Final Version of IMCA Code of Practice on Environmental Sustainability

Environmental Sustainability 12 March 2021

The International Marine Contractors Association (IMCA) is the international trade association representing offshore marine contractors, service companies, and the industry’s supply chain.

IMCA’s mission is to improve performance in the marine contracting industry. Our value proposition is to influence our industry in key technical, contractual, policy and regulatory matters that are in the collective best interest of the marine contracting industry.

For over 25 years IMCA has maintained an important body of knowledge to assist our industry in the form of published guidance documents promoting good practice across a wide range of technical and professional disciplines. Documents have a self-explanatory title and are catalogued using a code containing letters and numbers. The letter indicates the discipline, and the number is simply sequential within that discipline.

Members are expected to adopt as a minimum standard the technical guidelines (published documents, information notes and other materials) produced by the Association appropriate to the technical division(s) and region(s) to which the relevant Member belongs.

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IMCA makes every effort to ensure the accuracy and reliability of the data contained in the documents it publishes, but IMCA shall not be liable for any guidance and/or recommendation and/or statement herein contained. The information contained in this document does not fulfil or replace any individual’s or Member's legal, regulatory or other duties or obligations in respect of their operations. Individuals and Members remain solely responsible for the safe, lawful and proper conduct of their operations.

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Environmental Sustainability – Version History

Date Reason Revision

12.03.2021 As approved and endorsed by the ESC on 11 March 2021 and then Issued for Review for wider consultation.

1.0

Final Version of IMCA Code of Practice on Environmental Sustainability

Environmental Sustainability – 12 March 2021

1 Introduction ...............................................................................................................1

1.1 Why a Code of Practice on environmental sustainability for our industry ........................ 1

1.2 Principles for environmental sustainability ........................................................................ 2

1.3 Scope and regulatory context ............................................................................................. 2

1.4 Significant environmental aspects for our industry............................................................ 2

1.5 Strategic objectives and target setting ............................................................................... 3

2 Significant Environmental Aspects ..............................................................................6

2.1 Greenhouse gas emissions ................................................................................................. 6

2.2 Energy management and energy efficiency ....................................................................... 9

2.3 Life below water ............................................................................................................... 13

2.4 Encouraging a circular economy, waste management and end-of-life assets ................. 16

3 Making an impact on environmental sustainability across our industry ..................... 19

3.1 Raising awareness, competence and training .................................................................. 19

3.2 Engaging with the supply chain ........................................................................................ 19

3.3 Embracing automation and digitalisation and the associated environmental benefits ... 21

4 Measuring and monitoring industry progress ............................................................ 23

4.1 Reporting and disclosure .................................................................................................. 23

4.2 Updating the Code of Practice and areas for further work .............................................. 25

5 Appendices .............................................................................................................. 26

Appendix 3 – Carbon Intensity Indicator Proposed Proxies ............................................... 31

6 Glossary ................................................................................................................... 32

List of Figures Figure 1 – Key Definitions ........................................................................................................................ 6 Figure 2 – Carbon Pricing ........................................................................................................................ 7 Figure 3 – Practical Steps in a Decarbonisation Roadmap ...................................................................... 7 Figure 4 – What is Carbon Offsetting ...................................................................................................... 8 Figure 5 - State-of-the art technologies, measures and potential for GHG reductions from global shipping ................................................................................................................................................... 9 Figure 6 - Mapping of energy management system elements across SEEMP, ISM and ISO 50001 ...... 11 Figure 7 - Framework for setting up an energy management programme .......................................... 11 Figure 8 - A holistic view of energy management across organisational and operational boundaries 12 Figure 9 – Blue versus Green Hydrogen ................................................................................................ 13 Figure 10 - Biodiversity Impacts of offshore wind construction and decommissioning ....................... 14 Figure 11 - Recommended measures and approaches to aid in managing Life Below Water: ............ 15 Figure 12 - The MacArthur Foundation’s Circular Economy Framework .............................................. 16 Figure 13 - Key factors to consider in determining supplier criticality ................................................. 20 Figure 14 – Principles for enhancing the quality and decision-usefulness of IMCA members’ disclosures on climate and environmental matters ................................................................................................ 24 Figure 15 - Measuring emissions reductions for the offshore marine contracting industry ................ 25 Figure 16 - Measuring emissions reduction progress in the supply chain ............................................ 25

Environmental Sustainability © IMCA Trading Ltd 1

1 Introduction

1.1 Why a Code of Practice on environmental sustainability for our industry

With more than 700 member companies operating in over 60 countries globally, as a trade association, IMCA represents the majority of contractors and the supply chain in the offshore marine construction industry. This Code of Practice on Environmental Sustainability (the Code) presents a practical shared 5 approach to environmental sustainability for the offshore marine construction industry, developed by IMCA members (the Members).

Through IMCA’s Code of Conduct1, Members commit to adhere to applicable laws and comply with accepted standards of ethical business conduct, including those related to environmental protection. The Code of Conduct further states that “As part of our Membership we share experience and 10 knowledge that raise standards and ensure that the latest developments in working practices are adopted everywhere across our industry.”

The environment is one of three pillars of sustainable development, alongside social and economic development. Sustainable development is “development that meets the needs of the present without compromising the ability of future generations to meet their needs”2. By environmental sustainability, 15 IMCA is referring to how its members identify, assess and manage natural resources , biodiversity, and climate- and environment-related risks in their activities and operations and, as appropriate, embed these considerations in their business strategy. Environmental sustainability is the E in sustainability or “ESG” and should be considered alongside other sustainability dimensions that can contribute to the realisation of business economic goals and innovation. In the case of E, this relates not only to 20 reducing environmental and carbon footprints, but also to identifying and seizing opportunities for long-term value creation by championing environmental stewardship and maintaining ecological integrity of environmental systems. It also entails Members disclosing, through their own narratives, how they are making progress towards ensuring environmental sustainability.

