansControlled that, in Atmosphere the event of (CA) system transportation.ca (Berlin), Asia Fruit Logistica (Hong Kong), Seafolowo locald marketand 20,000 demand, TEU it helps under to theprevent Cold food Treatment waste (CT) proto- Expo Global (Brussels) and Gulfood (Dubai). Tandhe sthee destructioncol. MSC of reefers excess production allow customers as commodities to opt for a flexible Creatinginitiat inewves aopportunitieslso assist us forin fismallnding farmers out new wayscan beto tradedand in cost-effective other regions of alternative the world. to airfreight, as showed Throughunlo courk f rewide-scalesh opp ooperations,rtunities fouror worldwidefarmers an locald groAswe anrs illustration, by our in increasing Spain, our investments volumes. andThe strategic combination of CA agencies network provides our customers and business collaborations with small farmers helped to boost export worldwide. As part of our long-term commitment to and CT systems permits exporters to avoid food and partners with specialised reefer services tailored to their rates of dairy products, fruit and vegetables to alternative Spain, for example, we have helped mitigate the im- money losses by overcoming usual obstacles like long INVESTING IN TECHNOLOGY needs, whenever and wherever required. Backed by deep markets. Additionally, through our “Reefer Mediterranean knowledgepact of Ruof post-harvestssia’s 2014 imtreatments,port ban weon havesom ebeen agri cuProjectltural “, astransit well as times in Asia and and strict the Middle health East, & safetywe offer regulations set TO FOSTER RESPONSIBLE targeting,produ incts coordination by openin withg u pfarmers new rou andte growers,s to pote then tiallocally lu actors- by broader importing trade countries. options through our global CONSUMPTION expansioncrative of m theirarke businessts in As ithrougha and t newhe M opportunities.iddle East. network, providingCurrent MSCthem withbusiness better forecastreturn on isrevenue. positive as expecta- The reefer container can quickly adapt to different capac- At the sametions time, for we offer2018 accessible, predict asustainable volume formsincrease of of 1,000 CT ity demandsDeveloping without cooling requiring technology high levels of minimum protection,reefers such as especiallyad hoc insurance towards policies, Asia. to minimiseIn our vision, progres- inducementto expand to start food and markets stay in business. This factor risks and tosively encourage employing, small farmers fine-tuning to invest and in spreading more advanced enabledRefrigerated its usage bycontainers small players, (reefers) while inare the a past major this compoambitious- coolingand inclusive technologies business models. all along our global supply nent of cold chains. Their use has gradually multiplied chains is likely to open up new markets for growers As stressed by the former UN Secretary-General Yet, we should not forget that it is only at the end of the due to high growth rates of global population and con- of perishable food products and to raise awareness Ban Ki Moon1, “everybody in the world benefits from 1960 that the shipment of “cold” food was made possi- sequent demand for food. among intermediate and finalMSC Reeferusers about responsible Services in shipping, yet few people realize it. We ship food, ble thanks to self-refrigerated containers (“reefers”). Over the last years, MSC has managed to build-up consumption as set out byEcuador SDGs. technology, medicines and memories. As the world’s This made possible more trade opportunities, flexibility and operate one of the youngest, largest and most Inclusive ecpopulationonomic d continuesevelopm ento tgrow, relie sparticularly upon sus intai developn- In- lineand wi profitabilityth MSC’s forhol imany,stic comparedand social- to theinc limitationlusive ap of- able consuingmp countries,tion, prod low-costuction andand efficientrecycling maritimeof good transports pro achthe, ourefrigeratedr intention ships is twhicho keep were inve mainlysting usedin the to latetranss-t and resourcehass an a sessential set ou trole by to SD playG in12 growth. Among and othesustainabler techn portolog meat,ies, sdairyyste mproductss, proce andss esfruits. an d all other ele- causes, fooddevelopment.” loss in deve Thelop shippinging count sector,ries andis close in particularly men tToday,s of th enew cold technologies chain over tsuchhe next as theyea rsControlled to make related to thenon container-trade barrishippingers, industry,ultimately develops impac andtin sustainsg sur e tAtmospherehat, on the onesystem han andd, o urCold cu sTreatmenttomers a rallowe offe rtheed worldwide trade. Thanks to a specialised labour force reefer container to meet the highest safety and quali- the incomes of small farmers and food prices in local the best transport and storage conditions to their per- that works tirelessly day and night both at land and ty standards when transporting all types of “cold” markets. Reducing food loss is one way to limit the ishable cargos and, on the other hand, intermediate at sea, the whole sector helps to alleviate poverty by commodities all over the world. The shelf life of exotic negative efdecreasingfects of su thech pricebarri eofrs commodities and to add whileress fooenhancingd and finaandl freshcons productsumers g isain increased, access whichto best enables quality shipping food. security issueconomices affect anding asocial larg egrowth propo asrti onwell of as the standards pop- Theof expecompaniescted inc tor enterease newin the markets globa andl fo oreachd de consumersmand will ulation, esplivingeciall iny bothin leas developedt developed and developingeconomies countries.. pose innew every m acountry.jor cha Thisllen geis instrumentals that we want in facilitating to take onthe: At MSC weIn be thelie velast th decades,at cold c htheain transportations, i.e. supply chain of goodss tinhe firtransportst one i sof p everyrovid typeing glofo foodbal feverywhere,ood supply including with ef- that are refricontainersgerated hasfrom changed beginn ouring lives to end, dramatically. and coo Flexiblel- ficie nremotet logis tiareas,c solu andtion ins unlocking to reach opportunitiesa growing de form smalland, ing technoandlogy quick can tom move,ake a thedram containeratic diffe openedrence new in i avenuesn- ma inlyplayers, coming such fr oasm farmers emerg iandng ecgrowers.onomi es: this can be creasing thande su continuespply of q utoal helpity food meet and the i nworld’s reduc igrowingng achie Inved this by respect, furthe rMSC expa hasndi contributedng our conta tremendouslyiner fleet a ntod demand for goods and food. Almost everything we the development of the world’s maritime network and post-harvest food loss, including wasted water, ener- shipping services; the second challenge is tackling buy, eat, use and consume every day is transported to inclusive growth around the globe, for example by gy, land and labour. For this reason, in recent years we food loss issue affecting most developing countries by sea, so all countries and populations in the world increasing its investments in self-refrigerated contain- have massrelyivel yon i nvmaritimeested itrade.n imp roving our own cold by fuersrthe alongr inv eswithting cold in andstorage em pwarehouses,loying food -relatedrelated treatment supply chain – i.e. refrigerated containers, and cooling technologies. 1 UN Secretary-General Ban Ki moon’s message warehouses and depots - to ensure the best logistic on World Maritime Day, 29 September 2016 and treatment services to our customers.

