Human capital

Responsible ship recycling

In spite of many shipowners having policies for responsible ship recycling, nearly 90% of the gross tonnage recycled is done under poor health, safety and environmental conditions. As global ship recycling volumes9 are set to nearly double by 2028 and quadruple by 2033 there is an urgent need to ensure that this growth in demand for ship recycling services will be met by suppliers with responsible practices.

Over the past six years, Maersk has recycled 16 vessels in seven yards in Alang which is one of the three locations in South Asia where around 20%10 of the world's tonnage is sent for recycling. Playing the role of a catalyst, our engagement in the area has driven a transformational change in the Alang ship recycling industry. Over 90 of around 120 operational yards in Alang have voluntarily invested to be compliant with The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC), though this is still pending entry into force. Maersk vessels are recycled in accordance with the Maersk Responsible Ship Recycling Standard (RSRS), which is a stringent interpretation of the HKC and our responsible procurement programme.

Progress and activities in 2021

In 2021, we placed two vessels for recycling with yards in Alang, and completed recycling of three vessels. We continued our audit regime that encompasses a screening of partners, full-time presence by Maersk staff on the ground and external verification audits.

Despite COVID-19-related challenges in 2021, our yards engaged in safe, environmentally sound and RSRS-compliant recycling operations. As in previous years, external audits continued after landing a vessel in a yard, including one that we engaged with for the first time, until only one finding related to excessive overtime remained. This is a challenge in many industries and geographies with migrant workforces.

Alang impact assessment

The study covers the period 2017-2021, during which 14 Maersk ships were responsibly recycled at six Alang yards engaging more than 1000 workers.

Our engagement

Health and safety Environment

Over 2,950 man-days of supervision Over 82,000 m2 impermeable floor established at yards Over 1,300 workers' homes made ILO-compliant Over 62,200 consultations in Mobile Health Unit Over 5,800 laboratory tests

Over 4,350 trainings 20 heavy-duty cranes installed

Over 40 Lloyd’s Register audits Over 35 environmental tests

Labour and human rights

Improved social security standards and working conditions

Over 35 Maersk responsible procurement audits

Wider Alang development

Over 5,000 workers part of health awareness training programme

The impact

Zero fatalities Zero lost time injuries Zero spills and hazardous materials incidents Improved living standards

Minimised environmental impact Improved labour management and social security standards Enhanced healthcare access

Improved health awareness and outcomes

9 Sustainable Shipping Initiative - Exploring shipping's transition to a circular industry, June 2021 (www.sustainableshipping.org/resources/shippings-transition-to-a-circular-industry/) 10 2021 Annual List of Ships Scrapped Worldwide (Excel), NGO Shipbreaking Platform, February 2022 (shipbreakingplatform.org/platform-publishes-list-2021/) Why it matters

Only a small share of all vessels globally is recycled responsibly. The projected growth in demand for recycling capacity for very large vessels add to the urgency of creating new opportunities for responsible practice-driven, financially viable recycling. As a leader in the shipping industry, we have a responsibility to use our leverage to make a positive impact.

Ambitions

Ensure safe and responsible ship recycling globally to the benefit of workers, environment, responsible yards and ship owners.

8.8 14.1 17.16

Targets

• Create opportunities for responsible ship recycling of post-panamax ships globally • Work with industry stakeholders to support yards globally, including non-OECD countries, to achieve EUSRR compliance and thereby increase actual capacity on the EU List • Continue development of the wider

Alang area • Actively support the Ship Recycling

Transparency Initiative scale-up work and raise the profile of transparency • Identify Maersk's role in decarbonising the global steel value chain by leveraging ship recycling volumes in the long term