The energy transition is fundamental to long-term value creation for our industry. The Paris 25 Agreement, endorsed by almost all countries worldwide, requires countries to work together to limit global temperature increases to 2°C above pre-industrial levels, and to make all efforts to limit such rises to 1.5°C. The importance of the world collectively achieving the more ambitious target was 1.5°C was reinforced in 2018 in the Inter-governmental Panel on Climate Change’s (IPCC) Special Report on 1.5°C3, and is now driving corporate climate action globally (e.g. with 1.5°C targets in the Science-based 30 Targets Initiative4). This is of central importance to our industry and underpins this Code of Practice on environmental sustainability.

The International Maritime Organisation (IMO) has responsibility for regulating this work for the international shipping industry. In 2018, IMO adopted an initial strategy on the reduction of greenhouse gas (GHG) emissions from ships5 (the IMO GHG Strategy), setting out a vision which 35 confirms IMO’s commitment to reducing, and then completely phasing out, GHG emissions from international shipping as soon as possible. The strategy refers to a “pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals”. Under the identified “levels of ambition”, the initial strategy envisages for the first time a reduction in total GHG emissions from international shipping which should peak as soon as possible and to reduce the total annual GHG 40 emissions by at least 50% by 2050 compared to 2008, while, at the same time, pursuing efforts towards phasing them out entirely. The initial strategy is due to be revised by 2023.

1 Code of Conduct for IMCA Members (windows.net) 2 World Commission on Environment and Development. 1987. Our Common Future: The Brundtland Report. 3 Global Warming of 1.5 ºC — (ipcc.ch) 4 Business Ambition for 1.5°C - Science Based Targets 5 https://www.imo.org/en/MediaCentre/PressBriefings/Pages/06GHGinitialstrategy.aspx

2 © IMCA Trading Ltd Environmental Sustainability

This Code of Practice focuses specifically on good working practices related to environmental sustainability, bringing together knowledge and Member experiences, and highlighting new developments. It affirms IMCA’s commitment to environmental sustainability, including tackling 45 climate change, and provides guidance for Members and our industry, offering practical suggestions of what to do. It sets the bar on the most significant environmental expectations for our industry and on management of key environmental interactions associated with the offshore marine contracting industry. It has also been developed in response to demands and stakeholder expectations of Members, clients, regulators, investors, NGOs and the public. 50

The Code has been developed by IMCA members through a dedicated work group under the guidance of the Environmental Sustainability Committee, with oversight from the IMCA Board.

1.2 Principles for environmental sustainability

Members may wish to apply a number of principles for environmental sustainability, including:

• Demonstrating continuous improvement in environmental performance; 55

• Enabling sustainable choices and decision-making;

• Considering the application of key environmental law principles (i.e., Rio Principles6) such as the producer responsibility, polluter-pays, and the precautionary principles;

• Being transparent in emissions figures and those related to other environmental aspects; and

• Disclosing in accordance with internationally-recognised standards and frameworks. 60

1.3 Scope and regulatory context

The Code applies to all IMCA members, but does not aim to be prescriptive. It recognises the diversity of Members’ human and financial resources, competence, capacities, ambitions and differing stages of progress and maturity in advancing environmental sustainability within Member companies.

This is a voluntary, industry-led code on environmental sustainability for the offshore marine 65 contracting industry. It is not legally binding. Any practical requirements presented do not intend to take the place of those mandated by law.

At the international level, the IMO is the specialised UN agency on shipping, and reference should be made to its requirements on environmental sustainability such as those prescribed in the International Convention for the Prevention of Pollution from Ships (MARPOL)7 and other legal instruments. IMCA 70 holds consultative status with the IMO, whose work is closely monitored by IMCA’s Marine Policy and Regulatory Affairs Committee (MPRA). The MPRA Committee works in conjunction with IMCA’s Environmental Sustainability Committee (ESC) to flag key developments and discussions coming from the IMO which may affect members. In addition to these international requirements, IMCA Members are subject to Flag State and Class Societies requirements which may be more stringent. 75

1.4 Significant environmental aspects for our industry

As a good practice, organisations should undertake materiality assessments to identify the material environmental issues for their business. To facilitate this process, this Code identifies those environmental aspects (i.e. an element of an organisation’s activities, products, or services that has or may have an impact on the environment8) that are significant across the offshore marine contracting 80

6 27 Principles of Rio Declaration on Environment Protection (thefactfactor.com) 7 MARPOL (imo.org) 8 ISO 14001: Identifying and evaluating environmental aspects

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industry, but recognises that each Member company will then need to assess their materiality in the context of their own business and related ambitions.

In developing the Code of Practice, Members identified four significant environmental aspects of relevance across the offshore marine construction industry:

1. Greenhouse Gas emissions - GHG emissions produced by vessels are one of the most significant 85 environmental impacts arising from offshore marine contracting industry. This part of the Code differentiates between Scope 1, 2 and 3 emissions, identifies emissions reduction drivers, and offers some practical steps Members can take to develop or advance their emissions reduction roadmap, in alignment with the trajectory outlined in the IMO GHG Strategy9. It also conveys some current and evolving technologies and potential emissions reductions measures, and touches on 90 carbon pricing and offsetting.