26 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 27

38 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 39 MSC Reefer Services

CARRIER TRANSICOLD NATURALINE® REEFER CONTAINER Fostering responsible consumption emissions of F-gases are rising fast, the European Union The GWP=1, R-744 (CO ) refrigerant ­polyurethane foam blowing agent and food safety passed an updated F-Gas Regulation in 2014 limiting their 2 will enable us to avoid using inter- technology used in the NaturaLINE® Sustainable development also relies upon sustainable sale and banning their use in refrigeration systems if mediate refrigerant solutions that will unit offers high insulation properties­ consumption. According to the United Nations Food and more environmentally friendly alternatives are available. need to be phased out in any case without contributing to GWP. Agriculture Organization (FAO) “hunger is still one of The ban will apply to commercial refrigeration systems, within the 15-year lifespan of the When the NaturaLINE® unit reaches­ the most urgent development challenges1”, yet “rough- such as reefer containers, from 2020. At an internation- units. the end of its useful service life, it ly one third of the food produced in the world for human al level, the Kigali Amendment to the Montreal Protocol The NaturaLINE® reefer’s outstanding­ is nearly entirely recyclable. Its 95% consumption – approximately 1.3 billion tons – is lost or will enter into force on 1 January 2019 with the aim of energy efficiency can reduce ­recyclability rate has been attest- wasted before reaching consumers2”. Food waste and reducing worldwide production and consumption of shipboard demand for electricity,­ ed by the Underwriters Laboratories poor food conservation practices are strictly interrelat- hydrofluorocarbons (HFCs), the main type of F-gas used thus conserving fuel and reducing (UL), the largest and best-known ed to poverty, as they have an impact on food prices in in refrigeration technology. Partly caused by the stricter emissions related to power gener- independent, not-for-profit­ testing local markets and on the incomes of small farmers, while regulations, significant increases in the prices of refrig- ation. Moreover, the zero-GWP laboratory in the world. also creating barriers for people to access quality food. erants are raising additional challenges. Additionally, they might contribute to the increase of Nevertheless, we have started to make necessary invest- malnutrition cases around the world, as they bring further ments in order to comply with the new regulations. challenges to the poorest households and vulnerable Additionally, we have purchased thousands of new groups in affording adequate food and in implementing Carrier Transicold NaturaLINE® reefer containers with healthy habits and nutrition practices. natural-refrigerant R-744 (CO2) which is now the best At MSC we believe that cold chains and cooling technol- available technology compared to other refrigerants. ogy can make a dramatic difference in enhancing the supply of quality food and reducing post-harvest food loss, including losses related to water, energy, land and labour. By increasing the supply and affordability of quality food, reliable cold chains can play a key role in reducing poverty, fostering responsible consump- tion and promoting the right to health as set out by the COOLING TECHNOLOGIES SDGs. In this respect, we continue investing exten- AND PROTOCOLS sively in the latest available technologies, systems and By controlling oxygen and carbon dioxide levels and processes for sustainable cold chains, in line with inter- removing the ripening hormone ethylene, our Controlled national standards and regulations as well as our care Atmosphere systems prevent premature ripening and for the environment. This also ensures that our custom- reduce deterioration and spoilage. In addition, they ers are offered the best transportation and cold storage maintain the appearance, freshness and quality of conditions for their perishable cargoes, and provides the ­perishable foods over longer distances. highest level of food safety and quality to final consumers. In-transit Cold Treatment protocols are a chemical-free way to eliminate fruit flies and other insects that might Caring for the environment with sustainable damage the biodiversity and agricultural industries cold chain technology of importing countries. Our cooling and monitoring Regulations limiting ozone-depleting substances systems allow us to reliably keep the pulp of the fruit at (ODS), notably the Montreal Protocol of 1987, led to the the required temperature for the exposure period speci- widespread use of fluorinated gases (F-gases) in many fied in the protocols, which vary depending on the fruit industrial sectors. These man-made gases have a high and importing country. Global Warming Potential (GWP), ranging from about

12 to 14,800 times greater than carbon dioxide (CO2). As

1 Source: http://www.fao.org 2 Source: http://www.fao.org/save-food/resources/keyfindings/en/

28 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 29 MSC reefer containers at the terminal of Valencia, Spain

REEFER CARGO OVER TIME

1876 1877 1879 1882 1902 Early Early Late Early 2000 2016 2020 1960’s 1960’s 1960’s 1970’s

A plant was The first suc- The Anchor Refrigerated deep Lloyd’s Register Shipping lines Multi-temperature The first refri- The first reefers Seaborne reefer Seaborne reefer Seaborne reefer installed in a cessful shipment liner Circassia, sea shipping recorded 460 developed insu- reefer ships intro- gerated marine with integrated trade reaches trade rises to 111 trade estimated sailing ship, but of meat under ­equipped with takes off with the ships with refri- lated containers duced, capable containers were cooling units 60 million tonnes. million tonnes. to reach 120 it was a failure. chemical refri­ a cold storage­ first successful gerating plants, commonly known of transporting developed, based came to life. million tonnes geration was machine, attempt to carry mostly transport­ as ‘porthole different types of on converted with a 2.5% ­carried by the ­successfully­ car- frozen meat from ing meat, butter containers’. commodities at truck units. Reefer ­annual growth S.S. Paraguay ried chilled meat Buenos Aires to and fruit. the same time. containers fol- rate. from Buenos from America to Marseille. lowed, each with 30 SOCIAL INCLUSIVE APPROACH Aires to Rouen. Europe. its own cooling unit and temper­ ature control Source: Drewry Reefer Shipping system, bringing Market Review and Forecast 2016/2017 unprecedented flexibility and profitability.

30 SOCIAL INCLUSIVE APPROACH MSC SUSTAINABILITY REPORT 2017 31 MSC Laurence (built 2011), 12,400 TEU. Terminal of Seattle, Washington (USA)

CREATING SUSTAINABLE VALUE MSC’S COMMITMENT TO THE ENVIRONMENT

32 MSC’S COMMITMENT TO THE ENVIRONMENT MSC SUSTAINABILITY REPORT 2017 33 MSC vessel at HOW SHIPPING COMPARES Source: 3rd IMO the Terminal WITH OTHER TRANSPORT METHODS GHG Study 2014

of Valencia, Spain CO2 emissions by mode of transportation, CO2 g/km

PROTECTING OUR PLANET: A GLOBAL CHALLENGE

The adverse impacts of climate change have become more evident in recent decades and are increasing- ly affecting our planet and all human beings globally. According to the Office of the High Commissioner for Human Rights (OHCHR), climate change disproportion- Air: 560 g Road: 45 g Rail: 18 g Sea: 3 g ately affects vulnerable people and communities already in disadvantaged situations due to various factors. Tackling climate change challenges is therefore at the top of the international community’s agenda. With the signing in 2015 of the Paris Agreement, countries have agreed that temperature rises should be limited to no more than 2C above pre-industrial levels and that this will urgently require a global response from all stakeholders. Although the shipping sector is recognised as the world’s most cost-effective and energy efficient mass transportation method, account- able for only around 2.5% of global carbon emissions, it is subject to a challenging new set of technical and operational measures to further reduce emissions, as per international regulatory requirements. The shipping sector has been affected by weaker global demand since 2009. In spite of this, the internation- al community predicts greater seaborne trade due to the estimated growth of national GDPs as well as the growth of economic and population trends towards 2050. As a consequence, shipping emissions are expected to increase between 50% and 250% by 2050 if no measures are taken to mitigate climate change. At the same time, maritime transport’s outlook continues to be shaped and affected by uncertainty, increasingly challenging market conditions, fluctuant oil prices and global socio-economic factors and trade policies. The whole sector is therefore under pressure to address ongoing and future challenges, including increasing financial challenges, and to secure sustainable solutions while remaining competitive in the global market. MSC is investing heavily in a number of technical solutions to meet or exceed the new regula- tions, finding innovative solutions and continuously improving its environmental performance.

