GOVERNANCE
MATERIAL
ISSUES
Economic performance
Anti-corruption
Anti-competitive behavior
Tax
Ethical Business Conduct
Customer Satisfaction
GOALS
2021-2025
Status: 8 out of 12 governance
goals for 2025 have been already
embedded in 2023.
A STRONG CORPORATE CULTURE
Our governance structure is designed with strength and clarity, steered by our Board of Directors. This Board has confirmed that the majority of its members are independent, aligning with the standards of the New York Stock Ex.change (NYSE).
Their role includes defining the company’s strategic directions, overseeing the management team, and ensuring transparent communication with our shareholders about governance activities. Our commitment to corporate governance is fundamental, driving positive impacts across our operations, especially in advancing sustainability efforts.
Danaos abides by the:
• Corporate Governance Guidelines
• Code of Business Conduct and Ethics
• Code of Conduct & Ethics for Corporate Ofcers & Directors
• Ethics and Compliance Policy
• Anti-Fraud Policy
• Insider Trading Policy
• Anti-Bribery & Anti-Corruption Policy
• Anti-Money Laundering Policy
• Stakeholders Engagement Policy
• Health & Safety Policy
• Environmental policy
GOVERNANCE STRUCTURE, COMPOSITION,
AND RESPONSIBILITIES
In 2023, our governance framework was further enhanced, with the Board of Directors demonstrating rigorous adherence to high governance standards. Comprised of executive, non-executive and independent members, the Board reflects diversity in nationality and expertise, promoting strategic decision-making and effective oversight. This diverse structure ensures transparency and accountability, essential for aligning with the long-term interests of stakeholders. Currently, the Danaos Board is composed solely of male members. In our pursuit of excellence in governance though, we recognize the imperative need for a diverse and inclusive Board. To address the current composition, we are committed to implementing targeted recruitment and mentorship programs aimed at enhancing the representation especially of women and other underrepresented groups on our Board. These initiatives are designed to bring a wider range of perspectives and expertise to our governance, ensuring decisions reflect the diverse world in which we operate.
Our governance approach is articulated through the diligent efforts of four key committees: the Audit Committee, which oversees financial integrity and compliance; the Compensation Committee, responsible for executive compensation and policy setting; the Environmental, Social,
and Governance (ESG) Committee, guiding our impact on the economy, environment, and society; and the Nominating and Corporate Governance Committee, ensuring effective board and executive management. Each committee plays a crucial role, meeting multiple times throughout the year to review the company’s performance, strategies, and risk management.
Detailed description of the responsibilities of each committee can be found Danaos Corporation website.
The Board’s commitment is evident in their regular meetings, where comprehensive reviews of the company’s performance and strategic direction are conducted, always with an eye towards sustainable development and stakeholder value. Through these structured and focused efforts, our Board effectively manages and monitors the company’s impacts, ensuring responsible governance and strategic oversight.
For more detailed information on our governance practices and committee activities in 2023, please visit our website here and/or refer to our annual report. This documentation further underscores our dedication to high governance standards and our commitment to transparency, accountability, and the long-term interests of our stakeholders.
CORPORATE GOVERNANCE MANUAL
AND TRAINING PROGRAM
A detailed Corporate Governance Manual, accessible to all employees via the Company’s Intranet, provides clear guidance on governance principles and ethical standards.
CONTINUOUS IMPROVEMENT AND
ALIGNMENT WITH INDUSTRY STANDARDS
NOMINATION AND SELECTION OF THE
HIGHEST GOVERNANCE BODY
CHAIRMAN OF THE
HIGHEST GOVERNANCE BODY
CONFLICTS OF
INTEREST
HIGHEST GOVERNANCE BODY
IN SUSTAINABILITY REPORTING
COMMUNICATION OF
CRITICAL CONCERNS
EVALUATION OF THE PERFORMANCE
OF THE HIGHEST GOVERNANCE BODY
There were zero cases of confirmed breaches of the Code of Conduct & Ethics for 2023.
REMUNERATION
This process underscores our dedication to a remuneration system that is equitable and reflective of our commitment to ethical governance. More information about the remuneration policies, procedures and figures are provided in Danaos annual report for 2023.
