Environment | Social | Governance

Our ESG Strategic Roadmap

This report covers the period from January 1 to December 31, 2021 and illustrates our environmental, social and governance (ESG) activities, responding to our stakeholders’ expectations and interests in a transparent and comprehensive way.

At Danaos, we vision sustainability an integral part of our corporate culture and an important regulator in decision making. We constantly employ the highest operating standards on board and ashore to ensure an ethical, safe and pollution free environment for everyone. We evaluate our progress against our commitments, refining our strategy accordingly and we are happy to see that significant progress on our journey has been made. Danaos recognizes the importance of being a responsible part of the society so our Environmental, Social and Governance (ESG) approach provides us with a strategic roadmap to become a more sustainable and resilient business.

Sustainability and our ESG agenda are at the forefront of our thinking.

Materiality Assessment

In 2020 we conducted a materiality assessment, a qualitative survey involving our key stakeholder groups (Employees, Crew, Financial Institutions, Charterers, Suppliers and Danaos Management). For year the 2021 the results of the materiality assessment were validated and updated through internal processes, benchmarking, and through the process of drafting our new Sustainability (ESG) Strategy.

Our Material Topics

Our Commitments  | 2025 Goals

Our ESG Goals and Commitment to the SDG’s

Year 2021 marked the design and implementation of our updated ESG Plan which includes specific goals and measurable targets for the period 2021-2025. Environmental protection and pollution prevention is of high importance to the company. The table below, lists Danaos’s sustainability plan between 2021 and 2025 and summarizes our commitments to ESG.

Targets 2021 – 2025
Status
ENVIRONMENTAL
Emissions
Full alignment and exceeding with the IMO 2030 targets for carbon intensity and carbon neutrality by 2050
New Target set in 2021
47.5% reduction of CO2 emissions by 2025 (baseline 2008 IMO) (grCO2/tones x miles)
New Target set in 2021
Additionally, by 2050 all newbuilds are to be carbon neutral transitioning to alternative fuels subject to availability, as well as technological and regulatory readiness.
New Target set in 2021
25% of vessels will be equipped with AMPs to ensure full power with less emissions
New Target set in 2021
Exhaust gas Cleaning Systems (scrubbers) have been installed, certified and are now in operation onboard 11 Danaos vessels.
Embedded
Participate in Joint Industry Projects (JIP) investigating the use of alternative fuels to improve combustion and reduce the carbon footprint of vessels.
In progress
Voluntary enrollment in the DNV “CO2 Index” project, monitoring and certifying fleet’s performance and CO2 emissions.
Embedded
ISO-50001 Environmental Management System adopted in 2015 is now stimulating energy efficient operational practices and provides the necessary metrics.
Embedded
Marine Pollution, Conservation and Biodiversity
Work with vessels to ensure zero significant spills
In progress
Successful installation, certification, and operation of Water Ballast Treatment systems for the whole fleet.
In progress
Waste Reduction
Reduction of wastes volume by 50% on board all vessels
New target set in 2021
Zero waste and paper in all offices
New target set in 2021
Environmental Compliance
Perform gap analysis and an issue compliance roadmap with modifications for each vessel in the fleet (when relevant enforcement takes place)
Embedded
Comply with IMO’s 2020 regulations introducing a 0.5% sulphur cap, and achieving a successful and smooth transition from HSFO to VLSFO
Embedded
Memberships
Become a member of the Global Maritime Forum (GMF) and joined the Getting to Zero Coalition
Embedded
Become a member of the Ammonia Energy Association (AEA) and explored potential alternative ammonia-based fuels for newbuilt vessels
Embedded
Become a member of the Methanol Institute
Embedded
Reporting
Ensure full transparency to the IMO’s DCS and EU MRV emission reporting schemes through the WAVES data analytics platform
Embedded and ongoing
Monitor and report the fleet’s emissions and energy efficiency indices on our annual report
Embedded
Innovation
Work on fully digitizing our processes ensuring close control and a prompt response in promoting fuel efficiency
In progress
Continuous study and research on technical measures and design retrofits aiming at improving vessels performance
In progress
Support R&D research activities on use of alternative fuels and innovative technologies
In progress
Initiatives
Develop tools to monitor compliance with various initiatives such as the Poseidon Principles, Climate Bonds and sharing of relevant data with clients.
Embedded
SOCIAL
Employee Retention
Expand diversity and equal opportunities
In progress
Maintain annual employee retention rates above 90%
Embedded
Crew Retention
Maintain annual crew retention rates above 80%
Embedded
Full Compliance with the ILO’s requirements for seafarers
Embedded
Training & Development
All staff trained on Health, Safety, Social and Environmental (HSSE) risks
Embedded
Reinforce a culture of sustainability onboard and ashore
Embedded
Monitoring of career development and training for employees
Embedded
Summer internship programs
Embedded
Safety
Maintain a lost time injury frequency rate (LTIFR) significantly lower than the industry averages
Embedded
Zero fatal accidents
Embedded
Procurement
Establish a sustainable procurement policy and screen of our suppliers (100% key suppliers assessed)
New target set in 2021
Child and forced labor
No child or forced labor permitted in our own operations
Embedded
Screen our suppliers to preclude child or forced labor
In progress
Supporting Local Communities
Maintain strong social engagement and provide support to vulnerable groups
Embedded
Encourage the spirit of volunteerism among the employees on environmental and charity activities
Embedded
Increase social impact by 30%
New target set in 2021
Provide Sponsorships to University Students
Embedded
GOVERNANCE
Corruption
Zero Tolerance to bribery and corruption
Embedded
Establish partnerships with sustainable and anti-corruption initiatives
In progress
Whistle-blowing
Provide a confidential and effective whistle blowing system for reporting violations
Embedded
Reporting – ESG Ratings
Maintain full transparency through annual ESG reporting
Embedded
Increase ESG ratings by globally renowned Rating Agencies
New target set in 2021
Integrate SASB standards into ESG reporting
In progress
Diversity
25% women as Board Members and Executives
New target set in 2021
Customer Satisfaction
Maintain customer satisfaction at 95% or above through the application of new tasks
New target set in 2021
Ethical Business Conduct
Provide to all (100%) crew members and office employees a customized educational program of ethical business conduct
New target set in 2021