34 MSC’S COMMITMENT TO THE ENVIRONMENT MSC SUSTAINABILITY REPORT 2017 35 OUR STRATEGY FOR CLIMATE CHANGE & ENVIRONMENTAL SUSTAINABILITY SUPPORTING LOW-CARBON SHIPPING AT MSC’s environmental strategy and approach to sustain- fuel consumption and therefore improve our energy AN INTERNATIONAL LEVEL ability demonstrate a clear commitment to running a efficiency. Improving the maritime industry’s responsible business while respecting the environment We continuously monitor our environmental perfor- long-term sustainability performance and embracing precautionary efforts to mitigate broad mance and have implemented a number of operational requires international cooperation. global climate change impacts. measures to further reduce our CO emissions to meet 2 In line with the SDGs promoting action To achieve its vision, MSC promotes a strategic focus expected new regulations, including those to be adopt- on climate change and global on cleaner seas, land and cargo through massive invest- ed by the International Maritime Organization (IMO). partnerships, we participate actively­ ments in innovative low-carbon technology, energy Our overall strategy involves an investment of approx- in international­ policy discussions and efficiency and operational efficiency. Additionally, MSC’s imately USD 1.5 billion. This enormous financial continuously strengthen our collab­ modern, green fleet was greatly enhanced in recent years commitment was made possible by MSC’s growing oration with other stakeholders through by a retrofitting programme. We have invested extensive- and stable economic performance as well as by the important initiatives such as the ly in the latest generation of marine technologies, such continuous support of key financial institutions. Clean Cargo Working Group (CCWG). as new energy-efficient propellers and bows to reduce Furthermore, MSC is one of the found- ing members of the Global Industry Alliance (GIA) to support low-carbon­­ shipping within the framework of the REGULATION AIM & ENTRY INTO FORCE MSC’S RESPONSE GEF-UNDP-IMO GloMEEP Project. Launched in June 2017, this new IMO 2020 enhanced global Enhances existing limits for sulphur Installation of Exhaust Gas Cleaning partnership of maritime industry sulphur limit (MARPOL Annex VI, content in marine fuel to reduce Systems (ECGS); evolving fuel strat- leaders focuses on overcoming bar­­­ regulation 14) emissions of sulphur oxides and other egy including use of Low Sulphur pollutants. Entry into force: 1 Jan 2020. Fuel Oil (LSFO); advocating for shore riers to innovative technologies and power supply. taking operational measures that will accelerate­ shipping’s transition IMO Ballast Water Management Sets standards for proper manage- Installation of advanced ballast water to a low-carbon future. In addition to Convention ment of ballast water and sediments to treatment systems across entire fleet. promoting R&D, showcasing techno- prevent the spread of harmful marine Newbuilds designed to need minimal species. Entry into force: 8 Sep 2017. ballast water. logical advances,­ encouraging industry dialogue and implementing capacity-­ IMO Energy Efficiency Design Index Specifies a minimum efficiency level All newbuildings meet or exceed building and information-sharing (EEDI) (MARPOL Annex VI, per capacity mile according to ship EEDI standards; continuous invest- activities, members contribute to regulation 4) type and size, for ships 400 GT or over. ment in latest technologies to raise a GIA Fund. This fund helps to finance Entry into force: 1 Jan 2013. energy efficiency performance. selected projects within the GIA’s IMO Data Collection System (DCS) Requires collection of fuel consump- Advanced data acquisition and five areas of priority: energyefficiency ­ tion data for ships 5,000 GT or over as analytical software developed technologies and operational best part of the mandatory Ship Energy Ef- in-house and installed across fleet. practices; alternative fuels; ports; ficiency Management Plan. Entry into ­digitalisation and the human element. force: 1 Mar 2018 for data collection from 1 Jan 2019.

EU Monitoring, Reporting & Requires collection of CO2 emissions Advanced data acquisition and Verification (MRV) data for ships over 5,000 GT calling at analytical software developed EU/EFTA ports. Entry into force: in-house and installed across fleet. 1 Jul 2015 for data collection from 1 Jan 2018.

36 MSC’S COMMITMENT TO THE ENVIRONMENT MSC SUSTAINABILITY REPORT 2017 37 Cross-cutting efforts to improve efficiency increasing enquiries from our stakeholders with regards To maximise the efficiency of our fleet and further reduce to our environmental performance, emission counts and our ships’ energy consumption we use innovative technol- compliance with forthcoming data reporting regulations. ogies and implement a number of operational measures. These include the European Union’s MRV (Monitoring These include our continuous efforts towards cargo Reporting & Verification) and the IMO DCS (Data Collection and fleet optimisation. Additionally, we have a dedicat- System). ed Energy Efficiency (EE) team based at our Geneva HQ, which, in cooperation with MSC Shipmanagement techni- Operational efficiency of terminals cal offices, continuously monitors both the emission and The HQ Operations Department liaises with all termi- fuel performance of the whole fleet, while identifying nals and ports worldwide to ensure that operations are potential operational improvements during navigations. performed in line with international standards relating to the Our HQ Operations Department regularly liaises with safety of vessels, cargo and the environment. Our subsidi- Masters to plan the ocean routing of ships in order to ary, TiL, continuously invests in improving the operational ensure the most fuel-efficient route considering the efficiency of more than 50 container terminals around the weather, vessels’ load and stability conditions. It also world. Current efficiency strategies include measures to monitors the vessels’ speed in adverse weather to avoid cut unproductive procedures, such as reshuffling contain- higher consumption, while maintaining the vessels’ sched- ers during delivery, in order to reduce emissions as well as uled arrival time at port. waiting times for our customers.

Enhanced data analysis & reporting CONTINUOUS IMPROVEMENT OF OUR MSC FLEET CARBON EMISSIONS Through a series of complex geometrical models ENVIRONMENTAL PERFORMANCE and statistical analysis, together with state-of-the-art automatic data acquisition and analytical tools developed ISO CERTIFICATIONS We are fully committed to further reducing energy internally for this purpose, the MSC Shipmanagement -11% MSC’s excellent performance within the consumption and CO2 emissions across all our opera- technical team and the EE team regularly: internationally recognised ISO frame- tions. Emissions vary from vessel to vessel and voyage to • Monitor the hull performance of each vessel against work is of great significance. voyage, for reasons including operational factors, vessel its own baseline, facilitating the decision on any Successful audits and awarded certifica- load and waiting times in ports. To monitor the perfor- planned intervention like hull cleaning, advancing tions include the following: mance of individual ships and our fleet over time, among dry-docking of the vessel, etc. • Cargo Container Ocean Transport other measures, we use the Energy Efficiency Operational • Ensure that the minimum number of generators are • ISO 9001: 2015 Quality Management Indicator (EEOI) tool, as set out in the IMO Guideline running for the required power demand on board. Our System including Risk Management MEPC.1/circ.684. EEOI definition advanced data analytics tool automatically creates an • ISO 14001 Environmental Our EEOI analyses show that we have significantly reduced In its most simple form, the Energy alert if the generators run below a specified load over Efficiency Operational Indicator is Management our carbon dioxide emissions per metric tonne of cargo a defined period defined as the ratio of mass of CO2 (M) • ISO 50001: 2011 Energy moved on a per mile basis. Between 2016 and 2017, we • Ensure the main engine always operates within the emitted per unit of transport work: Management Systems reduced our EEOI from 15.55 to 14.80, and between 2015 Indicator = MCO2 / (transport work) optimum range and 2017 from 16.58 to 14.80 indicating an efficiency EEOI = gr CO2 / (Tons cargo / Miles) • Monitor and ensure that a vessel always sails at optimum improvement of 11%. trim, as per our state-of-the-art CFD (Computational Fluid Source: IMO DNV GL EXCELLENCE 5 STARS We are evaluating and considering implementing a dynam- Dynamics) trim optimisation module CERTIFICATION (2017) ic tool, developed by sustainability solutions provider South • Ensure that the reefer cargo is always optimised as Pole, to calculate our EEOI more frequently and specifical- per the vessel’s available electrical power MSC complies with the highest stand- ly. This will help us in our efforts to be transparent with our • Monitor the overall energy efficiency management ards for the operation of container customers and stakeholders, as we will be able to better of the vessel carriers, car carriers and bulk carriers quantify the benefits of new technical and operational We estimate a fuel saving of 58,000 tons over the year, in the categories of fleet, management measures related to CO2 emission per cargo transported. with a consequent emission reduction of 180,000 tons systems, safety & security, environment

of CO2 in 2017. In addition to monitoring energy efficien- & efficiency. cy, these systems help us to provide precise answers to

38 MSC’S COMMITMENT TO THE ENVIRONMENT MSC SUSTAINABILITY REPORT 2017 39 MSC FLEET & CAPACITY GROWTH Ships TEU FLEET & CAPACITY GROWTH

As our fleet grows and technology develops, we Fleet renewal programme

continuously engage with shipbuilders, design firms, Over the last six years, we have been upgrading our classification societies and other stakeholders to ensure fleet of owned and operated ships to the latest standards that our strategic investments are both environmental- of safety and fuel efficiency. Since its launch in 2011, ly and economically viable. our retrofitting programme has considerably reduced Through investments in capacity management and econo- carbon dioxide emissions. In 2017, we retrofitted more mies of scale, we have managed to increase our average than 250 ships with energy-saving technologies, includ- capacity per ship from 2,500 TEU in 2003 to 6,500 TEU in ing a specially designed bulbous bow, lighter and more 2017, significantly higher than the average of the top 10 efficient propellers, and new rudders designed to reduce cargo carriers. drag. Hulls are treated with a silicon-based anti-fouling coating to minimise friction, the need for underwater Pioneering new ships cleaning and the risk of spread of invasive species. At Confirmed in Q3 2017, our order of 11 x 23,000 TEU the same time, our ship management centres are retro- container ships underlines our leading role in driving fitting our ships’ main propulsion engines to make them global standards of ship design and energy efficiency.­ more efficient. With delivery scheduled for 2019 and 2020, these The impacts of this extensive effort are reflected within mega-ships will be propelled by ultra-efficient G-type the carbon reduction results detailed in the section engines and will include the latest energy-saving technol- “Continuous improvement of our environmental perfor- ogies in line with the IMO’s Energy Efficiency Design mance” on page 38 of this report. Index (EEDI) standards. In addition, the ground-breaking size of the new ships will significantly reduce emissions per amount of cargo carried.