Danaos sets specific climate related targets, which if met by the CEO, remuneration is provided. Moreover, Danaos has included the achievement of environmental targets in the assessment criteria for employees rewarding. 1% of net income is distributed to those contributed to targets achievement. The BoD approves salary bonuses for Executive Officers based upon the proposal of the Compensation Committee.
A ROBUST RISK MANAGEMENT
AND CONTROL FRAMEWORK
REFINED RISK
MANAGEMENT APPROACH
Two-Tiered Risk Assessment and Delegated Management Process:
In 2023, Danaos significantly refined its risk management framework, closely aligning it with strategic business objectives and a proactive stakeholder engagement strategy to ensure holistic risk management and operational efficiency. The process begins with the Board of Directors conducting a high-level assessment of 26 major risks, gaining a comprehensive understanding of the challenges and opportunities Danaos may face. Mid-level management further refines this assessment, thoroughly analyzing these risks into 80 smaller, actionable components. This two-tiered risk management approach ensures a detailed focus on risk mitigation and opportunity identification, aligning operations with industry best practices and reinforcing the commitment to the ESG strategy.
The Board of Directors, supported by the Audit Committee, plays a crucial role in this refined approach. The Board assesses major risks and contemplates potential mitigation strategies, while the Audit Committee engages in deep discussions about the enforcement of company’s policies regarding risk assessment and management. This includes establishing appropriate guidelines and policies to govern the process, alongside a thorough
examination of the company’s major financial risk exposures and the management’s steps to control them.
For effective risk management, the Board, with assistance from the Audit Committee, delegates the management of specific risks to executive officers, depending on the nature of each risk. This structured delegation ensures that risks are managed by individuals with the most relevant expertise and insight, significantly enhancing the effectiveness of risk management strategies.
Stakeholders Engagement and Risk Mitigation:
The Stakeholders Engagement Policy is integral to the risk management approach, ensuring proactive consideration of the needs and desires of all stakeholders. Strong and frequent relationships are established through various engagement methods such as open communication, internal meetings, management review reports, and team-building activities. This commitment to transparency and effective engagement reflects in identifying, communicating with, and meeting the expectations of stakeholders, fostering strong, transparent, and mutually beneficial relationships.
This policy, implemented and monitored by the Corporate Sustainability Officer (CSO) and the ESG Working Team, involves a comprehensive assessment that considers both internal and external material factors. It aligns risk management strategies with the expectations and concerns of stakeholders, thereby enhancing the resilience and responsiveness of operations.
Continual and Flexible Risk Assessment:
The shipping industry, dynamic and subject to continual change, including regulatory updates and market shifts, demands a flexible risk assessment approach. Our approach has been instrumental in enabling the company to adapt and respond effectively to these changes.
Additionally, we are committed to the continual development and training of staff. Recognizing that an informed and skilled workforce is the greatest asset in identifying and managing emerging risks, comprehensive training and development programs have been implemented. These programs focus on equipping staff with the knowledge and tools necessary to anticipate and respond to industry specific challenges, reinforcing a proactive stance on risk management.
Alignment with Business Objectives:
At Danaos, risk management is intricately woven into the business strategy, ensuring alignment of operations with the ability to achieve business objectives and the long-term vision. A structured set of business objectives – categorized into Operations, Reporting, Compliance, and Sustainability – is directly supported by the risk management framework and stakeholder engagement strategy.
• Operations Objectives: The risk management approach, coupled with stakeholder engagement strategy, ensures operational excellence, cost control, and fleet optimization, promoting profitability, growth, and innovation.
• Reporting Objectives: Commitment to accurate and transparent reporting is bolstered by risk management and stakeholder engagement strategies, ensuring reliability and integrity in financial and non-financial reporting.
• Compliance Objectives: Adherence to legal and regulatory frameworks is reinforced by the risk management framework and stakeholder insights, ensuring ethical operations and robust compliance protocols.
• ESG Objectives: ESG goals are supported by the risk management approach and stakeholder engagement, focusing on minimizing environmental impact, ensuring social well-being, and promoting ethical governance practices.
