The Swire group believes that alongside an abiding focus on employees, practical innovation and commercial viability, our existing businesses must adapt to a world in which they will be judged by their impact upon the environment and the community.
The Swire Pacific Offshore ("SPO") group of companies and our parent, Swire Pacific Limited, believe that sustainability is "a strategic imperative for our businesses and part of our overall approach to building long-term value for our shareholders".
SPO's mission is to 'Deliver safe, high quality, reliable and sustainable Marine Services'. We plan and operate our business in line with our long-term commitments to safety and sustainability, in accordance with best practice and often beyond internationally agreed standards. I am pleased to report our progress in this Sustainable Development (SD) Report for the calendar year, 2020.
SPO has been in business for over 45 years and as an industry leader has invested consistently in our people, assets and capabilities, continually seeking to differentiate ourselves from our competitors whilst simultaneously improving the sustainability of our businesses across all measures.
We have an in-house Sustainability Team, the leader of which also serves as a Director of the Sustainable Shipping Initiative, the Ship Recycling Transparency Initiative and the World Ocean Council. These organisations promote the sustainable use of the atmosphere and oceans as a commons and believe that natural resources such as air, water and a habitable earth should be accessible to all members of society and be responsibly managed for individual and collective benefit over multiple generations to come.
He is also a member of the Sustainability Committee of the British Chamber of Commerce in Singapore. He has ready access to SPO's senior leadership and helps shape strategy, operating at the outset of initiatives rather than through "retrofits" of existing assets, policies, practices and procedures. SPO's future strategy is defined through SwireTHRIVE 2.0 that was launched by Swire Pacific Limited's Chairman in November 2020, and which will be used to underpin our SPOTHRIVE 2.0 that will be rolled out in early 2021.
Our long-term integrated strategy is "to manage our business sustainably". The question of what may be an appropriate 2050 goal for SPO will be determined in the context initially, of our parent Swire Pacific Limited's recent announcement of a goal of (carbon neutrality by 2050), and secondly, of the IMO's present deliberations on an appropriate industry-level target for the shipping sector.
Our medium-term integrated strategy on the journey to meeting this is to reduce our absolute Scope 1 and Scope 2 carbon emissions by 50% from a 2018 baseline by 2030. Our main challenge to accomplishing this target is that only around 40% of this reduction can be achieved through Technical and Operational (T&O) measures to reduce fuel burn and associated emissions. The balance will only be realisable through the use of an alternate low or zero carbon fuel. However, there is currently no sustainable, economically viable, technologically ready alternate fuel. So, in the early stages of our journey to carbon neutrality, any reduction will have to be achieved through carbon offsetting.
There are a number of potential low or zero alternate fuels, but all have pros and cons. SPO has insufficient size to commission meaningful independent R&D in this area on our own, and in nearly all cases we would be unnecessarily duplicating work underway elsewhere. However, we are contributing where we can, such as being a knowledge partner to Singapore's Nanyang Technological University's Maritime Energy and Sustainable Development Centre of Excellence (NTU MESD CoE).
Our shorter-term strategic targets consist of many smaller activities in the People, Environment and Communities areas, as detailed in SPOTHRIVE, and around which our short-term, annual action plan is written.
To manage our business sustainably we will, inter alia:
The major corporate event for the SPO group in 2020 was the spin-off through an IPO of Swire Blue Ocean (renamed "Cadeler") that was announced on 8th October 2020, and completed on 27th November 2020. Taking the offshore wind turbine transportation and installation specialist public came on the back of the announcement of significant expansion plans for the Danish operator.
Pacific Orca and Pacific Osprey, already two of the most capable Windfarm Installation Vessels in the global fleet, are planned to be fitted with new cranes, enabling them to handle future turbine models currently under design by major manufacturers. With a strong orderbook and excellent relationships with blue-chip customers, Cadeler's IPO has positioned the company for the next phase of its growth and will help ensure that it remains a market leader, offering a unique proposition in what is an exciting and rapidly expanding sector.
The all-consuming story of 2020 was of course COVID-19. 2019 closed with improving market conditions at last in the core fleet segments of Anchor Handling Tug Supply (AHTS) Vessels and Platform Supply Vessels (PSV), but this was sadly derailed by the COVID-19 pandemic that spread around the world in March 2020. The pandemic devastated communities and economies across the world, and the resultant downturn in activity led to a commensurate collapse in energy demand, and thus also the need for offshore marine services. SPO reacted quickly to reduce our active fleet size, aiming to reduce from 75 vessels to 50 through the sale or lay-up of non-core and older vessels in order to reduce costs, maintain a competitive fleet, and position SPO to return to profitability.
The most material effect of COVID-19 on SPO was the almost total shutdown in international travel, which caused considerable difficulty in effecting crew changes, and resulted in large numbers of seafarers being unable to be relieved. At the height of this human crisis some 400,000 seafarers, globally, were serving onboard months over their contract lengths. Even as travel opened up, regulations for departure or arrival at crew change ports were changing by the day, and even into 2021, the situation is far from normalised.
In January 2021, along with over 300 other companies and organisations, the Company signed the Global Maritime Forum-initiated Neptune Declaration on Seafarer Wellbeing and Crew Change (the "Neptune Declaration") in a worldwide call to action to end this unprecedented crew change crisis caused by COVID-19.
This crisis will pass, but the Company owes significant thanks to all who have worked long hours to manage every obstruction that the pandemic has thrown in our path.
We will continue to work together with all our stakeholders, internal and external, to create a better, more sustainable, lower carbon future.
Managing Director, Swire Pacific Offshore
Above left: Photo by TJ Fitzsimmons on Unsplash
Above right: Photo by Matthew Albanus, Master, SPO