1970 1984 1996 2001 2005 2008 2015 – 2017 2019 – 2021

Patricia Alexandra MSC Alexa MSC Flaminia MSC Pamela MSC Daniela MSC Oscar 78m 650 TEU | 150m 3,300 TEU | 244m 6,800 TEU | 300m 9,400 TEU | 336m 14,000 TEU | 366m 19,224 TEU | 395m (Containers not used yet) First full container vessel First newbuilding First post-Panamax built in Korea 20 Oscar Class vessels ordered by MSC in service to Fincantieri

MSC Rafaela In October 2017, MSC confirmed an order of 23,000 TEU vessels for delivery in the coming years.

40 MSC’S COMMITMENT TO THE ENVIRONMENT MSC SUSTAINABILITY REPORT 2017 41 COMPARISON OF MAIN OPTIONS FOR SHIPOWNERS INVESTING IN INNOVATIVE TECHNOLOGIES Exhaust Gas Cleaning Systems Based on current forecasts and considering the size of our fleet, there is a strong Eco-containers For instance, we were promoting the use of WBP on (ECGS) business and environmental case for retrofitting our ships with EGCS. These MSC cares for the environment, working closely and our containers long before the regulations came into systems spray alkaline water into a vessel’s exhaust either via an open-loop actively with manufacturers to build containers using effect, even though WBP technology was in the initial system, closed-loop system, or hybrid (open-and-closed loop) system, to eliminate nearly all SOx and 70-80% of particulate matter (PM) from High Sulphur Fuel Oil sustainable materials. One recent eco-initiative consti- stage and the market was hesitant to use it. Yearly over (HSFO). The systems are costly and complex to install, however, with drydock, tutes our investment in bamboo flooring at an early 300,000 TEU of containers are now produced for MSC manufacturing and installation capacity all being potential limiting factors. stage. Our current new productions are close to 100% with WBP technology. fitted with bamboo flooring, which improves environ- Liquefied Natural Gas (LNG) LNG produces almost zero SOx and PM emissions and reduces nitrogen mental and economic efficiency. oxide (NOx) emissions by up to 85–90%. However, large-scale use of LNG for cargo ships would require very substantial improvements in global bunkering Bamboo is kinder to the environment, due to its bio­­­ PREPARING FOR infrastructure, since few major ports have developed full-scale LNG bunkering degradability and availability. It is in abundance compared THE 2020 SULPHUR CAP facilities. to conventional wood. Bamboo is also a highly renewable resource, with price competitivity, as bamboo plants grow MSC is strongly committed to contributing to global Low Sulphur Fuels Low sulphur fuels, such as Marine Gas Oil (MGO) and new blends of Ultra Low Sulphur Fuel Oil (ULSFO) contain less than 0.1% sulphur and require to full maturity in 4-6 years, compared to over 20 years efforts to reduce emissions from ships, and fully minimal structural or operational changes. However, low-sulphur fuel costs for hardwood. A bamboo plantation also releases 35% supports uniform enforcement of the decision by the are projected to generally remain significantly higher than for HSFO. With our more oxygen than an equivalent area of normal trees, IMO relating to the 2020 global cap on fuel sulphur large and globally active fleet, the quality, availability and reliability of new fuel and bamboo has better durability and impact resistance. content. This will reduce the sulphur limit for marine blends are key issues to consider. ULSFO plays a significant role in our current China has the largest output of Moso Bamboo ( 90% of fuel from the current 3.5% m/m to 0.5% m/m globally fuel mix and we will continue to monitor developments. the world’s production): it is found in 27 provinces, cities and to 0.1% m/m in designated Emission Control Areas and municipalities including Zhejiang, Jiangxi, Anhui, (ECAs), as implemented in 2015. Hunan, Hubei, Fujian, Guangdong, Chongqing, Yunnan We have invested heavily in exploring various strat­ Guangxi, Guizhou and Sichuan, which account for 66.7% egies to comply with the 2020 Sulphur Cap. The MSC SULPHUR EMISSIONS Area Sulphur limit Sulphur limit of the bamboo-growing area in China. Shipmanagement technical team has been working REGULATIONS Current situation Situation from This availability of bamboo in China is convenient, given on this since 2013 to research, analyse, review and 2020 onwards our ongoing container production facilities in the country. propose various available options: Exhaust Gas Cleaning Global 3.5 % 0.5 % Moreover, as of 1 July 2016, the Government of the Systems (EGCS), Liquefied Natural Gas (LNG) and Ultra- People’s Republic of China approved mandatory require- Low Sulphur Fuel Oil (ULSFO). Our compliance strategy US and EU ECA 0.1 % 0.1 % ments regarding the use of Water-Based Paint (WBP) will continue to evolve in line with developments in EU waters 0.1 %* 0.1 % for containers to minimise Volatile Organic Compounds technology and changes in the cost and availability of (VOC) emissions. MSC was a pioneer in this respect. different fuels. Hong Kong – China 0.5 %* 0.5%

*Only at berth

Source: Analysis of sulphur emissions regulations per geographic areas, FNTE Department, MSC Mediterranean Shipping 42 MSC’S COMMITMENT TO THE ENVIRONMENT Company SA 2017 MSC SUSTAINABILITY REPORT 2017 43 Anti-fouling coating: BALLAST WATER TREATMENT vessel’s propeller blades coated with silicon paints Ballast water helps ships maintain trim and stabil­ity, but We have been working with shipbuilders, classification poor ballast water management can release invasive societies and others to ensure that our new ship designs marine species that damage local ecosystems and biodi- require the minimum possible amount of ballast water. versity. The IMO’s Ballast Water Management Convention, During 2017, we completed our ambitious programme which entered into force on 8 September 2017, requires to instal ballast water treatment systems across our all ships to implement a Ballast Water and Sediments existing fleet and are now fully compliant with the Management Plan, carry a Ballast Water Record Book requirements, well in advance of the internationally and perform ballast water treatment to a given standard. required date for almost all ships.