2. Energy management and energy efficiency - This part of the Code emphasises the importance of making a commitment to energy management and to implementing a structured energy management plan with specific, measurable, achievable, realistic and time-bound (SMART) targets. It highlights relevant aspects of the IMO’s International Safety Management Code (ISM 95 Code), the Ship Energy Efficiency Management Plan (SEEMP) and the ISO50001 energy management standard. It then contextualises this in an organisation’s overall energy management plan, and offers a framework for establishing an energy management programme. It concludes with examples of operational and technical measures for enhanced energy efficiency within the offshore marine contracting industry. 100

3. Life below water – By the nature of its activities in the marine environment, the offshore marine contracting industry generates environmental impacts on life below water which need to be identified, assessed and managed. The precise actions to be taken will depend on the environmental characteristics and ecosystem where the activity is taking place, the engineering solutions delivered, and requirements of applicable environmental laws and regulations. Ten 105 approaches to managing life below water are presented, drawn from Members’ good practices. The offshore marine contracting industry can help to achieve the 14th UN Sustainable Development Goal (SDG), the life below water, of conserving and sustainably using the oceans, seas and marine resources by demonstrating good environmental stewardship.

4. Circular economy, waste management and end-of-life assets – Drawing on the MacArthur 110 Foundation’s 9Rs Circular Economy Framework, this part of the Code offers approaches to making waste and End-of-Life (EOL) assets circular instead of the linear ‘take-make-waste’. The circular economy concept discussed “is a systemic approach to economic development designed to benefit businesses, society, and the environment”, which is also “regenerative by design and aims to gradually decouple growth from the consumption of finite resources.”10 It draws from good 115 practice in waste management and addresses key stakeholder concerns, such as plastics pollution.

1.5 Strategic objectives and target setting

All companies are expected to set strategy objectives and targets related to environmental sustainability and the energy transition. The Board needs to be engaged in this and it shall be done systematically. It needs to take into account material environmental issues, engaging stakeholders, 120 with transparent reporting of the results, in line with financial and other sustainability information disclosed by a company in its reporting. For more on Board engagement on climate change, see the World Economic Forum (WEF) and PwC’s 2019 climate governance publication11. The World Business Council for Sustainable Development (WBCSD) and Baker McKenzie have also produced guidance on

9 https://www.imo.org/en/MediaCentre/HotTopics/Pages/Reducing-greenhouse-gas-emissions-from-ships.aspx 10 The Circular Economy In Detail (ellenmacarthurfoundation.org) 11 How to Set Up Effective Climate Governance on Corporate Boards: Guiding principles and questions | World Economic Forum (weforum.org)

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board directors’ duties and the consideration of ESG issues to help build stronger board decision-125 making12.

There are a number of key international targets related to significant environmental aspects for the international marine contracting industry. Many of these are addressed in the UN SDGs, an interconnected, holistic set of goals for both the public and private sector, with underlying targets and indicators, setting the agenda to be implemented between 2015 and 20301314. There may also be 130 alignment to other multi-lateral environmental agreements (MEAs) such as the Convention on Biological Diversity15.

At the regional level, there are also further instruments for which environmental targets can be aligned. For example, the EU’s Marine Strategy Framework Directive has the objective of achieving ‘good environmental status’ and protecting the resource base which marine socio-economic activities 135 are dependent16. Additionally, the European Green Deal17, the EU’s growth strategy and action plan, aims to: boost resource efficiency by moving to a clean, circular economy; restore biodiversity; cut pollution; with the target of the EU being climate neutral by 2050. Further details, for example, on the circular economy are available in the 2020 Circular Economy Action Plan18. The European Commission has also released its Offshore Renewable Energy Strategy19 as a step to achieve its climate neutrality 140 2050 target. Its 2020 Biodiversity Strategy20 commits to “put biodiversity on the path to recovery by 2030”, a key aspect for consideration in any target setting related to ‘life below water’ and associated environmental impacts.

Moreover, when developing company targets on environmental sustainability, close attention should also be paid to the key environmental matters addressed by the IMO (e.g., pollution preparedness and 145 response, ballast water management, identification of special and particularly sensitive sea areas, etc.) and any related regulatory requirements, including those, for example, covered under the MARPOL Convention.

In addition to environmental matters, there are also a number of relevant targets for our industry related to decarbonisation. The IMO 2050 target of peaking GHG emissions from international 150 shipping as soon as possible and reducing the total annual GHG emissions by at least 50% (from 2008 levels) sets the aspiration for the entire shipping industry. The IMO has also set targets of a 40% reduction of average carbon intensity by 2030 across the global shipping fleet and pursuing a 70% reduction by 205021. A revised strategy is expected in 202322. Many countries have developed national ambitions beyond what is mandated through IMO and the Paris Agreement, the latter of which 155 requires countries to set their own nationally determined contributions with increased ambition over time. At the IMO level, there are also national action plans to “develop policies and strategies to address GHG emissions from international shipping”23.

Other objectives are connected, but not limited to:

• Race to Zero24 (i.e., the global campaign to rally leadership and support from businesses, cities, 160 regions, investors for a healthy, resilient, zero carbon recovery) and setting of net zero targets;

12 Board directors’ duties and ESG considerations in decision-making - World Business Council for Sustainable Development (WBCSD) 13 The Sustainable Development Agenda – United Nations Sustainable Development 14 United Nations Official Document 15 Convention on Biodiversity | United Nations 16 See L_2017125EN.01004301.xml (europa.eu) for standards on good environmental status. 17 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en 18 https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1583933814386&uri=COM:2020:98:FIN 19 https://ec.europa.eu/energy/sites/ener/files/offshore_renewable_energy_strategy.pdf 20 https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1590574123338&uri=CELEX:52020DC0380 21 UN body adopts climate change strategy for shipping (imo.org) 22 https://www.imo.org/en/MediaCentre/HotTopics/Pages/Reducing-greenhouse-gas-emissions-from-ships.aspx 23 Relevant National Action Plans and Strategies (imo.org) 24 https://racetozero.unfccc.int/

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• Science-based Targets Initiative (SBTi)25 (i.e., a global initiative to drive ambitious climate action by the private sector by enabling companies to set science-based emissions reduction targets); and

• Calls for a carbon price and CO2 taxation measures. 165

This is a rapidly evolving area politically, nationally and internationally. With the United Nations Framework Convention on Climate Change (UNFCCC) 26th Conference of Parties (COP26) in November 2021, further significant developments are likely to take place which will impact our industry response to this challenge. There are also a growing number of multi-stakeholder initiatives on climate and environmental sustainability which Members are engaged in (See Appendix 1). These often have 170 specific targets. IMCA recommends Members consider engaging in multi-stakeholder initiatives, as appropriate to them.

