Sustainability

In 2020, Eimskip collaborated with the consulting company Circular Solutions (now a part of KPMG) on a risk assessment of the Company’s ESG and established a three-year action plan.  Based on this plan, the Company has focused on issues related to climate change, business ethics, health and safety, procurement, and diversity. Teams within the Company have responsibility for different topics according to the risk assessment. Eimskip continues to work according to that plan throughout 2023. The Company has already started reevaluating the ESG risk assessment.

Most of the projects according to the risk materiality assessment are linked to several UN Sustainability Development Goals. The focus in 2022 has been on Climate Action (goal 13); Good health and Well-Being (goal 3); Responsible Consumption and Production (goal 8 and 12); and Peace, Justice, and Strong Institution (goal 16) and gender equality and diversity (goal 5). The progress of the SDG goals is discussed in the chapter Governance.

OVERVIEW OF EIMSKIPS PROGRESS 2022
Teams have been established to work on the company's ESG strategy in accordance with the Eimskip ESG governance model. The teams have undertaken a range of challenges, some examples of which are shown below.

The changes associated with global warming and pollution of the ocean leave all the critical components of modern economy utterly exposed, in addition to threatening the quality of life for future generations.

The Company respects the environment and recognizes the effects of climate change on society, its business activities, and the need for a low-carbon economy. It is critical to reducing the environmental impact of the Company's operations. The Company considers climate change one of the main ESG risks in the business. The Company seeks to support the customers in their climate goals.

The focus is on achieving complete clarity regarding emissions and waste from each emitting source of Eimskip’s supply chain. Development in data and analytics gives Eimskip a better overview of its ecological footprint and reduction opportunities. The Company uses an electronic Environmental Management System linked to all significant assets in the supply chain, streaming reliable and transparent information on its environmental matters. Digitization of emission and waste-registration data from the supply chain enables continuous measurements and provides transparent and dependable communication.

In November 2015, Eimskip signed the Reykjavík Declaration on Climate Issues to support global and local environmental initiatives, the declaration is in the spirit of the Paris Agreement. The agreement includes reducing greenhouse gas emissions, reducing waste, monitoring the measured results, and regularly publicizing the information. Eimskip also participates in the “Green initiative” in the Faroe Islands, a project cooperating with local companies and institutions that aim to advance sustainable business.

Eimskip publishes quarterly environmental statements. The report and possible risk factors are presented and discussed each quarter with the Executive Management Team and reported at the same time as quarterly financial statements. This reporting is essential in managing and monitoring the Company’s CO2 emissions.

A new product was developed regarding transporting fresh fish with our product “Fresh by Sea”, but the Company offers customers a robust and reliable solution for transporting fresh products with lower emissions than cargo with airfreight. Eimskip has also continued to develop a carbon calculator for larger customers as an addition to the carbon calculator which is accessible on the Company’s website.

CLIMATE CHANGE
The Company is fully aware of the environmental impact of its business activities and the need for a low-carbon economy. Minimizing the ecological load from operations by achieving complete clarity regarding emissions and waste from each emitting source in the supply chain. The urgency to work on goals towards lower greenhouse gas (GHG) emissions is essential in the battle of limiting global warming before it goes over 1,5°C.

Carbon Footprint per transported ton
Eimskip’s official KPI was set in 2015. It measures the development of reducing GHG emissions of transported tons by 40% before 2030. It represents all scope 1 emissions of all vessels in Iceland, Norway, the Faroe Islands, and trucks/equipment in Iceland per ton of the transported unit. The KPI is adjusted to the vessel-sharing agreement with Royal Arctic Line (RAL) due to regulations regarding transportation to and from Greenland.

The calculation of the Company’s carbon footprint KPI is presented in the graph below. It shows accumulated carbon intensity per ton of transported units, compared to the base year 2015, and the path needed to reach the goal before 2030. The KPI shows a 23% decrease compared to the base year 2015.

The positive development in Eimskip’s Sustainability KPI, GHG emission per transported ton from 2015, is due to less oil consumption in the container liner system, increased volume, larger and more modern vessels, and overall higher utilization of the sailing system.

Greenhouse Gas Emissions
Eimskip has a good overview of the operation’s GHG emissions. The Company has an environmental management system and gathers its data digitally. The data covers the vessel fleet’s energy and waste management, trucking fleet, terminal assets, warehouses, and office facilities.