COLLABORATION BETWEEN MSC GROUP’S DIVISIONS TO PROTECT THE ENVIRONMENT

The MSC Group benefits greatly in the area of its ‘World Class’ ships (two firm orders and two options). Environmental Stewardship from the synergies between The four LNG-powered cruise ships are due to come into its two divisions. For example, development work service between 2022 and 2027. Each of these ships repre- on LNG propulsion by MSC Cruises greatly informs sents a capital investment exceeding EUR 1 billion. evaluation of this technology by the Cargo Division. We believe that LNG is one of the key elements that Furthermore, environmental leadership in Advanced will support our continuous efforts in reducing our Wastewater Treatment, Solid Waste Management and impact on the environment. LNG is arguably the clean- EGCS systems have all been to the benefit of the entire est commercially available marine fuel at the moment MSC Group. Similarly, extensive work for the Cargo and we believe it will be a game-changer for the cruise Division in connection with energy efficiency, marine sector in the years to come. Along with other industry fuels, and SPS have been extremely useful in related players, MSC Cruises wishes to actively contribute to ADVOCATING FOR SHORE MSC CO2 SAVINGS IN 2017 applications for MSC Cruises. this positive evolution. POWER SUPPLY LNG reduces SOx emissions by more than 99% and MSC Cruises’ investment in LNG technology NOx emissions by up to 85% compared to conventional We strongly believe that shore power supply (SPS) is In addition to equipping its ships with Exhaust Gas marine fuel. It also largely eliminates particulate matter one solution that terminals can adopt to improve local Cleaning Systems (EGCS), MSC Cruises is making signif- from the exhaust gases and produces the same amount air quality, where the source provides a net environmen- icant investments in LNG technology as part of its strategy of energy with approximately 20% less CO2 emissions tal benefit. By switching from generators to the onshore to mitigate air pollution. In particular, in 2017, MSC Cruises during the course of the engine operation, compared to electrical grid, ships can reduce their emissions in port committed to developing and installing LNG engines on conventional cruise ships of a similar size. by around 80%. Since 2014, the California Air Resources Board (CARB) has required shipping lines to use SPS for a minimum 5,336 tons/year Equivalent to percentage of their vessels, set at 70% for 2017. The 14.6 tons/day 1,351 cars’ CO2 proven benefits of SPS could be replicated in ports emissions/day* worldwide. However, while 143 of our vessels are able to run on shore power supply, only three termi- nals – all in California – are currently equipped with this technology. We are therefore actively promoting *Source: US Department of Energy - investment in SPS technology throughout our termi- Energy Efficiency & Renewable Energy nal network. (https://www.afdc.energy.gov/data/)

44 MSC’S COMMITMENT TO THE ENVIRONMENT MSC SUSTAINABILITY REPORT 2017 45 CREATING SUSTAINABLE VALUE HEALTH AND SAFETY

46 HEALTH AND SAFETY MSC SUSTAINABILITY REPORT 2017 47 OCCUPATIONAL HEALTH & SAFETY • International Convention for the Safety of Life at Sea (SOLAS) – Emergencies, Fire Prevention, Life-saving MSC aims to MSC’s commitment towards the protection of the Appliances, Safety of Navigation, Carriage of Cargoes, environment and the promotion of responsible occupa- International Safety Management (ISM) and International prevent any tional health and safety practices are essential parts of Ship and Port Facilities Security Codes (ISPS) loss of life and its philosophy and contributing factors to its business • International Convention for the Prevention of Pollution success. MSC aims to prevent any loss of life and unnec- from Ships (MARPOL) – Environment, Chemicals, unnecessary risk essary risk to human health in its business operations, Waste and Air to human health as well as to ensure environmental safety and proper • Standards of Training, Certification and Watch-keeping cargo-handling and management. (STCW) – Standards of qualification for the Master, in its business To do so, MSC has its own Health, Safety, Security and officers and crew on seagoing merchant ships operations, as Environmental (HSSE) policy, in line with applicable • Maritime Labour Convention (MLC) – Working condi- requirements defined for international shipping, most tions on ships, including conditions of employment, well as to ensure commonly known as the ‘four pillars of the international­ health protection, medical care and social security environmental regulatory regime for quality shipping’: protection safety and proper cargo-handling and MSC employees supervising management. terminal operations

Additionally, our “Responsible Cargo Care Policy” ­focuses on safe container-handling procedures. In accordance with the 2015 guidelines for the develop- ment of the Inventory of Hazardous Materials (IHM) developed by the IMO, we ensure proper handling of hazardous materials, regulate waste management and ensure prevention of accidental exposure to our crew. In this respect, on board our vessels, we maintain an IHM and related statements of compliance issued by an independent classification society. IHMs contain details on listed dangerous material quantities and locations on board vessels, and these inventories are updat- ed during any new installation or modification on our vessels throughout their operational life. Furthermore, during the year 2017, the MSC Shipmanagement Office based in Cyprus undertook a fleet-wide project for IHM surveys and used data from these surveys to review its procurement procedures for further mitigating the risk on board vessels in relation to a number of restricted hazardous materials.

48 HEALTH AND SAFETY MSC SUSTAINABILITY REPORT 2017 49 PROMOTING A CULTURE OF SAFETY ON BOARD

MSC Shipmanagement in Cyprus is responsible, among Our fundamental organisational principles are: other duties, for the selection, recruitment, training and • acting fairly; MSC SHIPMANAGEMENT management of our crew, in line with MSC’s vision, • fostering cooperation; LEADERSHIP AND mission and core values. In the last ten years, MSC • building a climate of reciprocal trust TEAM BUILDING Shipmanagement’s continuous focus on organisational and respect. The MSC Shipmanagement leadership development, capacity building and innovation at work has and team-building workshop focuses enabled it to cope with the rapid growth of MSC operat- Adapting our organisational structure, investing in our on providing a good understanding of ed fleet and at the same time to ensure high performance people, bringing innovation and applying the MSC work effective leadership attributes, how to at all levels of the organisation. Growing and developing culture all create added value in terms of quality of staff, influence people, how to build a team, crew professional competence through training in both process optimisation, shipping efficiency, quality stand- how to avoid mistakes and how to uti- lise their strengths more effectively. It soft and technical skills represents a key investment area ards, environmental protection and corporate reputation. also motivates participants to become for our company. To increase our rapid responsiveness The same elements have made MSC Shipmanagement more passionate about the company’s to risks, these training programmes also include specific one of the largest in-house ship management compa- vision, mission and core values. This modules on emergencies and unexpected events, such nies in the world, recognised as such by awards from enables participants to ­apply these as natural disasters. industry associations and the Governments of Cyprus, concepts in various situations and, Throughout 2017, over 750 people from management and India and Ukraine. For the same reasons, we enjoy an more specifically, toadapt in a multi- MSC Shipmanagement cultural and diverse environment operational levels attended our leadership development exceptionally high crew retention rate as well as an Kolkata, India • To motivate and encourage juniors training programme and our junior training programme extraordinary reputation among qualified job candi- and ratings welcomes some 500 cadets and trainees every year. Due dates wishing to join us in the future. • To use clear communication for criti- to our fleet growth, we can offer an increasing number cal operations of job opportunities. We intend to continue focusing on • To handle people-related issues and providing leadership development across all ranks and resolve conflicts with confidence on empowering our people to enable them to take on • To use influencing skills to get more increasing responsibilities. We strongly encourage and done by the same person support our crew to invest in their professional develop- • To build a better team on board ment and facilitate long-term career path plans, from junior • To develop a highly engaged to managerial positions. talent pool ISO CERTIFICATIONS A value-driven work culture AND AWARDS We believe that only a value-driven work culture can • OHSAS 18001 (Occupational ensure the development of a truly sustainable business Health & Safety) activity and an enduring sense of belonging to any organ- • ISO 26000 (Corporate Social isation. We therefore aim to build a positive working Responsibility) environment both on board vessels and in shore-based • Green Company of the Year, India offices based on open communication, accountability, MSC Shipmanagement • Cyprus Shipping Industry Award continuing education, knowledge-sharing and technical Odessa, Ukraine • Best Foreign Employer of the Year training opportunities. Award from Government of India • Samudra Manthan award, India • Best Cadet Training Program in Ukraine