The UN Sustainable Development Goals

In Danaos we are working on aligning key specific targets and future investments with the United Nations Sustainable Development Goals (SDGs) as well as Environment, Social and Governance (ESG) criteria.

Our priority is to intensify efforts towards contributing to this universal call to action to end poverty, protect the planet, combat climate change and ensure that by 2030 all people enjoy peace and prosperity.

We have fully integrated the SDGs into our strategy, acknowledging those that are most relevant to our business and assessing the extent to which they can help us leverage our contribution to the UN 2030 Agenda.

We have fully integrated the SDGs into our strategy, acknowledging those that are most relevant to our business and assessing the extent to which they can help us leverage our contribution to the UN 2030 Agenda.

Our sustainability goals in connection to the environment are as follows:

  1. Work towards decarbonization and achieve carbon neutrality by 2050
  2. Keep researching energy efficiency and alternative fuels and technologies
  3. Establish partnerships with key stakeholders to promote sustainable development
  4. Ensure perfect compliance with regulations at sea, prevent negative impacts on marine biodiversity by avoiding water pollution, ensure proper waste management and ballast water management and treatment.
  5. Fully comply with regulatory demands to reduce air emissions and continue investing in maintaining and implementing enabling solutions.
  6. Promote circular economy principles by implementing policies fostering the 3R concept.
  7. Training ashore and onboard personnel on decarbonization awareness and actions.
  8. Work further on digitalizing company processes and devising the tools that foster the decarbonization process on a transparent and block-chain ready concept