25 https://sciencebasedtargets.org/

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2 Significant Environmental Aspects

The four significant environmental aspects for the offshore marine contracting industry are presented here related to the following elements: greenhouse gas emissions; energy efficiency life below water; 175 and waste management and EOL assets.

2.1 Greenhouse gas emissions

This part of the Code focuses on GHG emissions originating from offshore vessel operations, as this is where the greatest impact lies for Members. Figure 1 contains the key terms related to GHG emissions. A Member company’s Scope 1 GHG emissions are those where the offshore marine contracting 180 industry can have a significant impact. Members also have the opportunity to create impact in their supply chain (Scope 2 and 3) as discussed further in Section 3.2.

Emissions reduction drivers for the offshore marine contracting industry

There are multiple drivers for emissions reduction, ranging from international, regional and national 185 regulation, to client and investor demands to costs. Many Members’ clients have made net zero commitments. There is also growing pressure by investors and financial institutions. For example, some may require a climate strategy or alignment with international frameworks and standards (See Section 4.1), such as the Task Force on Climate-related Financial Disclosures (TCFD). Many banks are also using means to assess the carbon exposure of their portfolios, such as through adopting the 190 Poseidon Principles26. There is growing interest in setting a price on carbon, as outlined in Figure 2, further attesting to the pressure placed on the offshore marine contracting industry in terms of decarbonisation.

26 Home - Poseidon Principles

• Greenhouse gases: Gases that absorb infrared radiation, trap heat in the atmosphere, and contribute to

climate change. These include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),

hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), sulphur hexafluoride (SF6), and nitrogen trifluoride

(NF3).

• Carbon Footprint: The total amount of greenhouse gases, or GHG emissions produced to support the

company’s activities. Greenhouse gases are often measured in carbon dioxide equivalents, based on the

global warming potential of each gas.

• Scope 1 GHG Emissions: Direct GHG emissions that occur from sources that are owned or controlled by the

company (e.g., fuel the company purchases).

• Scope 2 GHG Emissions: GHG emissions from the generation of purchased electricity, heat, or steam

consumed by the company. The emissions physically occur at the facility where electricity, heat, or steam is

generated.

• Scope 3 GHG Emissions: GHG emissions that are a consequence of company activities but occur from

sources not owned or controlled by the company (excluding Scope 2). They are also called value chain

emissions and can be upstream or downstream of a company’s operations.

Figure 1 – Key Definitions

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Practical steps in developing an emissions reduction strategy 195

As good practice, Members should develop Paris-aligned GHG emissions reduction targets and strategies. At minimum, this means setting a SMART target for emissions reduction, consistent with the IMO GHG Strategy. Good practice calls for achieving net zero emissions by 2050 and expressing a commitment to developing Science-based Targets by 2025. It is also good practice for Members to be transparent with their emissions targets and data, and to share these with IMCA. Members are 200 requested to share fuel consumption data with IMCA through the MPRA-managed process, to help IMCA effectively lobby IMO Member States for a carbon intensity indicator (CII) that works for the offshore industry. For more on the two proposed proxies, see Figure 14 and Appendix 3. Such disclosures will facilitate industry benchmarking and will convey to stakeholders that the offshore marine contracting industry tackles this global challenge as a responsible business partner. 205

IMCA recognises that Members are at different stages in the decarbonisation journey and face particular challenges. Companies with multiple business units will need to consider how their marine decarbonisation strategy aligns with and integrates into their wider corporate approach. Members may create their own decarbonisation roadmap which incorporates the practical steps outlined in Figure 3. If using a Decarbonisation Roadmap, it is good practice to review it regularly, taking into 210 consideration advances in technologies, fuel availability, adoption rates, economics, new and emerging regulation, and other key developments.

Carbon pricing: An example of an economic driver for emissions reduction

Carbon pricing is a market-based mechanism which puts a price on carbon pollution. It helps ensure emissions can be reduced, and investment may be driven into cleaner options and promotes market innovation. The overall environmental goal can be achieved in the most flexible and least-costly way to society. Two main types are regulatory carbon pricing, namely emissions trading systems (ETS) and carbon taxes. Companies may choose to set their own internal carbon price as part of their emissions reduction strategy. For more, see: https://www.wemeanbusinesscoalition.org/commitment/put-a-price-on-carbon/. For more on carbon pricing, see the World Bank’s Carbon Pricing Dashboard (carbonpricingdashboard.worldbank.org).

Figure 2 – Carbon Pricing

Practical steps in a Decarbonisation Roadmap 1. Establish a company baseline; 2. Measure GHG emissions; 3. Evaluate current emission sources (Scope 1 & 2); 4. Review assets and operational factors influencing emissions; 5. Develop action plans to decarbonize assets and operations (including new and retiring assets); 6. Set time-bound absolute reduction targets, aligned to Paris Agreement and SBTi; 7. Assess Scope 3 emissions in supply chain and associated reduction plan to avoid outsourcing emissions; 8. Consider if internal carbon pricing or carbon offsetting are opportune (see Figures 2 and 4); 9. Set other relevant emissions targets (Scope 3 reductions, intensity targets); and 10. Measure, monitor and analyse emissions data, and report.