This two-tiered risk management approach ensures a detailed focus on risk mitigation and opportunity identification, aligning operations with industry best practices and reinforcing the commitment to the ESG strategy.
ECONOMIC
PERFORMANCE
Danaos provides information on the direct economic value generated and distributed in its annual report.
The company also has a defined benefit plan in place, which is managed through its liquidity resources. Danaos believes it has sufficient cash and cash equivalents to meet its defined benefit plan obligations.
ANTI-CORRUPTION
Our holistic approach to anti-corruption, combining thorough risk management with a profound commitment to ethical business practices, solidifies our resolve against corruption. Strategic risk mitigation efforts, coupled with ethical engagement, not only help us address corruption risks but also enhance our operational resilience. Our track record of maintaining for 2023 no confirmed incidents of corruption and bribery or monetary losses from related legal proceedings, underscores the efficacy of our risk management strategies and our deep-rooted commitment to integrity in every aspect of our operations.
Danaos, devoted in its commitment to the highest standards of integrity and transparency, has firmly established a robust Anti-Bribery & Anti-Corruption (ABAC) Policy. This policy embodies our uncompromising stance against corruption, ensuring adherence to international anti-bribery and anti-corruption regulations. Our dynamic approach to policy review and updates aligns with evolving global standards, protecting our operations against potential legal, financial, and reputational risks.
ABAC Policy has been communicated to all (100%) managers and directors within the company.
ABAC Policy has been communicated to all (100%) managers and directors within the company.
Our ABAC Policy, alongside a comprehensive risk management framework, aims to uphold unparalleled ethical standards throughout all company operations. Our ABAC policy is publicly available in the company’s website.
Central to our anti-corruption efforts are our comprehensive training programs. Annually, we conduct several mandatory training sessions for all employees, aimed at deepening their understanding of our ABAC policy, the legal consequences of bribery and corruption, and the practical measures for their prevention. These sessions are pivotal in cultivating a culture of integrity within Danaos and are continuously updated to mirror the latest developments in legal standards and
best practices.
IDENTIFIED SIGNIFICANT RISKS
RELATED TO CORRUPTION
In 2023, we undertook a detailed risk assessment covering 100% of our operations to pinpoint all potential corruption-related risks, underscoring our dedication to transparent and ethical operations. This meticulous process ensures an extensive evaluation of our operational framework.
Our extensive risk assessment revealed several critical areas with potential corruption implications:
• Global Economic Conditions: We recognize that economic downturns and geopolitical tensions could inadvertently create conditions conducive to corruption. Our strategy to counteract such risks involves continuous monitoring and adaptable business planning.
• Demand Fluctuations and Trade Protectionism: Variability in market demand and the advent of protectionist policies could influence corruption risks by altering our competitive environment. To mitigate these risks, we pursue market diversification and strategic planning.
• Financial Market Disruptions: The volatility of financial markets poses a risk by potentially increasing borrowing costs and restricting capital
allocation. Our diversified funding sources and robust liquidity strategy are crucial for mitigating these risks.
Engagement in Sustainable
and Anti-Corruption Partnerships
We have initiated the process of joining the Maritime Anti-Corruption Network (MACN) initiative, a step that will strengthen our corporate governance by tackling bribery, facilitation payments, and various forms of corruption. This initiative involves the development and dissemination of best practices, enhancing awareness of common challenges, and engaging closely with our key stakeholders to create sustainable solutions.
QUANTITATIVE METRICS AND
MATERIALITY OF EXTERNALIZED IMPACT
ON STAKEHOLDERS
Our anti-corruption initiatives are supported by transparent and measurable metrics, such as the number of conducted training sessions, compliance rates, and the effectiveness of our reporting mechanisms.
Moreover, our risk assessment processes critically examine the externalized impacts of our operations on stakeholders, ensuring our business practices contribute positively to societal well-being and environmental sustainability.
PROACTIVE MEASURES
AND CPI INSIGHTS
Our dedication to ethical operations is further underscored by succeeding 0% of our port calls in 2023 were in countries ranked among the 20 lowest in Transparency International’s Corruption Perception Index (CPI).