IMO’s GHG Emission Reduction Targets

IMO continues to contribute to the global fight against climate change and takes urgent action to combat its impacts. As such, it has adopted mandatory measures to reduce emissions of greenhouse gases from international shipping, through the IMO’s pollution prevention treaty (MARPOL) – the Energy Efficiency Design Index (EEDI), and the Ship Energy Efficiency Management Plan (SEEMP) are now both mandatory for new ships. The IMO has adopted mandatory measures to reduce emissions of greenhouse gases from international shipping by at least a 40% reduction in carbon intensity by 2030 and pursue efforts towards a 70% reduction by 2050, with a total annual GHG emissions reduction by at least 50% by 2050, all compared to 2008. In 2021 Danaos for 3 consecutive year met IMO’s 2030 target achieving a 41.4% reduction in CO2 emissions per ton*miles compared to 2008 base year. The % of reduction though was a bit lower compared to 2020 due to an increase in the weighted average speed by almost 1 knot in 2021!

41.4 %

2021 reduction in CO2 emissions per ton*miles compared with 2008, the base year

Key Partnerships

We are actively seeking the participation in industry associations and committees in order to contribute to the advancement of the shipping sector through the exchange of experience and the support and the promotion of sustainability and environmental issues.

In 2020 Danaos became a member of the Global Maritime Forum (GMF), adhering the Getting to Zero Coalition statement.

We are also members of the Ammonia Energy Association (AEA) since July 2020, participating in meetings and keeping up to date with all latest developments for the use of Ammonia in the maritime industry.

We support the Poseidon Principles that help banks align their shipping loans with climate goals as set by the IMO. Signatory banks measure the carbon intensity of their shipping loans, relying on the global Data Collections System for fuel oil Consumption by ships (“IMO DCS”) and publicly report how their shipping loans align to the climate goals. As a result, banks can focus on financing “green” assets, such as vessels with technologies that allow for low GHG emissions. In 2021, 19% of Danaos fleet already complied. The percentage was lower than the previous year (35%) since the trajectory line revised in 2021 by the Poseidon Principles and became stricter, while the vessel’s average speed increased by almost 1 knot resulting in a higher average AER value for 2021.

*Annual Efficiency Ratio (AER): The ratio of a ship’s carbon emissions per actual capacity- distance (e.g., dwt*nm sailed). The AER uses the parameters of fuel consumption, distance travelled, and design deadweight tonnage.
The total AER value for Danaos fleet is calculated as the ratio of the fleet’s total carbon emissions divided by the sumproduct of each vessel’s deadweight multiplied by the total distance sailed in nm:


-FCijv is the mass of consumed fuel j at voyage i (metric tons) for the vessel v,
-nm is the distance in nautical miles corresponding to the voyage i for the vessel v
-Dwt is the Dwt for the vessel v at the summer load draft
-Cfj is a non-dimensional conversion factor between fuel j consumption, measured in grams and CO2 emission also measured in grams based on carbon content (as per the update of the IMO 2000 study (Buhaug et al,2008))

Climate bond initiatives are also explored to verify fleet’s compliance. We also work with Science Based Targets (SBTi) and the Methanol Institute (MI) to organize our participation in various initiatives and schemes.

Stakeholder Engagement

Stakeholder engagement helps us to proactively consider the needs and desires of anyone who has a stake at Danaos. This is fostering connections, trust, confidence, and buy-in for our key initiatives. When it comes to strategic planning stakeholder engagement is critical. An ongoing dialog with our stakeholders is of paramount importance so that we can fulfill their needs and concerns in relation to our actions. Moving forward, we are regularly developing full materiality assessments in which stakeholders are asked to map out sustainability issues according to their importance.

In determining if an issue is material, we consider our impacts across the value chain through the involvement of our main stakeholders. We update our assessment each year to make sure it reflects changes in our business and the external environment. Addressing each and every issue related to the ESG (environmental, social and governance) factors enables us to design our sustainability strategy accordingly.

