Our strong environmental, social and governance (ESG) performance is evidence of successful execution of our strategies to continually reduce our environmental impact, 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.

Striving for Sustainability Fit for a Global Business

In a year characterised by geopolitical turbulence and an unusually flat freight market, the Company delivered continued stable results and maintained a healthy financial position in 2024, and we can be proud of the good progress we made in delivering on our strategy and priorities, reinforcing the long-term sustainability of our business.

Our sustainability efforts are driven by our quest for business performance and success, our vision to be the first-choice partner for customers and other stakeholders and by our culture of doing the right things. We are encouraged by positive feedback from our customers, investors and other partners, and by continued improvement in our ESG ratings, which is important to stakeholders who increasingly value sustainable business practices and development.

Almost all of our several ESG ratings improved in 2024, positioning us among the top few in our sector or industry globally, reflecting the professionalism and care demonstrated by our colleagues around ESG ashore and at sea.

We also received a number of sustainability-related awards, most notably the Silver Award in the ESG Leader category at the ESG Shipping Awards International 2024 and, for a third consecutive year, a Gold Award for the Most Sustainable Companies at Hong Kong’s HKICPA Best Corporate Governance and ESG Awards. At the Hong Kong ESG Reporting Awards, we won three Grand Awards for excellence in social positive impact, excellence in ESG governance and best ESG report (mid-cap), with a commendation for excellence in environmental positive impact.

Leading the Way in Investment in Green Ships

In November, following a two-year collaborative green fuel study and ship design project with Japanese partners Nihon Shipyard Co and Mitsui & Co, Pacific Basin contracted for four dual-fuel newbuilding Ultramax low-emission vessels (LEVs) capable of running on green methanol as well as sustainable biodiesel and fuel oil. The vessels’ exceptional design, specification and quality will meet our cargo customers’ requirement for safe, reliable, efficient and low-emission transport well into the future, and offer us the fuel flexibility to optimise, comply and compete in what will be an increasingly challenging regulatory environment. Our investment in these next-generation vessels reaffirms our belief in our market in the longer term and in the business case for such LEVs, and it aligns with our sustainability goals, positions us at the forefront of innovation in our sector, and affords us several strategic early-mover benefits that will be important in the years ahead – including as an accelerator of growth for Pacific Basin.

We have been developing relationships with several green fuel producers to develop access to green methanol and sustainable biofuel (biodiesel) – including entering into a memorandum of understanding with Mitsui & Co to access volumes of green methanol – enabling our LEVs to comply with and benefit from the new FuelEU Maritime rules and IMO’s expected global rules forcing the gradual uptake of sustainable fuels.

Decarbonisation Tops the Environmental Agenda

The most challenging priority of our environmental programme is the gradual decarbonisation of our fleet for compliance and to achieve our IMO-aligned net zero by 2050 target.

As we have long said, regulation (including a meaningful carbon penalty) must and will drive the transition to low-carbon or carbon-neutral shipping, and the European Union’s inclusion of shipping in its Emissions Trading System (EU ETS) in 2024 and its FuelEU Maritime rules that took effect at the start of 2025 are beginning to support business cases for investment in green ships. What is needed is equivalent globally-applicable regulations that will enable the much higher green fuel and opex costs to be shared along the dry bulk supply chain and make major green capex decisions easier.

Those global regulations are under development; IMO’s new technical and economic measures designed to force the gradual uptake of green fuels and to put a price on greenhouse gas emissions are scheduled to enter into force in 2027, subject to further negotiations between the 170+ member states of the IMO. Whether implementation is delayed or not, we believe new global rules are to be reckoned with in the coming few years, posing a significant compliance challenge to most owners and operators of especially conventionally-fuelled and less efficient ships.

Our recent commitment to order dual-fuel LEVs marks a significant milestone in our long-term plan to transition to net zero emissions by 2050 and comply with increasing decarbonisation regulations along the way.