This achievement significantly minimizes our exposure to high-risk environments for corruption and underscores our commitment to conducting business in jurisdictions that reflect our ethical values.
Our dedication to ethical operations is further underscored by succeeding 0% of our port calls in 2023 were in countries ranked among the 20 lowest in Transparency International’s Corruption Perception Index (CPI).
ETHICAL BUSINESS
CONDUCT
The Purpose Of The Code Of Business
Conduct & Ethics And Policies Is To:
• Raise employee awareness on areas concerning ethical risk.
• Provide guidance to help employees recognize and deal with ethical issues, especially in preventing bribery and corruption.
• Provide mechanisms for employees to report unethical conduct.
• Foster among them a culture of honesty and accountability.
HIGH ETHICAL
PRINCIPLES
By prioritizing ethical conduct, we aim to establish trust with stakeholders and mitigate potential legal and operational risks.
We measure our commitment to ethical behavior through several key performance indicators. All employees (100%) certify their compliance with the company’s Code of Business Conduct & Ethics and Policies, and all employees (100%) receive training and education on ethical policies and procedures. Incidents reported through the anonymous reporting system are monitored, and effective resolution of any issues that arise is ensured. For 2023, no material reports were received. The company also conducts regular reviews and updates to its ethical policies and procedures to ensure their continued relevance and effectiveness.
DATA ETHICS, PRIVACY, AND CYBERSECURITY:
UPHOLDING DIGITAL TRUST AT DANAOS
We are dedicated to the highest ethical standards in managing data, privacy, and security. This foundational commitment to our stakeholders is supported by comprehensive compliance with a broad spectrum of regulatory standards. While our efforts include adherence to the European Union General Data Protection Regulation (GDPR),
National Institute of Standards and Technology (NIST) frameworks, and the EU’s Network and Information Systems 2 (NIS2) directive, these are not exhaustive of the regulations we follow. Our forward-thinking cybersecurity strategy encompasses a wider array of international data protection and cybersecurity norms and practices.
GDPR COMPLIANCE: THE FOUNDATION OF
PERSONAL DATA PROTECTION
With the GDPR’s enactment, Danaos has reinforced stringent personal data handling protocols across all data life cycles. This includes employing transparent, secure, and respectful data collection, processing, and storage practices.
Our proactive engagement in a Gap Analysis with a specialized consulting firm had further strengthened our compliance, enhancing our posture in global data protection.
INTEGRATING CYBERSECURITY:
PROTECTING DATA INTEGRITY AND PRIVACY
Our integrated cybersecurity strategy employs cutting-edge technologies and awareness initiatives to safeguard sensitive information. Danaos’ cybersecurity risk management program, adhering to international standards such as the IMO
guidelines and the ISO 27000 series, reflects our commitment to the confidentiality, integrity, and availability of data, showcasing our broader commitment beyond the specified frameworks.
STRATEGIC FOCUS ON ISO CERTIFICATIONS:
ENHANCING DATA GOVERNANCE
Actively pursuing ISO 27001 and 27701 certifications, Danaos demonstrates its commitment to risk management and data protection. ISO 27001’s focus on information security management systems and ISO 27701’s extension to
privacy information management emphasize our comprehensive approach to data governance, indicating our adherence to and beyond the specifically mentioned regulations.
ENHANCED GOVERNANCE AND OVERSIGHT: COMMITMENT TO EXCELLENCE
Our governance structure, as detailed in our Annual Report, showcases a proactive, structured approach to cybersecurity and data protection. With oversight mechanisms involving top management and specialized committees, Danaos ensures strategic alignment of our cybersecurity initiatives. The expertise within our IT
Department underpins these strategies, aligning them with both specified and additional international standards and organizational goals. This governance framework solidifies our commitment to excellence in data protection and cybersecurity within the maritime industry.
In 2023, the company did not receive any substantiated complaints concerning breaches of customer privacy or losses of customer data.
