This report was written and produced by Forum for the Future authors: The Sustainable Shipping Initiative (SSI) Forum for the Future on behalf of the Sam Kimmins, Rupert Fausset, brings together leading companies from Sustainable Shipping Initiative leaders group. Stephanie Draper. The authors would like to thank the SSI Forum for the Future support: across the industry and around the Steering Group members for their leadership, Louise Armstrong, James Goodman, Joy Green, world with two leading NGOs, Forum ideas, input and support in making this Martin Martinoff, David Mason, Laura Murphy, project happen. For more information on Chris Sedgwick, Ulrike Stein, Sion Williams. for the Future and WWF, to plan how the SSI member organisations please visit: www.forumforthefuture.org/projects/ Special thanks to Polly Simpson for her shipping can contribute to – and thrive sustainable-shipping-initiative/members help with our research and interviews. in – a sustainable future. Thanks to all those who contributed to project Registered office: interviews for their helpful ideas and feedback: Overseas House Forum for the Future is a non-profit organisation working globally Ian Adams, IBIA; David Balston, The Chamber 19–23 Ironmonger Row with business and government to create a sustainable future. of Shipping; Natalie Bruckner-Menchelli, London, EC1V 3QN We aim to transform the critical systems that we all depend on, such SustainableShipping.com; Rob Day, BP; United Kingdom as food, energy and finance, to make them fit for the challenges of Angie Farrag, BSR Paris; Alistair Fischbacher, the 21st century. We have 15 years’ experience inspiring new thinking, Rio Tinto; Diane Gilpin, B9 Shipping; Alf Henrik Registered charity number: 1040519 building creative partnerships and developing practical innovations Gistren, Fibria; The Rt Hon. John Gummer, Company limited by guarantee: 2959712 to change our world. Lord Deben, Sancroft International; Peter Hinchliffe, International Chamber of Shipping; Date of publication: www.forumforthefuture.org Mr Tatsuaki Hori, Oshima Shipbuilding Co Ltd; May 2011 Helén Jansson, Royal Sun Alliance; Kristian Jebsen, Gearbulk; Paola Lancellotti, EMEC Contacts: The European Marine Equipment Council; [email protected] David Menachof, Hull University Business [email protected] School; Warwick Norman, RightShip; Katharine Twitter: @sustshipping Palmer, BP; Jonathon Porritt, Forum for the Future; Del Redvers, BMT; Tristan Scott, Design by: University College London; Godfrey Souter, www.thomasmatthews.com UK Department of Transport; Jacob Sterling, Maersk Line; Per Tunell, Wallenius Marine AB; Richard Turner, Royal Sun Alliance; Simon Walmsley, WWF; Martin Watson, Watson Farley and Williams; Steve Waygood, Aviva Investors; Paul Wrobel, University College London; Makoto Yamaguchi, Mitsui OSK Line. Find out more: For more information www.forumforthefuture.org/ on the report or the projects/sustainable- Initiative please contact us: shipping-initiative [email protected] Contents • 1. Executive Summary • 2. Introduction • 3. Global Trends • 4. Key Challenges • 5. Driving Change • 6. Conclusions contents 1. executive summary p4 2. introduction p12 3. the changing context – global trends p17 The global economy: emerging giants? p18 Freedom vs level playing field: ocean governance p20 No secrets: demand for transparency p22 Moving on from oil: the future of energy p25 Demanding higher standards: sustainability regulation p29 Advancing technology: making it pay p31 Adapting to a changing climate p34 4. three key challenges p36 Navigating a changing economic context p37 Increased scrutiny, higher expectations p38 The future of energy and climate change p39 5. driving change – a call to industry leaders p40 6. conclusions p44 © Jeff Nagy / istock executive summary © Nikontiger / istock the case for action This Case for Action paper looks ahead to 2040. The Case for Action sets the agenda for the It is based on interviews with experts across second phase of the SSI, which will produce the maritime sector, from business, legislative a vision for an industry in 2040 that is resilient, and regulatory bodies and academia as well socially and environmentally responsible, and The Sustainable Shipping Initiative (SSI) brings together leading as the experience of our 14 members. It does profitable. In the third phase, members will companies from across the industry and around the world with not attempt to predict the future but is intended develop an action plan to future-proof the two leading NGOs, Forum for the Future and WWF, to plan how to raise awareness of how the whole environment shipping industry, and guide a series of specific, shipping can contribute to – and thrive in – a sustainable future. in which