Environment, social and governance (ESG) issues are an increasingly complex and demanding requirement for shipping companies.
The same is true for the advisors and consultancies aiming to help guide them through myriad reporting requirements.
Oslo-based ESG advisor to more than 50 global shipping companies, The Governance Group, recognised a need to widen its knowledge base, employ more digital technology and scale up in response.
So when Nordic-region private equity firm Norvestor made an offer to invest in building a merged group alongside Danish ESG advisor Velocity Consulting and sustainability software platform Position Green, it took the opportunity.
Joachim Nahem, founding partner of The Governance Group who will become chief executive of the merged Position Green Group, told TradeWinds clients are increasingly looking for a one-stop source of sustainability expertise to avoid fragmentation and confusion.
“We realised that although we have been commercially successful and gained the trust of a lot of companies it was not entirely sustainable for us to continue without having some type of consolidation, or having more people or expertise in-house,” he said.
Nahem concedes his background from the United Nations working on its Sustainable Development Goals, and that of co-founding partners Kristian Andersen from the Norwegian banking sector and Maria Gjolberg from DNV did not give them the expertise for mergers and acquisitions or developing software.
Norvester will provide capital and expertise in expanding Position Green Group while Nahem said the shareholders will reinvest up to 50% in the new company.
Velocity Consulting effectively counts as a first M&A move — into the Danish market with a company that broadens the group’s business experience but has also worked in the maritime sphere with Maersk.
“We are looking to add similar advisory capabilities and consultancies in different markets,” said Nahem.
“Most likely we are going to do an acquisition in the US, the UK and the Benelux area within the next 12 months.
“What we are saying is independent of what geography or industry you are coming from if you need help on a particular matter, we will find that expertise here.”
But Nahem added: “Shipping is going to remain very important to us because that is where we are coming from. We have a lot of experience and, we think, industry knowledge that will make a difference.”
The company has recruited Jason Stanley, a former vice president of ESG at Tidewater, to lead its US business while its office in Denmark will be led by Anders De Lichtenberg and Simon Taylor, who are both former Maersk employees.
Position Green’s platform was already The Governance Group’s preferred sustainability software, used by 300 of the merged firm’s customers including shipping companies such as Wallenius Wilhelmsen and MPC Container.
The Governance Group needed to go from basically manual methods to digital manipulation of data, Nahem admitted.
It had done carbon footprint analysis for shipping companies representing 5% of global fleet emissions.
“We literally have Excel spreadsheeets from here to the moon and back on mainly Scope 1 emissions, but also increasingly Scope 3 across the value chain. But that is not sustainable.”
There are a number of vessel performance monitoring software platforms that can be used to take data from ships, but few like Position Green Group, Nahem said, that can pull all that data together and automatically export the aggregated reporting required by the main bodies for ESG evaluation.
“As advisors, we would rather spend our time on strategy issues rather than on Excel sheets so that automation is a good thing,” he said.
The Governance Group has a cooperation deal with Kongsberg Digital, which collects very granular shipping data, Nahem added.
“But you cannot take that and then report to the Carbon Disclosure Project, or when the US Securities and Exchange Commission makes climate accounting mandatory. There is still a gap. You still need to take one step further to put all that data into the correct format and protocols.”
A lot of focus on ESG reporting has also often been retroactive: what needs to be done to tick boxes, but “not really driving strategy or performance”.
The focus is changing and Nahem said the merged Position Green Group will be able “to do a lot more with the platform in driving performance.
“There is no point in doing climate accounting unless you are going to do something with it,” he said.