50 HEALTH AND SAFETY MSC SUSTAINABILITY REPORT 2017 51 Employees in the MSC Headquarters’ crisis room

FOSTERING ENVIRONMENTAL PROTECTION AND HUMAN SAFETY AT SEA

Our care for people is demonstrated by our MSC’s staff MSC Group’s safety culture does not include cost-saving development strategy and professional train­ing which considerations when human lives are at stake. focus, in particular, on ensuring personal, cargo and As an illustration, in the autumn of 2017, our central navigational safety. Additionally, the MSC Operations management offices launched four emergency oper­­ Department based at the Headquarters provides brief- ations entailing the diversion of MSC ships with crew ings to Masters on a regular basis to raise awareness members in need of medical aid from their intend- about the latest developments in safety procedures and ed routes to Salalah (Oman), Maputo (Mozambique), ensure their implementation. The Department constantly Athens (Greece) and Los Angeles (USA). The purpose liaises with the whole fleet to report updated route plans was to let local authorities provide the seafarers with to enable proper risk assessments related the safety of medical assistance and hospitalisation in the fast possi- crew, vessels and the environment. This aims to effec- ble way. In October 2017, a special operation was also INTERNAL PROCESSES SUPPORTING SAFETY ON BOARD tively mitigate the risks of incidents at sea. put in place to arrange the helicopter evacuation of an injured crew member from an MSC vessel off the Dutch Crisis management coast to an hospital in Amsterdam. Seafarer Feedback from Crewing Inspections Self-appraisal MSC believes that early warning and rapid decision-­ It is our moral duty to help people and fellow seafarers engagement crew on seminars & audits making mechanisms are crucial for ensuring the safety in trouble during maritime operations. For this reason, survey disembarkation interaction of its crews and customers’ freight in case of maritime MSC crews are all well trained and keen to guarantee emergencies. All crisis management operations imply the safety not only of MSC ships but also of any vessel, Third-party Feedback on Multi-city Maritime Labour MARPOL rating the prompt involvement of dedicated experts under the personnel and person in distress at sea. independent specific areas seminars Convention company Inspector supervision of the experienced MSC senior manage- As an example, in 2017, our staff carried out a number ment. Capt. Gianluigi Aponte, the company’s founder, of rescue operations exclusively aimed at saving human Superintendent Safety and Mr. Diego Aponte, President & CEO, are personally lives at sea. The most dramatic one involved the rescue Leadership & & audits procedures involved in the monitoring and management of every of a stranded Japanese surfer from choppy waters off Crew notified team-building significant emergency operation. Following their instruc- Kembla (Australia) to give him medical first aid and take of actions taken workshops Biennial Masters feedback Company tions, HQ Operations Department remains in constant him back to shore. An MSC ship assisted the crew of to encourage procedures contact with the crew members to rapidly resolve another company’s vessel off the West African coast them to continue reporting the emergency situation, including potential medical that reported fire in the engine room. The MSC vessel Honest and open feedback emergencies occurring either on board or at sea amid provided communication facilities and food to the crew Training needs Training needs difficult conditions. of the other vessel until emergency towing arrange- ments for the other vessel were delivered a day later.

52 HEALTH AND SAFETY MSC SUSTAINABILITY REPORT 2017 53 MSC’S TECHNICAL SKILLS TRAINING MODEL MSC Training Centre in Sorrento, Italy MSC continuously invests in enhancing its employees’ focused on improving crews’ professional skills through technical skills. As an illustration, in the past ten years, the simulation of credible incidents and knowledge trans- MSC Shipmanagement in Cyprus has devoted 1 million fer on navigational safety. hours to training and capacity-building efforts. In the last two years, over 2,000 navigating officers, The MSC training model is designed to coach both including a number of Masters, have completed simula- on-board and shore-based staff using the most advanced tion courses and acquired the relevant skills to operate technological methods. For instance, we are among the MSC large container­ vessels. few multinational companies whose training centres Furthermore, in accordance with IMO recommendations, are equipped with the latest generation of full mission we have pioneered the implementation of the Electronic bridge and engine simulators. In our training facilities in Chart Display Information System (ECDIS) and trained India, Italy, Montenegro and Ukraine, MSC trainers are some 7,000 navigating officers to effectively operate it.

MSC’S TECHNICAL SKILLS TRAINING MODEL MSC vessel simulator in Ukraine Personal Cargo Navigational safety safety safety

Focus on Cargo care Navigational behavioural briefings safety

Mindset

Weather Task to responsibility Pilots training

Value-added training Maintenance

Positive atmosphere

54 HEALTH AND SAFETY MSC SUSTAINABILITY REPORT 2017 55 WORKING CONDITIONS AND CREW RETENTION RATES

MSC has at present a 98% crew retention rate, as per Internet on board Nevertheless, the increasing use of web-based naviga- For all these reasons, at MSC we take cyber securi- the industry standard Intertanko formula*. The earlier crew engagement survey undertaken in tion systems with interfaces to land-based networks is ty on board our connected vessels very seriously. To We believe that such a high rate is a clear recognition of 2015 resulted in some areas of improvement regard- making systems ever more vulnerable to cyber attacks. mitigate the risk of cyber attacks, we are investing in our efforts to provide our crew with a safe working environ- ing on-board internet facilities. MSC Shipmanagement On-board connectivity systems, including computers, for the latest hardware and software as well as in training ment and the highest standards in working conditions. technical offices took practical actions in this regard, internal management and “uncontrolled” mobile devices, to provide procedural updates and guidelines for users. In this respect, we are extremely proud to report that ensuring that our vessels are equipped with the latest can be easily infected with malware and allow cyber-at- Some cyber-security measures we have taken so far in the 2017 survey almost two thirds of MSC crew satellite communication systems and are kept upgraded tackers to gain access to ships’ security systems. Every include the implementation of a UTMS or Unified Threat members (66%) stated their wish to work for MSC until continuously, thus improving performance and offering operation requires a different, complex solution, which Management Service, the installation of smart devic- the end of their career, 1% higher than in 2015. Around to the crew a variety of services, much like they would in turn requires investment to protect on-board connec- es blocking unauthorised access and misuse, and the 77% expressed a wish to sail for us for more than ­ experience ashore. tivity systems against potential attacks. constant monitoring of potentially suspicious activities. 4 years. Finally, only 1% of respondents stated they plan The key benefits for crew we have observed so far include to stay with MSC for less than one year. keeping up-to-date with daily news and global events, feeling closer to their families and making use of online *Note: Introduced in 2008 by Intertanko, an association of services such as internet banking, research and educa- independent tanker owners promoting safe transport, cleaner tion. The 2017 Nautilus International study on crew at seas and fair competition, the Intertanko formula is cons­­ sea observed a correlation between on-board connec- idered a standard within the merchant shipping industry. tivity and staff retention rates. The same study states (www.intertanko.com) that this could be directly related to crew members’ abili-

ty to maintain connections with family and friends back MSC officers home. Social interaction could also significantly mitigate the sense of loneliness while away and have a positive impact on the mental health of crew members.

Cyber security Efficient on-board connectivity systems improve not CREW RETENTION RATE TREND only the crew’s well-being but also navigational safety (Based on Industry standard Intertanko formula) by enabling vessels to be in constant and reliable­­ communication with on-shore offices. This helps signif- 100% icantly to mitigate either maritime or operational risks and results in better performance. A connected ship 95% can transfer real-time data to the shore via telemetry information, remote access to systems and equipment for diagnostics, troubleshooting, updates and mainte- 90% nance. In this respect, on-board connectivity contributes to better provision of real-time information on potential 85% critical situations such as piracy attacks, chart correc- tions, voyage planning/routing, weather and medical assistance. It also allows onshore management offices­ 80% to look after the navigational safety of vessels by sharing operational documents and data at a faster pace, keeping 75% up-to-date records on their activity and running remote investigations.

56 HEALTH AND SAFETY MSC SUSTAINABILITY REPORT 2017 57 CREATING SUSTAINABLE VALUE BUSINESS ETHICS AND PROTECTION OF HUMAN RIGHTS