However, we also own over 110 existing, conventionally-fuelled vessels whose competitiveness we have been safeguarding through technical and operational fuel-efficiency measures and new ways to optimise our voyages.

Building on the several such initiatives we have implemented over many years, our fuel and energy-efficiency initiatives in 2024 included applying super-low-friction silicone hull coatings, retrofitting pre-swirl vanes, reshaping less efficient older propellers, installing more efficient smaller water pumps, retrofitting more efficient fuel injection nozzles, adopting strategic power weather routing services and RPM optimisation, and using advanced self-tuning autopilot systems.

The importance and prevalence of data and AI continues to increase as we and our industry look for an ever more granular understanding of the performance of our ships and the gains from technical and operational and other optimization initiatives.

Our Commercial Voyage Optimisation team is working hard to extract more value from fuel-efficient operational measures and other voyage-related efficiency improvements. Leveraging digitalisation, we made good progress in 2024 on systems for more accurate data measurement, collection and analysis, including:

• implementing AI-driven processes for daily verification of our time-chartered (TC) fleet voyage data (for emission reporting compliance and fuel consumption optimisation);
• advanced data models for precise information on the fuel efficiency of our owned and TC fleet (for improving fuel efficiency);
• systems and models for choosing optimal methods of compliance with EU ETS and EUFuel Maritime; and
• rolling out Remotely Operated Vehicles (ROVs) across our owned ships to monitor hull fouling.

Initiatives like these are important to help maximise the longevity of our conventionally-fuelled existing ships in the face of increasingly stringent regulatory requirements. Our ships are well positioned to continue to comply and trade for the foreseeable future, depending in part on the growing use and uncertain long-term availability of sustainable biofuels. However, new energy-efficiency gains will become increasingly marginal and costly, and only latest design, fuel-efficient, dual-fuel newbuildings will achieve the meaningful GHG reductions to meet the industry’s longer-term targets.

We finished 2024 with 89% of our owned ships achieving Carbon Intensity Index (CII) ratings of A, B or C, with the rest rated lower (while still in compliance) due mainly to long periods held up in port. Our owned fleet’s carbon intensity in 2024 was 42% lower than in our 2008 baseline year, and we expect to have more than halved our carbon intensity by 2030 enroute to our long-term target of net zero by 2050.

Responsibility to Our People

Notwithstanding the attention demanded by the industry’s decarbonisation challenges, we continue to be keenly focused on the security, safety, wellbeing, development and engagement of our employees. Sadly none of these are guaranteed in our industry, but they have long been a priority at Pacific Basin.

Over the past three years we have spoken passionately about the plight of several of our seafarer colleagues and fought hard for their release after they were unfairly criminalised and imprisoned when drug traffickers managed to stash their contraband in less-accessible parts of two of our ships in 2021 and 2023 respectively. We were very happy to report in December 2024 that ten colleagues detained in Nigeria since July 2023 were released and returned home to be with their families just in time for Christmas. And you may remember that our Captain Yu Yihai was released in 2023 after two years in an Honduran prison.

Our crews’ eventual release was the result of a good team effort within Pacific Basin and in collaboration with allies ranging from local lawyers and P&I correspondents all the way up to leadership at the International Chamber of Shipping, BIMCO, ILO and the IMO, as well as departments of the Hong Kong Government, HKSOA, and offices and embassies of the People’s Republic of China. We have advocated for security, fair treatment and due process for our colleagues and for seafarers generally in a number of forums.

In 2024, our crews registered 11 lost-time injuries in over 20 million man hours, which translates to one of our lowest ever LTIF injury rates, and our safety KPIs overall are considered among the best in our sector. Even so, our Board and managers cast a critical eye over all accidents and injuries, and we aspire to achieve zero incidents across our fleet.

Regretfully, one of our crew members died on a ship in 2024. This was a non-work-related fatality, but we still owe it to our seafarers to support their physical health and mental wellbeing as best we reasonably can, and we are doing this through the continuing development of our training strategies, enhancement of our safety and wellbeing programmes, engagement of remote physical and mental health service providers, and continued psychometric screening for all our seafarers before joining our ships.