Figure 3 – Practical Steps in a Decarbonisation Roadmap

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The offshore marine contracting industry is facing uncertainty on the measures needed for emissions 215 reduction. Available measures range from power and propulsion systems, alternative fuels and energy sources to operational measures (See Figure 5). All of these may have financial implications on capital expenditure (CAPEX) investments for the offshore industry. It is recognised that further technological development is necessary to make net zero solutions economically feasible and widely available to the offshore marine contracting industry. On the other hand, this challenge affords new opportunities for 220 long-term value creation.

Some Members may choose to support nature-based solutions as part of their carbon offsetting in their short/medium-term emissions reduction strategy. However, carbon offsetting should not replace emissions reductions in the long-term. Carbon offsetting is “a reduction in greenhouse gas emissions to compensate for emissions made somewhere else. Purchasing a carbon offset enables people and businesses, then, to reduce their carbon footprints.” (Source: What on Earth is a ‘carbon offset’? (conservation.org)). Members should look for carbon offsetting projects which meet rigorous standards. For example, Conservation International proposes that “Carbon offsetting programs should meet widely recognized and rigorous voluntary carbon market standards to ensure that the projects deliver strong social and environmental benefits.” (Source: ibid). Carbon offsetting can be contentious (For more see: What is carbon offsetting? | World Economic Forum (weforum.org)). The Oxford Principles for Net Zero Aligned Carbon Offsetting have attempted to address some of these concerns, see The Oxford Principles for Net Zero Aligned Carbon Offsetting 2020 and are recommended reading for those IMCA members interested in the topic.

Figure 4 – What is Carbon Offsetting

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Figure 5 - State-of-the art technologies, measures and potential for GHG reductions from global shipping 225

The above figure is intended to give an overview and not all the options above are applicable to the offshore marine contracting sector27.

2.2 Energy management and energy efficiency

It is in Members’ interests to demonstrate robust energy management practices in a rapidly evolving 230 industry. Investing in and prioritising energy efficient operations is increasingly becoming the expected norm and likely to become the new ‘licence to operate’. The IMO GHG Strategy sets the path to 2050 with mandatory technical and operational measures for the energy efficiency of ships which will be reviewed along the way to verify that targets are being met. Fossil fuels are a finite resource and should be actively managed as such, as discussed in Section 2.1. IMCA is aware that Members may use LNG 235 as a transition fuel and note the potential implications of methane slip.

Energy efficiency can also have positive impacts on costs and schedule. However, in order to satisfy IMO regulation, IMO MSC.1 Circular 1580, Guideline for Vessels and Units with Dynamic Positioning Systems, Dynamic Positioning (DP) vessels satisfying equipment class 2 and 3 must operate with redundancy in equipment installed and redundancy of online equipment. This means that DP vessels 240 are required to be operated with enough “spinning reserve” (i.e., power generation and propulsion equipment online and with available capacity) to tolerate the vessel’s worst case failure, which in most cases means loss of an entire redundant group of equipment. In the balance between maintaining safe and reliable DP operations and the operating of the power plant in an efficient manner, the safety of DP operations must always take priority. Environmental sustainability should not therefore be used 245 as an opportunity to operate the DP system in a way that reduces the safety of DP operations28.

27 Evert A. Bouman, Elizabeth Lindstad, Agathe Rialland, Anders H. Strømman, Transportation Research Part D, 2017. 28 IMCA M 245 Guidelines for vessels and units with dynamic positioning (DP) systems (MSC.1/Circ. 1580).

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Making an energy management commitment and developing an energy management plan

250 Members should have clear commitments in place to prioritise and plan for sustained energy efficient operations. It is recommended that Members have an overall commitment to demonstrate tangible energy management practices and lasting energy efficiency gains. This should be clearly stated in a stand-alone energy management policy/charter or incorporated in other policies. This should cover various aspects, including but not limited to purchasing practices, operational considerations, 255 technology investments, lowering maintenance costs, asset/building design, and compliance to applicable energy management standards. To act on established commitments to sustainable energy management practices, it is good practice to implement a structured energy management plan (the Plan) with SMART targets and objectives. 260 Some existing frameworks to help achieve this include:

• The Ship Energy Efficiency Management Plan (SEEMP), an existing tool for IMCA member companies to monitor rising CO2 emissions from the maritime sector for all vessels of 5000 GT and above in operation. Developments are currently underway at the IMO to enhance 265 the SEEMP provisions and the MPRA Committee is actively monitoring these and will report the outcome to Members. SEEMP is not a full energy management system framework as such, but sets clear requirements for having a structured plan outlined for each applicable vessel. SEEMP provides a structured approach for monitoring and improving ship and fleet efficiency performance over time and encourages ship owners to consider new technologies 270 and practices at each stage of the plan.

• The IMO’s International Safety Management Code (ISM Code)29 was created to provide an international standard for the safe management and operation of ships, and for preventing environmental harm. Although this is a well-recognised and implemented management 275 system framework in the maritime industry, it does not specifically address energy management and efficiency requirements. However, it provides an existing structure where energy management elements can be integrated.

• ISO 50001, the ISO standard for implementing and maintaining an ongoing energy 280 management system, goes a step further than SEEMP and ISM by outlining a framework aimed at identifying where excess energy consumption is occurring and how to systematically improve it. By implementing ISO 50001, as part of an integrated management system together with ISM and SEEMP, organisations will be in a position to significantly reduce energy and operational costs over time. Members who adhere to ISO 50001 will have covered all 16 285 standard management system elements listed in Figure 6. Even where full ISO 50001 certification is not pursued, it is strongly recommended that Members work in ‘accordance’ with this standard.

