Our strong environmental, social and governance performance in a year marked by crew movement restrictions and other pandemic-related challenges are evidence of successful execution of our strategies to continually reduce our environmental impact intensity, keep our crews healthy and safe, and maintain sound controls and accountability to our stakeholders. We have the people, values, assets, business model, strategies and financial health that position us well for a sustainable future

2021 saw the strongest dry bulk freight market since 2008, and we generated our best results in our Company’s history. Our ability to capitalise on the strong market and significantly strengthen our available liquidity while navigating crew movement restrictions and other pandemic-related challenges – and while still delivering a safe, efficient and seamless service to our customers – speaks volumes about the Pacific Basin platform that we have built over many years. It also reinforces our confidence in our preparedness for the future.

Crew Safety and Wellbeing is a Key Focus Area

Seafarers around the world continue to be impacted by crew-change restrictions, long periods of quarantine and other complications arising from governments’ measures to manage the pandemic. We recognise the toll these measures have on our seafarers, and so our shore-based staff and management are doing their utmost to provide our seafarers with financial and other support, encouragement, leisure and sports equipment, increased internet and communications access, and free access to mental health support to help safeguard our crews’ health, safety and wellbeing on board. In 2021, we joined the Sailors Society’s Wellness at Sea campaign which supplements our inhouse fleet-wide wellness programme with multi-media training on mental health and wellbeing for seafarers, their families and shore staff.

In parallel, we continue to pursue every effort to reunite our seafarers with their families, if necessary deviating our ships, paying premium prices for air tickets home, and putting up our crews in hotel rooms for long layovers and quarantine. We have engaged with and urged governments and other authorities for solutions to enable the safe movement of seafarers and, in January 2021, Pacific Basin signed the Neptune Declaration on Seafarer Wellbeing and Crew Change.

Thankfully our efforts resulted in successfully relieving almost all of our crews within one month of their contract periods in 2021, although several have faced unavoidable extended tours of duty, occasionally because of positive Covid cases on board despite a high rate of vaccination among our crews. The surge in Omicron cases around the world is also impacting the availability of seafarers due to join vessels, which adds further complication to crew rotations.

We are very grateful to our seagoing staff who throughout the pandemic have demonstrated patience and professionalism in maintaining safe operating practices and a reliable and substantially uninterrupted service to our customers

The life of the seafarer is never easy, but pandemic containment measures, piracy, and the unjust criminalisation of seafarers all add significant extra stress. We will continually seek new ways to improve seafarers’ lives and raise the profile of their essential work, which will also be important in the long-term challenge of attracting future new talent to careers at sea.

In-house Fleet Management Drives Health, Safety, Quality and Environmental Focus

With safety being so important, it is pleasing that our ships’ crews recorded our lowest ever injury frequency KPIs (registering five lost-time injuries in 19.9 million man hours in 2021) which we hope will mark a key step in our efforts to reach zero injuries in the future. This 2021 safety performance is particularly commendable in thecontext of the challenging pandemic period when seafarers’ mental health has been strained by Covid-related restrictions.

Having an innovative, comprehensive and world-class fleet management team in-house (with experts covering technical operations, fleet personnel and marine risk, safety and security) represents a significant advantage for us and our stakeholders.

Firstly, we can be directly involved with our seafarers, ensuring they benefit from sound labour standards, workplace conditions, our best shore-based support and a fulfilling career. Health and safety on board our ships have always been of paramount focus, underpinned by the investments we make in training, risk management and the policies and practices embodied in our Pacific Basin Management System.

Secondly, having a core owned fleet of around 120 ships run by our own in-house fleet management team also means we have better control of the quality of our ships and the service reliability that we are able to offer our customers.

Thirdly, our experts ensure that we are adequately shouldering our responsibility to continually reduce the environmental impact of our operations and to stay ahead of and comply with all relevant environmental and other laws and regulations in our highly regulated industry.

Well Prepared to Comply with IMO Carbon Intensity Reduction Rules

In June 2021, IMO adopted global EEXI (energy efficiency existing ship index) and CII (carbon intensity index) regulations to drive technical and operational measures to ensure annual improvements in the carbon efficiency of existing ships over the course of this decade with effect from 2023. Shortly thereafter, the European Commission announced its intention to include shipping in the European Union Emissions Trading System (EU ETS), charge tax on bunker fuel and implement carbon intensity reduction requirements effective 2023 which, subject to further development, may help to drive a more ambitious pace of decarbonisation.