the industry operates could change. practical innovation projects. This will set out Our intention is also to start a debate on how what key players need to do to achieve this Our goal is to transform the global shipping industry and the to respond. vision. It may include technical and engineering wider maritime sector, establishing a new, sustainable approach initiatives, regulatory and policy proposals, and as the norm. We want to help industry leaders to look beyond We identify the global trends – such as new new models of finance and business. their immediate concerns by understanding the long-term patterns of trade, shifting global powers, rising challenges and opportunities that face them. We hope our initiative fuel costs and changing customer demands – that will energise and inspire members and non-members alike. will profoundly affect the maritime sector over the next 30 years. We examine how they interact to The world faces great challenges: recent decades have seen a present three key challenges for the industry, Globalisation, climate change, and escalating huge growth in economic activity coupled with a massive rise and the risks and opportunities that these present. energy costs are a strategic nightmare for in population. These developments have put the Earth’s finite Finally, we explore how change happens in the shipping companies and they all have one resources under increasing strain. The UK Government’s Chief shipping industry, and the role of industry leaders thing in common – fossil fuels. Scientist, John Beddington, has warned of a ‘perfect storm’ of in driving future change. Throughout the Case for Martin Stopford, Clarksons climate change, insufficient energy resources, food shortages Action, we pose questions designed to stimulate and scarce water, causing major upheavals to the global economy thought and discussion on what action businesses within the next 30 years.1 might take on their own and across the industry. This analysis is a call to action for the worldwide shipping industry. We believe that, with far-sighted leadership, businesses can The Case Vision Future Wider weather the storm and emerge stronger and more sustainable. for Action 2040 Innovation Action And we believe that the industry has a vital role to play in helping create a sustainable, low-carbon economy. 2011 2012 2013 Contents • 1. Executive Summary • 2. Introduction • 3. Global Trends • 4. Key Challenges • 5. Driving Change • 6. Conclusions Page 4 three key challenges It is clear that the shipping industry’s operating context will alter significantly over the next 30 years. Cargoes and markets are changing, and there are new challenges in global ocean governance. Fuel costs are rising, although technological advances offer the potential for radical improvements in efficiency. And commercial customers, particularly the global brands, are incorporating sustainability into their core business and coming under increased pressure to address sustainability concerns throughout their supply chains. The changing context in which shipping must Navigating a changing operate is summarised in seven global trends economic context that we believe will profoundly affect the industry over the next 30 years (see diagram). Each of these will have direct impacts, but at least as important will be how they combine and interact to create significant, game-changing challenges. Increased scrutiny, higher expectations The future of energy and climate change Contents • 1. Executive Summary • 2. Introduction • 3. Global Trends • 4. Key Challenges • 5. Driving Change • 6. Conclusions Page 5 global trends The global economy: emerging giants? Moving on from oil: the future of energy Developing nations are growing in influence and economic activity. The massive expansion in global trade of the past 20 years has been New demands will alter patterns of trade, changing which goods powered by easily available fossil fuels. Major oil institutions are are transported and where. Most people assume that the global now cautioning that the age of easy oil is over, predicting higher and economy and global trade will continue to grow. However, there more volatile pricing and a peak in oil production.2 This, combined are several reasons why trade might decline: the growth of ‘closed- with concerns over energy security and climate change, may drive loop economies’ where resources are reused; greater virtualisation major changes in fuel types and efficiency. Will shipping respond of trade based on information technology (eg sales of CDs being to this threat with a planned transition, a last-minute scramble, or displaced by downloads); and a critical resource crunch such as a disorderly decline? ‘peak oil’ leading to instability, protectionism and