We continue to challenge ourselves on what it means and takes to cultivate an optimally supported, competent, diverse, engaged and high-performing workforce. At sea and on shore, we continue to uphold the highest safety, security, health and wellbeing standards and train our colleagues for high-performance teamwork and to enable them to tackle evolving business challenges while looking after each other’s overall wellbeing.

Our shore-based team comprises staff of 36 nationalities which is indicative of the diversity in our organisation. Our gender distribution ashore is relatively well-balanced overall, but we recognize the lower representation of female colleagues in middle and senior management due largely to the significantly smaller proportion of female applicants for shipping industry roles. We are trying to improve in this area, leveraging our strong employer brand to build diverse high-performing teams, but our priority is in making diversity sustainable – increasing diversity the right way, not the fast way. Meanwhile, as at February 2024, women account for 44% of our Board which comprises directors of 7 nationalities who have wide-ranging professional expertise, backgrounds and perspectives.

We strive to create a culture of care, respect and non-discrimination and inclusion. Through this effort we aim to nurture a dynamic and high-performing organisation in which all colleagues feel safe, are welcomed for their differences, enjoy equality of opportunity for career advancement, recognition and rewards based on merit and are supported in their individual efforts to contribute to our business’ success.

In 2024, our Sustainability team coordinated a review of two of our priority sustainability issues, namely Safety, Security, Health & Wellbeing and Diversity, Equity & Inclusion. We take a practical approach to both of these issues, firmly believing that Safety & Wellbeing and workplace DEI done right lead to a healthy, engaged, effective and thriving workforce and bring out and leverage the best in everyone and drives performance. These strategy reviews provided a valuable opportunity for deeper engagement with our colleagues on these subjects – including discussing why they are important for business, how we are progressing, what’s our approach, and what are our related goals and targets – which is an important part of our efforts to embed and enhance our sustainability culture throughout the Pacific Basin organisation.

Responsible Value Creation for Our Stakeholders

We value long-term relationships with our stakeholders and are committed to serving our customers, society and sustainable trade, and our wider stakeholders for more resilient and sustainable dry bulk supply chains. Such initiatives are often characterised by a degree of collaboration and innovation.

One example is the collaborative research and vessel design work we conducted with Nihon Shipyard Co and Mitsui & Co before contracting for our first newbuilding LEVs, which we believe will inspire other ship owners to follow suit, while also signalling to global regulators, governments, green fuel investors and producers, energy companies, technology companies, engine makers and shipbuilders that shipowners are ready to play their part in the transition which cannot succeed without all other stakeholders playing their part too. We are now particularly engaged with green fuel project owners, helping them to understand the green fuel requirements and challenges in the dry bulk tramp shipping space. We believe examples like ours will help add momentum to the transition to low-emission shipping.

We continue to be involved with the Maritime Anti-Corruption Network (MACN) and TRACE which draw on collective action to eliminate corruption in our industry and advance commercial transparency in areas of anti-bribery, compliance and good governance. In 2024, we advocated for the security, fair treatment and due process for seafarers in a number of forums – including in maritime and security conferences in Lagos, Geneva and Houston – in which coast guard, law enforcement, drug enforcement and other security agencies sought to collaborate with the shipping industry to tackle the issue.

Since early 2023, we have been collaborating with our cargo customer Rio Tinto as part of their Designated Owners & Operators Standard initiative to enhance safety and crew welfare in the dry bulk industry.

We expanded our internship programme in 2024, welcoming a diverse group of 17 interns mainly in our Hong Kong headquarters. We believe internships are a way of helping young community members with their development and career preparations, providing opportunities to candidates from different backgrounds, while also raising their awareness about the shipping industry and possibly even developing a pipeline of potential future employees. Our interns come to us mainly via our scholarship programme with Hong Kong Polytechnic University, our commitment to Hong Kong’s Racial Diversity Charter, and our relationship with the Zubin Foundation.