In the environmental statement for 2022, the Company has registered scope 1&2 for all vessels and offices in Iceland. Eimskip’s total emissions were 303.197 tCO2e in 2022. Scope 1 is 301.250 tCO2e, where the vessel fleet is responsible for most of the emissions.

Eimskip has been extending the scope of data by involving all international offices in the environmental report. In 2022 17 of 20 countries are providing data. Now all countries except three are sharing environmental data for scope 1&2. It is expected that the remaining countries will start to contribute information in Q1 2023. Additional data from the global offices influence scope 2 but scope 2 for 2022 is 1,567 tCO2 compared to 702 tCO2e in 2021.

Scope 3 is partly mapped but the focus in 2022 was on finalizing the mapping of scope 1 and scope 2 emissions. In scope 3 the Company has gathered information about waste in Iceland and business flights. Scope 3 is registered 379 tCO2e in 2022. More steps will be taken to map scope 3 in 2023.

New fuel source, infrastructure, and supply
The main part of the energy that Eimskip uses comes from fossil fuel. The vessels are responsible for most of the fossil fuel use.

An energy transition is required to achieve Eimskip’s CO2 reduction objective. The future will lead to green fuel, and there are several options. Green methanol, green ammonia, and green hydrogen are future energy sources of ocean and land transport. But before large steps need to be taken, the supply of the energy and the infrastructure must be in place. It is also of importance that the pricing of the new energy is transparent so that it will be possible to calculate all green investments based on operational requirements.

Eimskip is evaluating its steps regarding energy change. The Company has signed LOI with Landsvirkjun, The National Power Company of Iceland, concerning Eimskip’s energy transition for its shipping- and ground transport fleet. The companies will jointly analyze market conditions and technology development regarding using hydrogen or e-fuel instead of fossil fuels in transportation, resulting in significantly reduced greenhouse gas emissions. Based on these analyses, the companies will discuss potential future procurement and sales of hydrogen or e-fuel produced by Landsvirkjun or its partners. Eimskip also announced this year that it has started to analyze and evaluate its options in renewing the container vessel fleet, focusing on the next generation of vessels using alternative greener fuel.

Development has taken place in electric trucks and Eimskip has invested in two 18-pallet trucks intended for distribution in the capital area in Reykjavík. The Company had previously invested in trucks powered by green energy, including methane and electric vehicles. The Company faces the same challenges as in the energy change for vessels, especially regarding the infrastructure of the energy supply.

Legislation
Regulation affects the Company’s progress. In 2021, the European Commission unveiled the Fit for 55 Package, focusing on more ambitious climate change targets. The EU ETS (Emission Trading System) for vessels is one of the legislative packages the EU has proposed to help achieve that objective. By establishing a carbon market where businesses may purchase and sell emissions allowances depending on GHG output, ETS seeks to minimize GHG emissions. IMO (International Maritime Organization) is a global agency of the United Nations that has taken several steps to support the reduction of GHG emissions. IMO has mandated using the EEXI (Energy Efficiency Existing Ship Index) and EEDI (Energy Efficiency standards for new ships), and SEEMP, which requires ships to have an energy efficiency plan in place. Carbon Intensity Indicator (CII) is intended to complete other measures and will have an impact from 2023. This regulation will affect will most likely be mandatory before 2024. The CII provides a way to assess individual ships’ carbon efficiency and identify improvement opportunities.

Carbon projects
Running Tide is an innovative company working to decrease carbon footprint by growing macroalgae in the ocean, but the ocean’s biological carbon pump plays a significant role in the global carbon cycle. Running Tide and Eimskip cooperate, whereas Running Tide utilizes Eimskip land at Grundartangi in return for carbon credits. Eimskips employees have also assisted by putting measuring devices into the ocean so it is possible to measure ocean currents. Running Tide will then use the information to decide where to release its macroalgae in the sea

Several carbon offset projects were conducted in 2022 e.g., all vessel transport of personal effects, all business flights, and the printing of Eimskip’s calendar.

CIRCULAR ECONOMY
For many years, Eimskip has sorted and recycled most of the waste produced by its operations. In recent years, the focus has been on recycling as much as possible, and the procedures are continuously revisited.