29 The International Safety Management (ISM) Code (imo.org)

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Figure 6 - Mapping of energy management system elements across SEEMP, ISM and ISO 50001 290

(Source: Hannes Johnson, Mikael Johansson, Karin Andersson and Bjørn Sødahl. Maritime Policy and Management, 2013, Vol. 40, No. 2, 177-190). 295 Regardless of the framework employed, each IMCA member company should have an overall company plan which contains detailed assessments of existing energy practices and energy performance data. This should be recorded across the scope of the Member’s energy management system, with a view to demonstrate continuous year-on-year improvement according to the ‘plan, do, check, act’ principle, (as per Figure 7). Collaboration across key functional stakeholders (e.g. commercial, procurement, HSE 300 and operations), is essential to secure buy-in and create a holistic energy management plan with potential to contribute to moving the offshore marine contracting industry towards a more sustainable future. Figure 7 - Framework for setting up an energy management programme 305

(Source: ENERGY STAR - U.S. Environmental Protection Agency Program. Guidelines for Energy Management.)

Establishing boundaries, baselines and reporting frequencies 310

To measure, monitor and improve on annual energy performance, it is important Members establish a baseline for energy consumption based on the organisational and operational boundaries of the company in a given time period (as outlined in Figure 8). Once established, energy consumption data should be recorded and consolidated at regular intervals to gauge performance gaps and to identify 315 areas requiring further performance improvements.

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Figure 8 - A holistic view of energy management across organisational and operational boundaries

320

Emerging technological advancements and measures supporting good energy management

Technology plays a crucial role in energy efficiency and is constantly evolving. It is good practice for Members to keep abreast of any technological advancements that may enhance a vessel’s energy 325 efficiency. These should be part of the overall strategy to improve energy performance. Opportunities for enhancing energy management include operational and technical measures:

• Operational measures 330

For DP vessels, Activity Specific Operating Guidelines (ASOG) are developed for ensuring that a vessel is operating at the appropriate level of safety for a specific mode of operation. This may often drive inefficient vessel operation due to redundancy requirements. Reference should therefore be made to IMCA M220 – Guidance on Operational Activity Planning. 335 There are also a number of operational measures which can be taken to enhance energy management:

• To trigger a heightened prioritisation of energy management in operational settings, 340

site management should ensure that energy management is included in daily status

meetings, verifying that operational modes have been agreed and correctly recorded

and that options for fuel reduction and energy efficiency are prioritised;

• Worksite awareness regarding energy performance and targets should be regularly

promoted; 345

• Preventive asset maintenance should be periodically planned (e.g., propeller/hull

cleaning to remove marine growth);

• Appropriate vessel selection for the activity should be undertaken; and

• Fuel reduction through optimised voyage planning should be prioritised over transit

speed. Most DP vessels have the potential to be easily reconfigured for transit and 350

non DP operations to a more efficient configuration that favours efficiency over

redundancy of online equipment, as would be the case in redundancy-conscious DP

operations.

355

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• Technical measures Members have been leaders in the energy industry in terms of innovation of vessels and support to those leading the renewables industry, and will continue to work towards 360 innovative solutions, many of which have yet to materialise in terms of commercial viability. Some technical measures include enhanced use of digitalisation by using sensors and software programs to:

• monitor and manage energy use throughout the worksite; 365

• digitally control the vessels power generation and power management system using the likes of auto standby, starting and stopping functionality as engine demand trends increase or decrease;

• digitally control engine(s) fuel injection and speed; and

• leverage effective use of the latest satellite positioning route planning software to 370 achieve the most optimal course (see Section 3.3.).

Moreover, known technologies to improve the efficient operation of vessels include, but are not limited to:

• Hybrid systems that use different power sources in combination with battery power 375 to reduce transient engine loads by:

▪ absorbing peak power loads during operations, so-called “peak shaving”; and ▪ potentially replacing one of the main engines as a so-called “spinning

reserve” in DP-operations’;

• Fuel cell systems, such as hydrogen fuel cells which are developing (but there are 380 challenges with green versus blue hydrogen, see Figure 9); and

• Use of shore power when alongside in port which would allow a vessel’s engines/generators to be switched off, reducing fuel consumption, emissions, noise and costs.

385

The available and emerging energy sources need to be considered in combination with ship operation and management measures. In building a new vessel, environmental considerations should be one of the key elements in design alongside long-term energy and operational efficiency.

2.3 Life below water 390

Members construct and decommission energy infrastructure in the marine environment (e.g. oil and gas installations and windfarms), and support its operation and maintenance. In undertaking these activities in the marine environment, the activities and actions of marine contractors could be detrimental to ‘life below water’, as the 14th SDG30 which aims to conserve and sustainably use the oceans, seas and marine resources for sustainable development. Members have an important role to 395

30 See Goal 14 | Department of Economic and Social Affairs (un.org) and SDG 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development – SDG Compass.

Blue Hydrogen: is produced when natural gas, a fossil source, is split into hydrogen and CO2 where the Carbon is Captured and Stored (CCS). Green hydrogen: is produced using non-fossil sources (wind/solar/hydro) to power electrolysers that separate hydrogen and oxygen without generating any CO2 emissions.

Figure 9 – Blue versus Green Hydrogen

14 © IMCA Trading Ltd Environmental Sustainability

play in supporting the achievement of SDG 14 by demonstrating good environmental stewardship in the marine environment in which they operate.