Our Stakeholders
What they expect from us
Communication Channels and Frequency of Engagement
Employees
(Office staff & Seafarers)
Our employees expect from Danaos to be a fair employer, to provide safe working conditions and to care for the work-life balance of employees, to provide opportunities for training and professional development, and to ensure a discrimination-free working environment.
Relative material issues: Anti-corruption, Commitments to Decarbonization, Carbon Emissions, Waste Management, Marine Pollution and Conservation, Promote Zero Accidents, Talent Management, Ethical Business Conduct, Governance
We support an ongoing open communication between management and employees. Communication is achieved through monthly internal meetings as well as annual management review reports. We host regular team building activities and employee welfare initiatives, and we hold regular employee satisfaction surveys.
Customers
(Charterers)
Our customers expect high quality and flexible services, ongoing support, flexibility to any requirements that come up, transparency, and to conduct our business in a sustainable manner (ethical, safe, environmentally friendly, respecting of human rights).
Relative material topics: Commitments to Decarbonization, Carbon Emissions, Waste Management, Marine Pollution and Conservation, Ethical Business Conduct, Governance, Customer Satisfaction
Communication with our finance related stakeholders is through contracts, financial reports, progress meetings, corporate presentations, and day-to-day transactions.
Finance Related
(Banks)
Our finance related stakeholders are interested in credit and financial performance, wish to receive accurate information, on risk control and assessment, and to the company’s robust management processes and long-term growth.
Relative material topics: Anti-corruption, Transparency and Disclosure of ESG Data, Ethical Business Conduct, Commitment to Achieve IMO Goals, Improving Key ESG Rating Performance, Promoting Diversity in the BoD and Executive Level, Commitments to Decarbonization
Communication with our finance related stakeholders is through contracts, financial reports, progress meetings, corporate presentations, and day-to-day transactions.
Government Officials and Authorities
(Port State Control)
Government officials and agencies expect us to be compliant and consistent, to conduct safe and environmentally friendly operations, to implement quality standards, to cover due diligence, and to generate economic growth.
Relative material topics: Anti-corruption, Transparency and Disclosure of ESG Data, Ethical Business Conduct, Commitment to Achieve IMO Goals, Commitments to Decarbonization, Carbon Emissions, Waste Management, Marine Pollution and Conservation
We engage with government officials and authorities through notices/instructions about on latest regulations and requirements, through the results inspections and auditing programs, and through formal dialogue and communication channels.
International and Industry Organizations and Regulators
(e.g. IMO, HELMEPA)
These stakeholders expect our active participation, collaboration and support, to be up-to-date and compliant with new requirements, to operate in an ethical manner, and to promote a sustainability culture.
Relative material topics: Anti-corruption, Transparency and Disclosure of ESG Data, Ethical Business Conduct, Commitment to Achieve IMO Goals, Commitments to Decarbonization, Carbon Emissions, Waste Management, Marine Pollution and Conservation, Promote Zero Accidents
We engage though annual and ad-hoc meetings, through memberships, audits, through participation on high-level meetings, steering groups, committee, councils, forums and projects, as well as in the formation of joint action plans.
Suppliers
(port agents, manufacturers, shipyards)
Our suppliers expect a fair and long-term cooperation, the timely execution of our financial responsibilities, to provide information on significant changes, and to exchange knowledge for business opportunities.
Relative material topics: Ethical Business Conduct, Tracking Key Suppliers Sustainability Performance, Commitments to Decarbonization, Commitments to Achieve IMO Goals
We communicate with our suppliers through our supplier performance evaluation, through service review meetings (with major suppliers), through our participation in supplier organized workshops and on- site visits.
Society
(NGOs, Local Communities)
Our social stakeholders expect social support and economic development, to conduct our business in an ethical manner and protect human rights, to provide employment opportunities, and to participate in initiatives in order to support social and environmental causes.
Relative material topics: Commitments to Decarbonization, Commitments to Achieve IMO Goals, Ethical Business Conduct, Promote Zero Accidents, Marine Pollution and Conservation, Talent Management
We communicate through news published on our corporate We communicate through news published on our corporate website and social media accounts, through our donations and charities, and through our participation in discussions/ dialogue in sustainability forums organized by NGOs