These decarbonisation rules are front and foremost on the industry agenda, and our sustainability, optimisation, technical, commercial and senior management teams are well attuned to these and longer-term decarbonisation challenges. They have been collaborating internally and with other stakeholders for some years to ensure that we are already well prepared to comply with the 2023 rules, for which:

  • we are growing and renewing our fleet with younger, larger, more efficient ships which help to reduce our carbon intensity;
  • we will continue to assess and adopt innovative energy-efficiency technical retrofits (such as fins, ducts and reshaped propellers) as we have done for several years;
  • we will continue to trade our ships efficiently for high laden-to-ballast utilisation; and
  • we will constantly seek, assess and implement other energy-efficient operating measures, such as fuel-efficient weather routing, slow steaming and just-in-time arrivals, etc.

We will pursue these initiatives – including looking for collaborative solutions with our customers, tonnage providers, ports and other stakeholders – to ensure our existing ships running on conventional fuel oil can continue to trade for the foreseeable future.

In parallel, we are also collaborating and making preparations to achieve the longer-term goal of complete decarbonisation involving entirely new ships and fuels which are not yet available.

Targeting Net Zero by 2050

Our ambition since 2021 is for Pacific Basin to achieve net zero emissions by 2050. We hope that the IMO will similarly tighten its 2050 target to align with this key goal of last November’s COP26, which is designed to limit global warming to 1.5°C over pre-industrial levels.

To achieve that goal, we target that our fleet will comprise only zero-emission vessels by 2050, and we will not contract newbuildings until zero-emission-ready ships are available and commercially viable in our segments and the appropriate refuelling infrastructure is being built out globally.

We are evaluating which of the possible replacement zero-carbon (or very-low carbon) fuels and propulsion technologies will be right for us, and are actively involved in initiatives to develop and roll out commercially viable deep-sea zero-emission bulk carriers well before 2030.

In 2021, we signed the Call to Action for Shipping Decarbonisation, which urges world leaders to align shipping with the Paris Agreement temperature goal and calls for decisive government action to enable full decarbonisation of international shipping by 2050.

As an active participant in the working group meetings of the Getting to Zero Coalition, we believe the 2050 goal is achievable with the support of governments who we urge to deliver the policies that will supercharge the transition and make zero-emission-ready vessels the default choice by 2030. What we want to see from the IMO and governments is:

  • support for investment in new marine fuels R&D to accelerate our understanding of which green fuel will be right for our dry bulk sector;
  • support for the development of a worldwide refuelling infrastructure to assure global tramp ship operators that the new fuel or fuels will be readily accessible around the world; and
  • carbon pricing (implemented on a global level playing field) to help drive the transition to expensive new green fuels.

Pacific Basin Offers Carbon Neutral Shipping

Acknowledging that we will still be left with unavoidable voyage emissions for the foreseeable future, in November 2021 we launched the PB Carbon Neutral Voyage Programme, which offers our customers the option of voluntarily offsetting voyage emissions from the transportation of their cargoes on Pacific Basin ships using carbon credits generated by Hong Kong power company CLP’s wind and solar farms in Asia. While carbon offsetting is no substitute for tangible efforts to reduce and eventually eliminate our actual emissions which we are pursuing, we believe that offering carbon neutral shipping is an extra step worth taking. It helps to raise carbon footprint awareness in the supply chain and is something we can do today.

We disclose our voyage emissions data to customers who request it, and are gradually rolling out disclosure of forecast and actual voyage emissions before and after every voyage. We engage with customers, banks and now also insurers who through the Sea Cargo Charter, Poseidon Principles and Poseidon Principles for Marine Insurance commit to track, assess and disclose the emissions and climate alignment of their shipping activity.

For the second consecutive year, we offset the carbon emissions from our global onshore operations in 2021, including all office activities, commuting and business and crew travel.

Climate Risk Scenario Analysis

In 2021, we engaged external consultants ABS (American Bureau of Shipping) to lead a Pacific Basin climate-related risk scenario analysis that is aligned with the Task Force on Climate- related Financial Disclosures (“TCFD”) framework established by the Financial Stability Board.

The exercise has helped us to refine our understanding of the most material physical and transition risks, vulnerabilities and opportunities to our business, stemming from:

  • shifts in climate patterns (such as extreme weather events); and
  • climate-related changes in policy, technology and markets (such as decarbonisation rules, market-based measures, new fuels and propulsion systems, and changing commodity trade patterns).

The study includes scenario analyses to understand and quantify the risks and uncertainties our business may face under different hypothetical futures (including +1.5ºC and +4ºC scenarios), which can in turn be used to help refine our strategy and decision-making to mitigate, adapt to and even benefit from possible future factors.