58 BUSINESS ETHICS AND PROTECTION OF HUMAN RIGHTS MSC SUSTAINABILITY REPORT 2017 59 PROMOTING FAIR BUSINESS PRACTICES MSC is MSC strongly supports the Tenth Principle of the UN committed to a Global Compact in the area of anti-corruption.­ MSC is zero-tolerance committed to a zero-tolerance approach to bribery and corruption. It has policies and procedures that outline approach responsibilities for all employees around the globe to to ­­­bribery and comply with all applicable anti-corruption laws. Actions taken in 2017 include global communication and corruption. follow-up of the implementation as per local laws of the Employees at MSC Headquarters, MSC Anti-Bribery Policy within MSC agencies world- Geneva, Switzerland wide. In order to embed ethics and further foster an anti-corruption culture in the most effective way around the globe, the MSC Anti-Bribery Policy is available in 11 different languages. MSC also launched a mandatory ­e-learning training module for all employees to enhance IMPLEMENTATION OF MSC CODE anti-corruption awareness and improve its anti-corrup- OF BUSINESS CONDUCT tion programme. In 2017, MSC issued the MSC Conflict of Interest Policy Multi-stakeholder approach to advance SDGs MSC has its own Code of Business Conduct which is in dialogue with internal stakeholders. All reports made by which provides guidelines on how to define, identify, To further promote SDGs 16 and 17, MSC seeks collab- line with internationally recognised standards as well as employees are evaluated with care and, based on these, report and manage actual and potential situations of orations with cross-industrial networks when collective the Ten UN Global Compact Principles on Human Rights, internal investigations may be initiated, as appropriate. conflict of interest. An e-learning training module was actions are required to advance key social responsibility Labour, Environment and Anti-Corruption. During 2017, MSC made further efforts to strengthen also created to improve knowledge and awareness on practices in line with its standards. In October 2017, MSC During 2017, MSC continued to develop a culture of integ- transparency and build trust within the organisation, for conflicts of interest. joined the Maritime Anti-Corruption Network (MACN), a rity within the organisation, setting forth and monitoring example, by encouraging employees to report miscon- In addition, MSC adopted a Gifts and Corporate global business network composed of maritime indus- compliance with common standards of ethical behav- ducts. At present, the HQ Compliance and the Corporate Hospitality Procedure applicable to employees working try leaders working together towards the vision of a iour as well as all applicable laws, regulations, policies Audit Departments are in charge of establishing and in MSC’s headquarters in Switzerland. The Procedure maritime industry free of corruption. The MACN allows and procedures. Training courses on the MSC Code implementing a centralised reporting tool. is designed to provide employees with guidance on MSC to collaborate with other shipping lines to share of Business Conduct, for instance, are provided to all During 2017, MSC also reinforced the cooperation what can be accepted as a gift. It also provides a set of best practices and develop strategies to tackle corrup- employees around the globe. Their content is regularly between the Compliance Department and the Corporate self-decision-making principles and guidelines to enable tion in the maritime sector and, more specifically, within updated and an e-learning training tool will be launched in Audit Department to ensure all ethical standards and employees to tackle corruption. the container shipping industry. The MACN Container 2018. Furthermore, MSC monitors the implementation of relevant policies are correctly implemented through- MSC strives to impose on identified business partners Working Group represents around 65% of the contain- the Code of Business Conduct within its agencies world- out the organisation. In particular, the Corporate contractual obligations of compliance with applic­ er carrier market. wide in collaboration with local “Code Implementers”. Audit Department performs on-site visits of MSC’s able anti-corruption laws. MSC also encourages such MSC also took the initiative to join TRACE International, As part of its compliance programme, MSC has in place agencies and reports on its findings to various ­intern­al business partners to comply with similar standards to a globally recognised, nonprofit anti-bribery associa- a reporting mechanism which also serves to promote a stakeholders. those set out in the MSC Code of Business Conduct. tion, to expand its knowledge and expertise in this field.

60 BUSINESS ETHICS AND PROTECTION OF HUMAN RIGHTS MSC SUSTAINABILITY REPORT 2017 61 Women’s empowerment According to the International Transport Workers Federation (ITF), “women make up only an estimated 2% of the world’s maritime workforce”. Despite continu- ous efforts from the shipping industry and inter­national organisations, such as the IMO, to reduce gender gaps, improve working conditions at sea and promote safety awareness, being a seafarer is still considered a challenging career for a woman. In line with SDGs 1, 5 and 10, MSC strongly promotes access to employment opportunities for female candi- dates, both shipboard and ashore and encourages women’s integration into maritime activities. However, we are fully aware that increasing the female quota in our recruitment procedures and creating KPIs based merely on quantitative indicators on gender diver- MSC employee in sity do not necessarily contribute to effectively reducing Singapore’s office gender disparities and advancing women’s empowerment. We therefore strive to mainstream gender inclusive practices into our business models by providing maritime training and related vocational training to our female employees, at all levels. We also support women’s partic- BASCAP-business action to stop ipation in decision-making processes by offering equal MEDLOG employees, counterfeiting and piracy career paths in accordance with the principles of equal in Abidjan’s office MSC is part of BASCAP (Business Action to Stop opportunity, fair treatment and non-discrimination, in Counterfeiting and Piracy). BASCAP was created under line with our Code of Business Conduct. the umbrella of the International Chamber of Commerce To improve current practices on women’s empowerment (ICC) to raise awareness of the economic and social harm we encourage continuous dialogue with our employ­ generated by counterfeiting and piracy activities and their ees, and in particular with our female employees, to environments, appropriate facilities, strong management potential risks to the health and safety of consumers. better understand their concerns and improve their We therefore strive support and relevant policies in order for women to feel Members of BASCAP advocate for the adoption, working conditions. In this respect, in 2017 we carried to mainstream adequately supported and encouraged, especially when enforcement and protection of brand holders’ intel- out a human rights assessment in collaboration with the returning to work after maternity. In this respect, as an lectual property (IP) rights before local, national and Global Human Resources Department and local Human gender inclusive illustration, our local office in the Dominican Republic international authorities. BASCAP has also been dealing Resources Officers based in MSC agencies. Based on practices into our opened a dedicated breastfeeding room, in line with with cross-cutting issues, including the links between the the assessment’s preliminary findings we will remain World Health Organization (WHO) recommendations, production and selling of counterfeit goods and other strongly focused on: a) respecting cultural diversity as business models creating a work environment that supports new mothers criminal activities such as drug smuggling, terrorism, part of our inclusive approach to promoting communi- by providing mari- and enhances their quality of life. child labour and prostitution. ties’ involvement; b) providing training opportunities in In Gabon, we focus on promoting healthy nutrition Since 2016, MSC has engaged in constructive discus- soft and technical skills, especially for female employ- time training and practices and improving stress management. Further sions on carriers’ activities and related challenges. We ees; and c) ensuring health-related support in order to related vocational to our employees’ request, we decided to offer the also actively participate in the establishment of the best help employees increase their productivity, thus reduc- possibility to participate in sports activities with a profes- practices that are set to become the future standard for ing absenteeism rates as well as promoting women’s training to our sional trainer free of charge after working hours. We the industry, and suggest innovative approaches due to empowerment. female employees, also support local awareness-raising campaigns on our comprehensive understanding of the international MSC is committed to reducing barriers to women’s entre- women’s health, such as the annual marathon support- shipping supply chain. preneurship by also providing supportive workplace at all levels. ing women’s cancer research.

62 BUSINESS ETHICS AND PROTECTION OF HUMAN RIGHTS MSC SUSTAINABILITY REPORT 2017 63 TSP has also implemented a ticket restaurant system wives of men employees. TSP is also working towards paying 50% of the cost of every meal bought and eaten implementing a programme to support employees in the company’s canteen, thus encouraging employees with disabled family members and/or those affected to eat at the workplace. This has significantly reduced by chronic illness. cases of digestion-related diseases due to poor hygiene TSP also plans to create a nursery and offer specific practices, as well as poor food availability and food training sessions on health matters such as food conser- conservation. vation. Awards will be granted to encourage healthy Furthermore, a comprehensive 5-year action plan will be practices in the workplace. launched in 2018, with the aim of improving the health Additional initiatives to promote access to quality and well-being of women and men at work. ­education and women’s empowerment are planned for The plan includes programmes on matters related to the coming years. For instance, the Terminal will imple- health and hygiene at work. For example, it will provide ment a university scholarship programme for the children free medical assistance to employees in the case of of low-income employees every year, based on pre- diseases such as malaria and typhoid fever, as well defined criteria. Applications from young women will be as vaccination campaigns against avoidable diseases. strongly encouraged. Furthermore, to raise awareness on breast and uterine Moreover, the Terminal will continue to offer a literacy cancer, the Terminal will bear the costs of mammo- programme for its employees and an English language grams and pap tests for all women employees and the course for those who use English in their daily work.