On board vessels, Eimskip works on waste management according to MARPOL. All vessels have a garbage management plan and a garbage record book. To further improve monitoring, recycling, and reporting, Eimskip has digitized the garbage log and started streaming the data to the environmental data warehouse in 2016. Through this, waste has become a part of the supply chain footprint calculation and analytics.

Land operation waste management is continuously improving, and in 2022, the particular focus was on identifying the source of waste with the goal of reducing it.

There is a strong culture of reusing material and preventing waste within the Company, and material is reused as much as possible. An example of a project that focuses on reuse dunnage bags. Dunnage bags are used to stabilize cargo and are reused. Another example is the handling of old pallets in the system. When they cannot be used anymore for transport, the wood has been given a new life as a spare part for other pallets. In inland transport, reusable boxes are used to transport goods within Iceland, which decreases the demand for plastic in the operation as well as minimizes the risk of damage of the cargo.

In Vöruhotelid, the Eimskip warehouse in Reykjavik uses film to secure cargo on pallets. In 2022 thinner plastic films were put into use, and it is expected that the use of plastic film will go down by 38%. The warehouse expects the carbon footprint to be reduced by 6,6 tCO2e annually.

As a part of Eimskip goal to be an active partner in the circular economy, all film is sent to the innovation Company Pure North which is developing new solutions for recycling plastic. In 2022 about 32 ton of film were sent to Pure North from all land operation in Iceland and Eimskip reduced the emission of those 32 tons by 82%.

Only waste from Iceland is registered in the environmental system. In 2022 total waste generated in Iceland was 144.000 less than in 2021. The rate of recycled waste has gone from 30% in 2021 to 73% in 2022, mainly because the oil sludge was wrongly categorized as disposal instead recycled until 2022. The percentage of sorted waste was 78% in 2022 compared to 75% in 2020.

At the office, the most waste is due to the use of paper. All around the world, employees have worked on projects to support “Eimskip Paperless Journey”. Several projects were conducted with a digital solution, and in other cases, employees changed their way of working to reduce printing.

ECOSYSTEMS AND BIODIVERSITY
Eimskip operation mostly impacts the ocean and land. Special effort have been on actions regarding climate change but the Company also evaluates other possible environmental impact including the effect of pollution on biodiversity and ecosystems. In the operation there is a risk of affecting the nature but as a part of the operation the risk is monitored and evaluated constantly.

Air quality
Eimskip implemented an electric shore power connection system for container vessels in Sundahöfn in Reykjavík. Eimskip is now able to operate its largest vessels on electricity instead of oil-powered auxiliary engines during its port time in Sundahöfn. The benefit is a reduction in emissions and improved air quality and acoustics in the area. At the same time, the shore power connection reduces oil consumption by up to 240 tons per year, which equals 750 tCO2 emissions.

Two electric trucks that will improve air quality have also been ordered by the Company. Forklifts at warehouses are typically powered by electricity, such as all of them in Iceland. Yet, in various parts of the world, such as the United States, forklifts use different types of gasoline. Early in 2023, new electric forklifts that the Company has invested in will be delivered to the warehouse in the States. The air quality will benefit from this investment.

Eimskip operates mobile harbor cranes connected directly to electrical power at three of the Company’s terminals in Iceland: Reykjavík, Grundartangi, and Reydarfjördur on the east coast. Some of the cranes were initially designed to run on diesel but have been retrofitted. The new crane, Alda, arrived to Reykjavík terminal in 2022, runs on electricity and is an excellent example of green investment within the Company. The positive effect is also on CO2 emission but Eimskip reduces carbon dioxide (CO2) by 340 metric tons per year by operating cranes with electricity. This amounts to what a 17-hectare forest can bind on an annual basis. In addition, noise and dust pollution is reduced at the terminals.

Eimskip has met the regulation regarding the obligation of having sulfur (SOx) content lower than 0.5% in international waters. Eimskip has met those new regulations by installing scrubbers on Bruarfoss, Dettifoss, and Lagarfoss and by using sulfur limit fuel on the rest of the fleet. To meet the NOx requirements the Company has installed a UREA catalysator on Holmfoss that will reduce the NOx emission by 80%.