We actively support the Hong Kong Maritime Museum’s programmes and initiatives that align with our shipping and community-focused social responsibility priorities in Hong Kong. To mark the International Day of the Seafarer in late June, we sponsored free admission to the museum for the public, with programming and workshops on the day partially facilitated by Pacific Basin ship officers, cadets, and shore-based managers and former ship captains.

We also supported the marine conservation and education programmes of WWF Hong Kong, which included eco-tours around Hong Kong’s shorelines and coral reefs for over 60 Pacific Basin colleagues and family members.

These initiatives are just a few examples of the increasing engagement and collaboration with like-minded stakeholders that we consider valuable to better tackle our industry’s main challenges and promote a responsible, ethical, inclusive and resilient global marketplace.

Responsible Business Fundamentals

Our culture of doing the right things includes good governance and ethical management and decision-making, and striving for best-in-class risk management, reporting, transparency, corporate stewardship and stakeholder confidence.

Good corporate governance underpins all components of our business and brings energy and credibility to the Company’s decision-making, which is central to delivering value for our shareholders. Our international Board comprises a majority of Independent Non-executive Directors (INEDs) with diverse expertise and backgrounds, and was enhanced in February 2025 with the addition of two new and highly qualified INEDs, Ms. Kalpana Desai and Ms. Heather Wang, who we welcome warmly to the Pacific Basin team.

Responsibility for Pacific Basin’s sustainability rests with our Board who in January 2024 elevated its delegated board-level oversight of sustainability from the Audit Committee to a dedicated new Sustainability Committee. In line with best practice, this is facilitating greater board-level bandwidth to ESG matters, while also freeing up time in board and audit committee meetings for other business.

As at February 2025, the Sustainability Committee, chaired by Dr. Kirsi Tikka, now comprises three independent non-executive directors and one nonexecutive director.

Our Chairman Stanley Ryan has stepped down from the Sustainability Committee and has been replaced by our two new INEDs, Ms. Desai and Ms. Wang, who both have qualifications, experience and strong professional backgrounds that will help to strengthen our Board and Sustainability Committee with a broader range of valuable expertise.

Management and a dedicated sustainability team are supported by a Sustainability Management Committee in coordinating and enhancing our approach to sustainable business practices and investments, in ensuring compliance with growing ESG requirements for companies engaged in shipping and listed on the Hong Kong Stock Exchange, and to better integrate more precise and deliberate sustainability thinking into our culture and every aspect of our business.

We believe our enhanced sustainability governance structure will further improve the effectiveness of our approach to sustainable practices and development, the resilience and reputation of our business, and the confidence our stakeholders place in us.

Effective Platform for a Sustainable Business

We continued to make progress in addressing our most significant sustainability issues last year, as evidenced by improved performance in key areas and by our external recognitions and ESG ratings. With dedicated sustainability, decarbonisation, safety, operations, HR and other relevant teams, and with the closer oversight of an expanded board-level Sustainability Committee, we have experienced people and an effective platform with which to tackle our challenges and make good progress on our sustainability journey.

Our approach to sustainability is well aligned with our company strategy and culture, so internal engagement these days, especially with new employees, is focused on why ESG is important at Pacific Basin. We continually review our strategies for managing our most material ESG priorities and issues. These collaborative exercises and related internal engagement help to refine and update our ESG ambitions and targets, while empowering our colleagues to tailor our initiatives to achieve them and further embedding sustainability in our culture.

We are privileged to have excellent and dedicated people in our Pacific Basin family both at sea and ashore, and I thank them all for what they do so well and for the way they do it, responsibly delivering value for our customers, shareholders and other stakeholders. They are all Pacific Basin ambassadors whose actions underpin the reputation and resilience of our Company.

I thank also our shareholders, customers and other stakeholders for their continuous support, including their increasing interest in and expressions of encouragement for our ongoing ESG efforts. We have the excellent Board, colleagues, values, assets, business model, strategies, financial health and culture that position us well for a sustainable future.