We strive to ensure PROTECTION OF HUMAN RIGHTS BEYOND COMPLIANCE that our employees are offered MSC is committed to helping address poverty and Social actions by the Terminal of San Pedro (TSP) long-term career inequalities. For instance, we strive to ensure that our In 2017, MSC and San Pedro Port signed a 35-year conces- employees are offered long-term career prospects in sion agreement for the expansion of the San Pedro Container prospects in safe and healthy working conditions. Terminal in Côte d’Ivoire. The concession agreement was safe and healthy We are aware that social challenges, including the lack signed just weeks after MSC celebrated its 15th anniver- of quality and affordable health facilities, can have an sary of operations and investments in Côte d’Ivoire. Our working conditions. impact not only on turnover, absenteeism rates and renewed engagement will help to generate inclusive and employees’ productivity but also on employers’ efforts social growth through job creation and vocational training. to recruit and retain local employees, especially in devel- Since 2015, TSP has multiplied its efforts to improve oping countries. employees’ access to social benefits and health facilities. Our business models therefore take into consideration The Terminal now grants all its employees invalidity/ human development indicators based on official country death insurance, which will provide up to 36 months of profiles developed by international organisations and salary to the family in case of death. Furthermore, TSP human rights assessments undertaken at country levels covers 80% of the costs of the health insurance for all by our local agencies. its employees and members of their families.

64 BUSINESS ETHICS AND PROTECTION OF HUMAN RIGHTS MSC SUSTAINABILITY REPORT 2017 65 ASSISTING VULNERABLE GROUPS AND COMMUNITIES IN NEED

In addition to promoting healthy and safe working condi- efforts. In this respect, we are actively engaged in human- tions for our employees, we provide support for the most itarian emergency preparedness, response and recovery vulnerable people affected by war, famine or epidemics, actions in collaboration with public authorities and the through our core business expertise and broader charity international humanitarian community.

The immediate impact on the health of local populations is clear, with nearly 10,800 patients treated on board the ship and in land-based dental and eye clinics renovated by Mercy Ships volunteers. This included almost 2,800 surgical procedures, ranging from orthopaedic surgery to women’s health. The facilities were then passed on to local authorities, helping to improve regional healthcare infrastructure. Included in the 44 containers of medical equipment shipped by MSC were ultrasound machines © Mercy Ships and biomedical equipment for donation to four hospi- tals in Cameroon. Both Mercy Ships and MSC recognise the importance of continuity to ensure better long-term health outcomes for local populations. Capacity-building measures © Mercy Ships MSC AND MERCY SHIPS include providing courses, mentoring and observation 2017 IMPACT REPORT BENIN & CAMEROON opportunities to nearly 1,900 local healthcare profession- als. These programmes, which cover essential medical skills such as primary trauma care, pain management Our partnership with Mercy Ships and neonatal resuscitation, include training 115 local 1,200 3 10,772 Our support for Mercy Ships, a non-profit organisation healthcare professionals to train others. Our commit- Volunteer crew’s Community development Village patients treated that uses floating hospital ships to deliver free, state-of- ment to Mercy Ships and to the communities it serves lifeline projects completed with medical and dental the-art medical care and training to African communities procedures remains strong and we are aiming to enhance our desperately in need of it, goes back to 2011. By provid- partnership in the coming years. ing free transportation of medical equipment, MSC helps 44 1,871 Mercy Ships to reallocate a significant portion of its Containers shipped to Healthcare Benin and Cameroon professionals trained logistics budget to the life-saving medical procedures and training programmes it provides. In 2017, Mercy Ships served in both the Port of Cotonou, 2,792 115 Republic of Benin and the Port of Douala, Republic of Surgical procedures Healthcare professionals © Mercy Ships Cameroon. performed trained to train others

66 BUSINESS ETHICS AND PROTECTION OF HUMAN RIGHTS MSC SUSTAINABILITY REPORT 2017 67 equipment, which are used in the feeding programmes. Amid heavy rains in the weeks that followed the disas- Bicycles are supporting health workers in the follow-up ters, MSC worked with local communities in the hillside and management of malnutrition cases. Schools received town of Regent and parts of the capital Freetown. soccer balls, writing pads and colouring books. Finally, Donations of cooking oil, food such as rice, and cloth- community volunteers worked to promote good nutri- ing helped ease the suffering. tion practices and identify and support children affected by malnutrition. They also received pots for the prepara- tion of therapeutic milk and other foods, as well as farm utensils for vegetable gardens to supplement the food MSC for UNICEF field trip in reserves and increase food diversity in the community. Malawi, Mr. Vago, MSC Cruises MSC Cruises is also actively engaged in raising aware- Executive Chairman ness of UNICEF’s global mission among children and families on board through jointly organised ­advocacy campaigns and related educational programmes. In Humanitarian aid in the Caribbean region Tackling child malnutrition in Malawi 2017, more than 200,000 children aged 5 to 17 were In September 2017, a series of extremely powerful hurri- MSC Cruises and UNICEF have worked in partner- involved in these initiatives. canes caused widespread and catastrophic damage in ship since 2009. In 2013, together they established a the north-eastern Caribbean and Florida. MSC Group global project that aims to assist children affected by companies contributed significantly to a worldwide crisis and malnutrition in developing countries, includ- Empowering people and communities in Haiti effort to support the affected communities and islands ing in Ethiopia, South Sudan, Somalia and Malawi. In December 2017, the MSC Group launched a new in the Caribbean that were most impacted. The initiative encourages MSC Cruises’ guests across partnership with the Andrea Bocelli Foundation (ABF) Through its vast network, MSC engaged in a compre- the fleet to make a donation to UNICEF. Since 2013, to support some of the most disadvantaged communi- hensive effort to provide meaningful assistance to the thanks to the generous donations of guests, more than ties in Haiti. MSC Group will support ABF’s Health and Caribbean islands in need, including Puerto Rico, St. EUR 7.7 million has been raised. This has enabled us to Educational Projects in Haiti, collecting funds on board Maarten, Tortola and Dominica. MSC procured and provide 2,262,900 sachets of Ready to Use Therapeutic MSC Seaside. shipped multiple containers of vital goods, such as Food and 30,660 sachets of therapeutic milk for the treat- The MSC Group has worked closely with the ABF to water, food, building materials, personal supplies, ment of malnourished children. identify, design and implement a long-term partnership lighting, mattresses, empty containers for shelter In 2017, MSC Cruises and its passengers raised EUR that aims to improve communities’ living conditions and and medical supplies. Goods were delivered through 1,428,165 for UNICEF. This helped to treat 13,799 deliver education programmes to over 2,550 children cargo containers provided by MSC Cargo Division children with Severe Acute Malnutrition in Malawi. As Sierra Leone mudslide living in some of the most disadvantaged areas of the and through ferries provided by GNV, part of MSC’s part of the “MSC for Malawi” cooperation with UNICEF, MSC staff in Sierra Leone contributed to the relief effort country. Passenger Division. six MSC Cargo Division containers carrying 22,941 items following the tragic flooding and mudslides in August MSC is also supporting the ABF’s Mobile Clinic project, With all the schools in the British Virgin Islands destroyed of essential goods were dispatched from Italy to Malawi. 2017, working in collaboration with local stakeholders. which focuses on free health care assistance and in the hurricane, MSC also purchased and shipped from This was a contribution to the ongoing relief efforts The United Nations International Organization for prevention programmes that benefit over 8,000 people the US a large semi-permanent structure to be used as supported by the international communities, internation- Migration (IOM) estimated that 500 people died due to per year living in the five poorest and most remote a school in the region. Along with other players in the al development actors and United Nations Specialized the events of 14 August, with several thousand others areas of Haiti. The medical staff provide a wide range cruise industry, MSC worked to support local govern- Agencies, including UNICEF. affected in some way. Other reports put the death toll of services,­ including medical care, vaccination for ments in their efforts to improve the living conditions of The Items were distributed at the Chikwawa District as high as 1,000. Efforts by governments and human- children aged 3 to 7, nutrition surveillance and monitor- the affected communities and rebuild basic infrastruc- Hospital and to schools and care groups in Gonda Village. itarian organisations, as well as businesses, helped to ing, screening tests for common illnesses and health tures that were impacted by the hurricane. The hospital received mattresses and children’s play accelerate the recovery. conditions, health education and family consultations.

68 BUSINESS ETHICS AND PROTECTION OF HUMAN RIGHTS MSC SUSTAINABILITY REPORT 2017 69 Terminal of Navegantes, Brazil

ABOUT THIS REPORT

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