Improved energy efficiency
Eimskip is continuously working on improving energy efficiency in the overall system. Energy efficiency is an integrated part of operating the vessel fleet, and the Company constantly seeks opportunities to find a solution to increase the efficiency in energy consumption. Eimskip operates about 157 trucks in Iceland and Europe. Most of them are connected to a monitoring system for improved energy efficiency. Most of the Company’s premises and storage facilities use electricity for lighting and the operation of refrigeration systems in warehouses and electrical loading stations. Harbor lighting also consumes electricity. The new terminal in Sundahöfn is equipped with LED lighting, far more efficient than conventional lighting systems. In Iceland the energy is 100% green.

Pollution
In the operation there is a risk of spills, but it is part of the Company’s migration plan to decrease the risk as much as possible. In 2022 the Company introduced an “organic spill kit” solution for land operation but the kits contain 100% natural fiber without any additives and are completely biodegradable. These spill kits are to be used to prevent spillage from having an impact when they occur and thereby protect the ecosystem. No large spills were reported in 2022.

The Company seeks to reduce the risk of container loss by preventative measures. The crews are trained to handle the securement of the container. Bad weather is one of the biggest risk factors for container loss, but in 2022, despite extremely harsh weather throughout the year, no container was lost at sea.

Eimskip supports a project with Fisheries Iceland to clean up and recycle orphaned fishing gear. Fishing gear is recycled, and products are used by the automotive, furniture, and high fashion industries.

Water management
Water management involves planning, distribution, development, and management of water resources, including surface water, groundwater, and wastewater. Eimskip focuses on the risk on the impact on waste water due to ballast equipment but one part of water management is to minimize the impact of ballast water discharge on local ecosystems. For ocean safety, Eimskip vessels have ballast equipment where seawater is pumped in for stability reasons. Sea from the geographic area where the sea is pumped in is cleared of unwanted wildlife and plants on order to protect the wildlife in another geographic area.

According to Eimskip’s ESG statement for the year 2022 the water usage was 397.788 most of it comes from land operation.

Eimskip recognizes its responsibility to work in partnership with the communities it operates in. This partnership connects all stakeholders, employees, customers, shareholders, and society with the Company’s values of achievement, cooperation, and always trust in mind. These values serve as guiding principles for The Company’s actions and decisions and shape the Company’s culture and actions, both internally and externally. Eimskip has a clear Human Rights Policy declaring that everyone shall enjoy equal rights in all respects. The policy is accessible on the Company’s website.

EMPLOYEES
The Company employs around 1.700 people across four continents and 20 countries. Eimskip´s employee group consists of diverse individuals with different backgrounds and experiences. These employees bring a wide range of talents, ideas, and views to the table, which inspires creativity and innovation within the Company, and together they create a dynamic work culture characterized by collaboration, communication, and ambition.

The Company continuously looks for new ways to build a positive, inclusive work environment. Employee satisfaction is one of Eimskip’s most important KPIs, and the employee engagement survey provides valuable feedback about employee experiences and perceptions. The Company measures employee satisfaction with the Workday tool, Peakon Employee Voice. One survey was conducted in June 2022, yielding an employee satisfaction score of 7.9, an employee loyalty score of 7.4, and an employee engagement score of 7.7. In every case, Eimskip outperforms the tool's industry benchmark, which provides a focused comparison with similar organizations.

Eimskip actively seeks to ensure that women have a voice at all levels in the Company to ensure dynamic conversations and ensure broad perspectives. A powerful tool in driving diversity and gender equality in Eimskip’s Executive Management team is its Succession Planning process.

Women are 30% of all employees in general and 29% of management. Since 2020, the number of women on the Executive Board has advanced from 14% to 22%. The diversity of job type within the Company is good e.g., 41% of employees work in the office, 16% in warehouses, 10% in the harbor area and around 8% on the vessels. The Company is extremely proud of having employees of 44 different nationalities. Therefore, high importance is on inclusivity among the employees. The Company will continue to emphasize diversity and inclusion in the year 2023.

Employee learning is essential for improving performance and fostering a culture of innovation and growth. Eimskip believes that investing in employee development encourages individual growth and contributes to the Company’s long-term success. The Company is committed to providing employees with opportunities for learning and development and offers a variety of on-site and online training programs and workshops throughout the year. Furthermore, employees are supported in continuing their education and learning by attending outside seminars or degree programs and obtaining professional certifications.