Key take-aways from the exercise are that:

  • we are fortunate to be focused on Handysize, Supramax and diverse minor bulks and grain (the mainstay of future dry bulk trade) with an agile tramping business model which allows us to change our trading patterns at short notice if necessary to avoid developing physical risks; and
  • we are fortunate to have the scale and sophisticated, experienced team that enable us to navigate challenging regulatory, technological, demand and other transition-related changes.

Our assessment of climate-related risks and their quantitative impact on our business will be further refined through continued analysis in 2022 and beyond.

Experienced Team and Effective Platform for a Sustainable Business

Our commitment to strong corporate governance – sound internal controls, transparency and accountability to all stakeholders – continues to underpin all components of our business and seeks to enhance stakeholder confidence in Pacific Basin.

That commitment starts with a strong board. Our Board and board-level committees have continued to evolve in recent months. With effect from our 2021 AGM, John Williamson assumed the position of Chairman of the Audit Committee, a role for which his considerable financial and governance experience makes him amply qualified.

Alexander Cheung joined the Board and board-level committees as a new Non-executive Director in January 2022. Alex’s strong professional background in the legal, regulatory, commercial, governance and compliance fields, coupled with his intimate knowledge of our Company will be beneficial to Pacific Basin’s business and development.

Our senior management team also evolved with the retirement of our CEO Mats Berglund, and Martin Fruergaard taking over as our new CEO on 31 July 2021. Martin has settled in well and is proving to be a very good fit for Pacific Basin. Under him, the Company continues to be in excellent hands.

Martin has assumed the chairmanship of our Sustainability Management Committee (“SMC”) which reports to the board-level Audit Committee to ensure strong sustainability governance and board engagement. Our SMC comprises our CEO, CFO and six senior executives from different functions to ensure that members with different backgrounds and expertise are represented so that our sustainability strategy delivers meaningful outcomes and sound progress against our sustainability goals annually-reviewed KPI targets.

Delivering that progress day-to-day is an outstanding team of people across our business who provide the world-class expertise we need to tackle the challenges we face.

Safeguarding the wellbeing of seafarers and improving their lives for the long term, and embracing the fourth propulsion revolution and the new environmental regulations and technical challenges that come with that – these and other social and environmental challenges require a keen understanding of the issues, careful collaboration and astute decision-making for which we are well equipped.

We have recently formed a dedicated sustainability team to further enhance our strategic focus on sustainable business practices and investments in sustainable assets. We aim to develop a more holistic and effective approach and set adequately ambitious goals and targets to ensure we are continuously refining our policies and practices and our conduct in everything we do.

The Company received a number of awards and commendations in 2021 in recognition of excellence in such areas as corporate governance, safety and port state control inspections, environmental positive impact and sustainability generally.

  • Pacific Basin was named among the Most Sustainable Companies at the HKICPA’s Best Corporate Governance and ESG Awards 2021;
  • we won two Grand Awards for Excellence in Environmental Positive Impact and for Best ESG Report (mid-cap) at the 2021 Hong Kong ESG Reporting Awards;
  • in investor relations, we won a Sector Award (Industrial) at the IR Magazine Awards and a Certificate of Excellence at the Hong Kong Investor Relations Association 7th Awards; and
  • we again received the Hong Kong Marine Department Award for Outstanding Performance in Port State Control Inspections.

Our governance and overall Environmental Social Governance (ESG) ratings are typically the best in our industry, according to ESG ratings information available from Refinitiv, MSCI, S&P Global, Sustainalytics and Bloomberg.

In 2021, on behalf of Hang Seng Indexes, the Hong Kong Quality Assurance Agency (HKQAA) awarded Pacific Basin a sustainability rating of A+

These awards and industry-best ESG ratings are indicative of the professionalism of our teams whose focus on ESG matters enhance the sustainability of our operations and the reputation of our Company in the eyes of customers, suppliers, staff and potential recruits, investors, financiers and other stakeholders.

The focus of our reporting is on how, at all levels of our business from the Board down, we tackle our responsibilities towards the safety and wellbeing of our staff, ethical business practice, the environment and the communities in which we operate. As a large player in our sector with an ambitious vision for the future, we recognise our responsibilities in these areas which have a bearing on the long-term sustainability of our business. We have the excellent board, staff, values, assets, business model, strategies and financial health that position us well for a sustainable future.

David Turnbull


Martin Fruergaard

Chief Executive Officer

Hong Kong, 24 February 2022

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