By Nikos Avlonas, President of Center for Sustainability and Excelence |
Visiting Professor Sustainability Athens University of Economics and Business
The shipping industry is currently at a turning point. For decades, access to financing was based primarily on traditional criteria, such as fleet value, commercial strategy, and charter rates. Today, however, a new framework is emerging, in which ESG increasingly shapes the decisions of banks and investors, as well as those of charterers.
This shift is directly linked to shipping’s role in the global economy. The sector is responsible for approximately 3% of global greenhouse gas emissions, while it transports nearly 90% of global trade. This dual role, as a key driver of growth and as a factor with environmental impact, has brought shipping, along with other sectors, into the spotlight of regulatory authorities and financial institutions.
In practice, ESG is evolving into a key tool for risk assessment. Banks and investors now seek a clear picture of how a shipping company manages its environmental performance, its workforce, and its governance. This analysis directly affects borrowing costs, access to capital, and overall confidence in the company.
Despite the rapid pace of change, many shipping executives hold views that do not take all the above into account, thereby creating risks for their companies. ESG is often treated as a public relations exercise or a voluntary initiative, while in many cases, there is a lack of awareness regarding its importance.
Similarly, the exclusive focus on greenhouse gas emissions paints an incomplete picture. Issues related to seafarer safety and training, as well as corporate governance, equally shape the level of risk regarding ESG criteria.
The safety and continuous training of crews, along with a certified annual ESG Report, adhering to specific standards (e.g., GRI, SASB), are now key evaluation criteria for investors and partners. It is also a fact that a survey conducted by the Center for Sustainability (CSE) found that most major shipping companies (>70%), in addition to having a certified ESG Report based on specific standards, also have a strategy for decarbonization and ESG.
Equally important is the shift from simple ESG reporting toward strategic implementation across all operations and suppliers. Accordingly, an ESG report only gains value when it is accompanied by concrete results and progress and is certified by an independent firm using appropriate standards (AA1000).
Perhaps the most significant change concerns the very way banks operate. ESG has already been integrated into the financing assessment systems of all European banks.
In Greece, for example, companies applying for financing exceeding €10 million are now assessed based on more than 120 ESG criteria and classified into risk tiers regarding their financing. Similar practices are being implemented across Europe, underscoring the importance of compliance and strategic adaptation, while in Asia, some major banks have also begun to adopt such practices.
Companies that systematically invest in ESG practices enhance their access to capital, reduce their financial risk, and improve their market position.
At the same time, they gain a significant competitive advantage. Charterers, partners, and investors are increasingly choosing companies that have a clear ESG strategy and transparency in their operations.
Greek shipping possesses all the characteristics to lead this transition. The industry’s expertise, international presence, and flexibility create the conditions for the meaningful integration of ESG at a strategic level.
In this new landscape, medium and small shipping companies, beyond the large ones, that act immediately and strategically, going beyond the creation of a simple ESG report, will find themselves in a position of strength. The rest will need to quickly make up for lost ground with increasing risk in a rapidly evolving environment.
ESG is now shaping the new financing framework in shipping.