Eimskip strives to promote general wellbeing and good mental, physical and social health. Increased wellbeing leads to improved quality of life and happier employees. The Company encourages employees to use public transportation to reduce GHG emission and supports green transportation.

Employee turnover was 21% in 2021 and is 20% in 2022 with the highest turnover among crew members and warehouse employees. Eimskip has a goal of increasing employee retention and is working on various projects towards that goal e.g., employee wellbeing.

Diversity and variety within the workforce is essential. It is equally important to focus on inclusion so that every employee feels a sense of belonging. Eimskip actively seeks to ensure that women have a voice at all levels in the Company to ensure dynamic conversations and broad perspectives. Women are 30% of all employees in general, 30% of Senior Management and 29% of the Executive Board and the Company has a goal of increasing the ratio of women. Eimskip is very proud to have employees of 44 different nationalities, it enriches the Company Culture. In 2022 focus was put on diversity and inclusion with several programs to support a strong culture of diversity and inclusion.

GOVERNANCE
Eimskip strives to ensure an open and transparent relationship between the Company´s management, its Board of Directors, its shareholders, and other stakeholders.

BUSINESS ETHICS
Eimskip’s Code of Conduct supports the Company’s mission and vision. The Code of Conduct provides guidelines for employees on their daily activities. The emphasis is on an honest, responsible, and ethical way of working. Each member of Team Eimskip plays an important role in maintaining the Company’s trust and safeguarding the Company´s reputation.

A valuable part of Eimskip’s Code of Conduct is to fight against corruption and bribery. The Company’s management and its employees strive to always comply with applicable laws and regulations, With rules and general standards of business ethics and corporate governance the Company avoids conflict of interests and maintains confidentiality. The Company’s internal control and risk management are intended to spot abnormalities, including the risk of corruption and bribery. The Code of Conduct was sent to employees with the aim of introducing the Code of Conduct more formally and seeking confirmation from employees that they read and understood it. The process is ongoing but 50% of employees have signed the Code of Conduct in 2022. The Anti-Money Laundering & Sanction Policy prohibits anyone employed by Eimskip from participating in money laundering, terrorist financing, and sanction breaches and supports anti-corruption procedures further.

Speak up culture is in place within the Company. Employees have various ways to report if they need. The most common way is to report to their next manager or a trusted colleague. Eimskip has also in place a global Whistleblower procedure for handling reports of alleged misconduct concerning the Company’s operations and the protection of whistleblowers. 

Global training was conducted in 2022 with employees that have direct contact with customers and suppliers. The focus was on Governance issues and policies e.g., anti-corruption and competition laws. The Company has good and strong values and will continue to build up an even stronger compliance Culture, with solid policies, training, and communication.

SUPPLIER CODE OF CONDUCT
A good partnership with suppliers is beneficial and risk management of the supply chain is important. The Company published a Supplier Code of Conduct and Procurement Policy in 2021. In 2022 the Supplier Code of Conduct was introduced to vendors and top Icelandic Suppliers with 80% turnover have signed the Supplier Code of Conduct. Furthermore, a suppliers assessment tool based on ESG has been implemented and this tool can be used at a global level. A questionnaire has been sent to the largest supplier of Eimskip Iceland. The project will continue in the year 2023 to assess suppliers across the Company globally.

DATA PRIVACY
Eimskip is committed to processing the personal data of customers, employees, business partners, and other stakeholders in a lawful, fair, and secure way. Eimskip strives to comply with applicable data protection laws, and all personal data used in the business operation must be handled following global privacy and internal policies. The first group of suppliers who process data on Eimskip’s behalf has been sent a self-assessment. This journey will be continued in 2023.

DISCLOSURE AND EXTERNAL ASSURANCE
Eimskip’s ESG statement is published on www.eimskip.com. It is based on the Nasdaq ESG Reporting Guide, focusing on 30 environmental, social, and governance performance indicators. The statement is confirmed each year by Klappir Green Solution hf. Furthermore, the emission from the vessels is confirmed yearly by Verifavia.

SUMMARY OF PROGRESS OF SDG TARGETS
As a part of Eimskip ESG sustainability risk assessment, the Company has identified the SDG goals (UN sustainability goals) that align with the value and the goal of the Company. The Company has prioritized the SDG goals where it can have environmental or social impact. The contribution in 2022 is displayed and evaluated each year and targets are reset.