For example, Members may come into contact with marine mammals and other biodiversity in operating their vessels (See Figure 10). Cetaceans may also be impacted by noise from activities, such as piledriving. Vessels may also transport invasive species, e.g. through ballast water, and sufficient 400 control measures need to be in place to avoid this. The associated potential impacts vary dependent on the environmental characteristics and ecosystems where the activity is taking place, and on the engineering solutions delivered.

It is also important to distinguish between the impact of IMCA members on ‘life below water’ (e.g. through ballast water, on hulls and in intakes/outlets, oily water discharge, hydraulic spills from 405 thrusters and hoses, and underwater noise from machinery) and the much larger impact, made on behalf of clients (e.g. seabed disturbance through dredging, ploughing, trenching and rock installation; chemical discharge through RFO operations on pipelines, drill cuttings from drill rigs; underwater noise from piling and seismic activities). It should be recognised that many of these activities are conducted under the client’s environmental plan and associated requirements and approvals. Where practicable, 410 Members should adopt “Best Available Techniques” and ALARP principles, even in areas where client or government requirements are not stringent.

A growing number of Members have also embedded environmental protection in their business models and strategies, attesting to their commitment to environmental sustainability. Many environmental matters are highly regulated at the national, regional and international levels to support 415 the achievement of positive environmental outcomes. Of particular importance to the offshore industry is MARPOL. Failing to comply with obligations under environmental laws and regulations at national, regional and international levels, can result in potential liabilities and reputational damage.

The 2021 Mitigation biodiversity impacts associated with solar and wind energy development: Guidelines for project developers published by IUCN and The Biodiversity Consultancy, outlines key impacts of fixed offshore wind assets on biodiversity and ecosystem services during different project stages. It also includes some consideration of floating structures. In the construction phase, potential impacts of fixed wind farms may include, but are not limited to:

• seabed habitat loss and degradation;

• barrier and displacement effects;

• mortality, injury and behavioural effects associated with vessels or associated with underwater noise;

• dust, light, solid and liquid pollution;

• associated ecosystem service impacts; and

• introduction of invasive species. The above guide also specifies mitigation measures, through abatement controls (e.g. implementing noise reduction measures through adoption of best practice piling protocols, use of acoustic deterrent devices, etc. and using measures to minimise potential habitat loss and disturbance when installing offshore wind cabling) and operational controls (e.g. conforming to international standards under MARPOL, and limiting vessel speeds to avoid collisions with fauna) in the construction phase. (For more, see: https://portals.iucn.org/library/node/49283).

Figure 10 - Biodiversity Impacts of offshore wind construction and decommissioning

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There are, however, a host of practical measures and approaches to managing identified environmental aspects and their associated impacts (see Figure 11). These can aid in reducing 420 environmental incidents and in improving an organisation’s overall environmental footprint.

Recommended measures and approaches to aid in managing Life Below Water:

1. It is often a legal or client requirement to undertake or commission environmental baseline studies, and tools such as Environmental Impact Assessments (EIAs), Environmental and Social Impact Assessments (ESIAs), and Strategic Environmental Assessments (SEAs) are often deployed to manage Life Below Water. Where the measures proposed in the EIA are deficient, IMCA members should look to apply best practices.

2. Environmental risks can also be considered in the context of a company’s existing risk management processes, with adherence to environmental risk management guidelines. This should include not only the business’ impact on the environment, but consideration of how environmental and climate risks impact on the business.

3. Making a commitment to responsible management and efficient use of energy and other natural resources, and applying environmental principles such as those of the UN Global Compact, the International Finance Corporation and its Performance Standards on Environmental and Social Standing, and the OECD’s Guidelines for Multinational Companies. Adopting HSE management principles of prevention, protection, awareness, promotion and participation can also aid in environmental management.

4. Use of environmental management systems (EMS) can aid in managing environmental impacts, as can the development and implementation of specific systems and plans and use of related tools for pollutant spill prevention, management and response, ballast water management, biofouling management, and water management.

5. Measurement of environmental impacts can be enhanced by the setting of key performance targets and indicators, and making of related disclosures, and operating in accordance with recognised environmental standards.

6. Assurance of reported environmental information, as appropriate (i.e., through third party verification and certification).

7. Making investments in R&D to minimise environmental impacts. 8. Sharing best practices in managing life below water internally, within the value chain and with external stakeholders. 9. Delivering environmental training and implementing environmental awareness campaigns can also help (e.g., on

eliminating single use plastics). 10. Establishing an internal environmental working group to ensure a cross-business approach to environmental

performance of assets and specific projects. (Source: The above measures are best practices drawn from IMCA members in their annual and sustainability reports).

Figure 11 - Recommended measures and approaches to aid in managing Life Below Water:

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2.4 Encouraging a circular economy, waste management and end-of-life assets 425 This part of the Code aims to support Members in developing a circular economy within their company, by offering a possible stepwise approach based on the 9Rs Circular Economy Framework as shown in Figure 12. This applied to two subcategories:

• firstly, waste management, i.e., the management of wastes produced by a company, and

• secondly, on End-Of-Life (EOL) assets, i.e., on what to do with assets deemed to have served 430 their purpose.

The Ellen MacArthur Foundation coined the most well-known definition of a Circular Economy: “an industrial economy that is restorative or regenerative by intention and design”. It reshapes a linear model into a circular model, by closing the cycle and keeping resources in it. This Framework is aligned 435 to the EU Green Deal’s Transition to a Circular Economy Statement by 205031. At the global level, the UN SDGs and in particular, SDG12 on responsible consumption and production reinforces the importance of circularity as advocated in the EU Green Deal. Regarding waste management, MARPOL mandates vessel-specific legal requirements on waste management.

