In at least three global measures of shipping companies’ environmental, social and corporate governance (ESG) performance, there is one outfit that stands out.

The top shipping company in Refinitiv’s environmental, social and governance ratings? Japan’s NYK Line.

One of just two companies in the industry to receive an A grade from the Carbon Disclosure Project? NYK, alongside compatriot rival K Line.

One of just two shipping outfits to have their decarbonisation goal validated by the Science Based Targets initiative? You guessed it, NYK again with K Line.

The high scores for NYK come as the Tokyo-based shipping giant is continuing to transform its ESG management efforts by rolling out new targets that it will link to executive compensation.

NYK threw down the ESG gauntlet in 2018, when the company set out to integrate ESG principles with its management strategies. Then in April, it created an ESG management committee led by company president Hitoshi Nagasawa that reports directly to the shipping giant’s board of directors.

Executive officer Yuko Tsutsui said the company is making good progress in rolling out new key performance indicators (KPIs), with the new committee in the process of finalising targets.

By fiscal year 2022, she told TradeWinds that the company expects those KPIs to be reflected in executive compensation.

With Nagasawa both at the helm of the new committee and in direct control of the ESG management promotion group that Tsutsui leads, “ESG related topics and progress of the action plans can be shared directly and quickly with the president”, she told TradeWinds.

Yuko Tsutsui: Executive officer at NYK Line Photo: NYK Line

Putting ESG at the centre of high-level decision-making is part of what NYK describes as its goal of becoming a “sustainable solutions provider”.

Tsutsui explained that the term is meant to describe a company that creates value by solving social issues through its business “by achieving both existing ‘economic efficiency yardsticks’ aiming to maximise profits and ‘ESG yardsticks’ aiming to realise a sustainable society and environment”.

For shipping, environmental matters have taken much of the spotlight in ESG as the industry grapples with its carbon footprint.

But for NYK, the ‘S’ and ‘G’ are interwoven with the ‘E’. As the shipowner seeks to pursue advanced technical solutions to achieve environmental goals, that effort relies on people — the ‘S’ for social.

“It is clear that the efforts to recruit excellent human resources and fully demonstrate their abilities and improve employee engagement are essential for promoting ‘E‘ activities,” Tsutsui said. “‘G’ is essential to be trusted by society.”