SUSTAINABLE
PROCUREMENT
In Danaos we have procedures in place to ensure effective implementation of suppliers ESG programs required to identify and assess material risks and impacts. We publicly disclose the measures related to suppliers’ engagement in our Low Carbon Transition Plan. Throughout 2022, we worked to establish end-to-end visibility on supplier ESG performance by establishing the operational model, integrating ESG principles in the procurement process and prioritized focus on human rights, equal opportunities and non-discrimination policies, child labor policies, anti-corruption policies, carbon reduction policies and safe working condition policies.
We have a systematic supplier screening approach to identify significant suppliers and environmental, social and governance aspects are considered in the screening process. The approved list of suppliers is comprised of suppliers meeting financial integrity, legal integrity, reliability, material and service cost and delivery time predefined criteria. For significant key suppliers ESG criteria have also been introduced.
Suppliers’ desk assessment with verification of evidence is in place. The Danaos ESG Assessment Questionnaire, in which ESG rating criteria
are reported, can be found in the following link:
https://vq.danaosshipping.gr/
Suppliers are requested to provide supporting evidence on their ESG policies, practices, performance and public disclosures. This information is then reviewed resulting in an appraisal of the supplier’s ESG performance.
We have set prerequisites and mandatory criteria which, in case not fulfilled the corresponding suppliers are removed from the approved suppliers list. The 2023 assessment resulted in zero suppliers being excluded from the list.
In the scope of this questionnaire with ESG criteria, according to UN Compact and GRI standards, our suppliers are requested to report not only on their Scope 1+2 emissions related to Danaos activities,
but all ESG aspects that are considered important for sustainable business.
Within 2023 the number of our suppliers sharing their Scope 1+2 emissions doubled. Of course, there is work to be done to this respect, however the first steps have been successfully made to this direction.
We also share with our clients our Scope 1+2 emissions allocated to them, so that they can in turn evaluate the size of their contribution in a holistic approach as a part of the value chain environmental footprint and refine their strategy accordingly.
We have introduced KPIs for our suppliers basis on their ESG performance while we have enhanced our ESG questionnaire requiring more
supporting evidence.
We have developed the Supplier Code of Conduct that articulates our expectations for ethical behavior, legal compliance, and responsible practices among all our suppliers and subcontractors. The Code aligns with our core values of sustainability, fairness, and corporate responsibility, and
demonstrates our commitment to the United Nations Global Compact and adherence to international standards such as the ILO Declaration and the UN Universal Declaration of Human Rights.
Within 2023 we sent our ESG questionnaire to 141 significant suppliers (above $200k business and more than 20 p personnel) which represent more than 90% of our suppliers’ turnover. These suppliers include shipyards, spares, lub oil and paint suppliers, travel agents, insurers etc.
More than 30% of them have replied and over 30% have reported that the adhere to Danaos Code of Ethics, part of which is Danaos Supplier
Code of Conduct (https://www.danaos.com/investors/corporate-governance/corporate-governance-guidelines/default.aspx). The foundation for integrating sustainable procurement into our ESG strategy was built in 2022, in 2023-2025 we focus on scaling up our supplier engagement.
Within 2024 it is our target to pursue 100% of significant suppliers commitment to the Supplier Code of Conduct, to assess 100% of our key suppliers, to introduce weights to ESG criteria and produce a scorecard assessment for our suppliers basis on their ESG performance, to train our stakeholders on the Supplier ESG program. Our plan is for the suppliers with low ESG rating to engage in a constructive dialogue, identify the root causes of their low performance, listen their ideas on alternative plans/practices for improving their ESG score, share our view on best practices and capture measurable, achievable solutions, guide and support them on the implementation of corrective and improvement actions within a realistic timeframe.
To this respect we have proceeded to the establishment of a sustainable procurement steering committee that will meet on a quarterly basis to review progress and discuss risks and consequently plan remedial measures to assure solid sustainability performance. This committee will report to the COO that is responsible to ensure alignment of ESG vision and implementation and align ESG strategies of different divisions within the company.
CUSTOMER ADDED
VALUE PROGRAM
Our customer strategy is based on a spirit of partnership and our customers’ needs is the compass that paves the way for necessary improvements in our services. Our commitments refer to certain focus areas and are explicitly described in our “Customer Added Value Program” methodology
that will be published within the 2024 and encompass the 2023 Customer Added Value Dashboard with the KPIs linked to each one of the following elements relevant to our customers’
added value creation:
Danaos Financial Integrity
The Company is committed to preserve a healthy financial status. Financial KPIs, such as EBIDTA, which are the metrics of a company’s financial integrity create the foundation of a concrete base for a long-term collaboration in a safe and trustful business environment.
