ESG IN SHIPPING

WMC Capital believes that ESG considerations should be an essential part of any investment process. Currently in Shipping, the changing regulatory environment creates an opportunity to invest for positive change.

Environment

- Shipping is the most efficient and least polluting means of transporting goods; but given 85-90% of global goods are shipped it accounts for 2.5% of GHG emissions.

- The IMO is introducing new regulations to reduce GHG emissions:

IMO 2030: reduce CO2 intensity by > 40% by 2030 versus 2008
IMO 2050: reduce GHG emissions by > 50% by 2050 versus 2008
2023: mandatory EEXI & carbon intensity regulations for all vessels

- These regulations will increase barriers to entry and accelerate scrapping of older, more polluting vessels

- Unclear which new means of propulsion will become mainstream, hindering new investment (e.g. LNG, Ammonia, Hydrogen, Methanol).

Social

- The health and safety of seafarers is paramount for successful operations.

- Shipping is a global industry, and it is essential the companies operate in a way that is beneficial to communities across the world.

Governance

- Shipping has suffered from poor corporate governance in the past but this is improving: well managed companies outperform poorly managed ones with the latter often seeing significant equity dilution and corporate kleptocracy.