Danaos Code of Business and Ethics
The reputation and integrity of Danaos are valuable assets that are vital to the creation of a transparent, ethical, fair framework of cooperation with our customers. Each employee of the Company, including each of the Company’s officers, is responsible for conducting the Company’s business in a manner that demonstrates a commitment to the highest standards of integrity.
Reliability in the transportation of goods
Danaos sets the target of fleets’ utilization due to operational issues >99%. This target is met on an annual basis for the last 10 years. The uninterrupted operation of our fleet, with the highest quality standards, ensuring safe, efficient and on time transportation of goods generates high value for our customers.
Professional Crew
Our target for crew retention rate is > 80%. Seafarers are the most valuable link in the operations chain. Competent crew is the key pillar for safe and efficient ship’s operation. Crew awareness and engagement to company procedures, policies and practices is of outmost importance for ensuring quality service and is ensured by continuous training.
Optimized Performance
The Danaos Low Carbon Transition Plan (LCTP), offers a comprehensive overview of our dedication to climate action and describes our decarbonization strategy, surpassing the targets set by the IMO. In LCTP we record in a transparent and structured way Danaos policies to achieve our environmental goals. LCTP addresses IMO targets following IEA SDS pursuing efforts to meet the stricter 1.5oC Paris Agreement goal. Following LCTP roadmap will create opportunities for further business development with commercially attractive ships of low carbon footprint. Considering the IEA B2DS scenario analysis and as a first step, in Danaos we decided to strengthen decarbonization policy, setting new stricter targets of 50% carbon intensity reduction by 2030 compared to 2008 levels, with the aim to be carbon neutral by 2050.
Therefore, Danaos is the partner who can support its customer’s “green” initiatives and be next to them sharing efforts and the same vision in the decarbonization journey.
Transparency and Data Sharing
In view of the EU ETS, Fuel EU Maritime and the upcoming IMO decision on CII penalizing scheme, data sharing and transparency is more than imperative, in fact it is the new norm along with on-demand emission data verification.
We work on a transparent data sharing basis with our clients under JIPs developing APIs for online data exchange aiming to work together on route optimization after having developed a common understanding and approach on performance analysis.
Thus, clients can have a transparent, fully updated picture of ship’s performance on demand and/ or periodically.
Sustainable Structure
At Danaos sustainability is an integral part of our corporate culture and an important regulator in the decision making process. The company is committed to issue updated ESG report annually according to GRI & SASB standards. We are also committed to disclose data to CDP and CSA annually. The way to achieve our commitments is described in our LCTP (Low Carbon Transition Plan) which outlines the roadmap with the progressive steps to the ultimate target which is carbon neutrality.
When it comes to the environment as part of our ESG strategy and following our decision on strengthening our engagement with sustainability, in Danaos within 2023 we have disclosed for second time to CDP, obtaining a B- rating and we also received a CDP Supplier evaluation B- score on our practices on supplier engagement issues. In 2023 we reported in the S&P Global Corporate Sustainability Assessment. We declare in a transparent way our commitments and progress towards their achievement, and we are assessed and rated accordingly.
In Danaos we evaluate our progress against our commitments and refine our strategy accordingly.
Customers’ Satisfaction
In Danaos we are committed to honor our commitments and C/P agreements.
We are committed to provide accurate information on the requested data on a timely manner. Our digitalized processing of performance and operational data via sophisticated data analytics tools ensures close control and on-time detection of any possible issue and proactive action to this respect.
We engage with our customers through meetings, in order to share information on action plans and long-term strategy. We work closely with our customers to develop services that promote sustainability, and we participate in our customers’ benchmarking systems and sustainability assessments.
In 2023 we have initiated a customer satisfaction and we are currently in process of revisiting the survey for fine tuning based on the assessment in order to reach our commitment by 2025.