Figure 12 - The MacArthur Foundation’s Circular Economy Framework 440

There are two different approaches presented to make waste and EOL circular; however, a preliminary step would be to refuse, and rethink as shown at the top of the 9Rs Framework (see Figure 12). This also illustrates the importance of starting with design. For example, consideration could be given to 445 design for maintainability/repairability with use of standardised parts and modularity. Similarly, design for disassembly/deconstruction32 could entail using fewer parts, avoiding complex or non-recyclable

31 https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1583933814386&uri=COM:2020:98:FIN 32 https://www.circulardesignguide.com/

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materials, and providing disassembly instructions33. When constructing new structures (e.g. mooring chains, anchors, subsea fixtures) Life Cycle Assessment (LCA) considerations could be incorporated. For example, this could include designing in elements to extend life, provide alternative uses and to 450 lessen marine impact. Members need to manage their own waste and also ensure good waste management and circularity in their supply chain (e.g., Scope 3 emissions), including exploring how equipment can best be repurposed in the future. These circular initiatives can also accrue economic benefits beyond 455 environmental sustainability benefits. Organisational culture and behavioural change are also important to realising circularity and waste management goals. For example, those charged with responsibility for sustainability can educate business units on circular economy. In a project, consideration can be given to EOL and what is used, 460 and to providing information about strategies and actions. These two subcategories of waste management and EOL assets are presented in further detail and a practical stepwise approach is offered for each. 465 Waste Management

Waste management includes all aspects required to manage waste (i.e., collecting, transporting, treatment and disposal of waste), together with monitoring, traceability, and regulation of the waste management process. When managing waste in a sustainable way, a value is added to the above 470 definition, i.e., to work towards a ‘zero waste’ organisation. This means shaping linear value chains into circular value chains to counteract material shortage. Reshaping waste management includes making sustainable decisions for each stage in the waste hierarchy. Within the following proposed stepwise approach, it is possible to start at the level suiting the 475 Member’s state of circularity:

1. Create an overview of existing waste streams (i.e., what waste) and partners/stakeholders its partners/stakeholders (e.g., landfill, energy-from-waste, etc).

2. Quantify the company’s waste streams. 480 3. Define non-circular aspects of overview of the waste streams (e.g., consider alternate

options within the 9Rs with a higher-ranking circularity). 4. Apply a strategy per waste stream and data to make these circular. 5. Monitor progress, and identify opportunities for continuous improvement by examining

existing initiatives/opportunities for enhancing circularity. 485 To monitor progress in applying the above approach, it can be beneficial to set targets (e.g., zero waste to landfill, and to eliminate plastic and hazardous wastes). These can then be translated into key performance indicators (See Section 4.1), such as: 490

• Amount of waste total;

• Amount of waste per category (based on MARPOL/ISO);

• Amount of material ‘recovered’ per strategy (e.g., 10.000 kg steel recycled in 2020);

• Waste per month (waste calendar linked to organizations activities); and

• Economic benefits of applying circular strategies. 495

33 https://www.ellenmacarthurfoundation.org/explore/circular-design

18 © IMCA Trading Ltd Environmental Sustainability

End-of-Life Assets 500 This is a key sustainability challenge for the offshore marine contracting industry. Members are referred to the 2009 Hong Kong International Convention for the safe and environmentally sound recycling of ships34, and the 2013 EU Ship Recycling Regulation35. A distinction should be drawn between the management of members’ own EOL assets and those of their clients. A key sustainability challenge includes effectively managing the challenges associated with marine growth, 505 including but not limited to the handling of toxic sludges and liquids in EOL assets, NORM, and hazardous materials such as asbestos. This remainder of this part of the Code aims to address the process of removal and decommissioning of EOL assets. Decommissioning of an EOL asset does not necessarily mean removal of all items as it 510 may be determined that it may do more harm to the environment compared to leaving it in situ and repurposing for biodiversity benefits. At the highest level of any circularity strategy, should be the aim of refuse, which may not always be possible. This will vary on a case-by-case basis for EOL assets. In many cases, where 9R hierarchy is implemented the most relevant are likely to be strategies R5 to 515 R9. Possible strategies adopting circularity within the context of EOL assets:

• R0, R1, R2 - As there are aging assets already in use for many years in the offshore marine contracting industry and, in some cases, facilities were not designed considering methods for decommissioning. In the future, all asset/facility design should take into consideration the 9Rs.

• R3, R4, R5 - Due to the safety critical nature of facilities and vessels, they will be repaired and 520 maintained throughout their lifecycle.

• R6 - equipment from EOL assets which could still be used on alternative assets, such as: o Accommodation (e.g., chairs, fridges, tables, ...) o Marine equipment (e.g., switchboards, DP equipment, navigation equipment) o Safety equipment (e.g., lifesaving equipment) 525 o Auxiliary equipment (e.g., Cranes, ROV, diving equipment, installation aids)

• R7 – EOL assets given a new function: o Mobile units (e.g., converted vessels) o Wind turbine blades converted to furniture, … o Artificial reef created by leaving an asset in place (or modify) 530

• R8 - It is critical, dependent on local requirements for any EOL asset to have traceability post sale and to ensure that the supply chain involved will dismantle, recycle and dispose the items in an environmentally-conscious way.

• R9 – Consider energy-from-waste. 535

34 https://www.imo.org/en/OurWork/Environment/Pages/Ship-Recycling.aspx 35 EUR-Lex - 32013R1257 - EN - EUR-Lex (europa.eu)

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3 Making an impact on environmental sustainability across our industry

The introduction identified four significant environmental aspects of relevance to ensuring environmental sustainability across the offshore marine contracting industry, which are expanded on in Chapter 2. In addition to these, communications and awareness-raising, engagement with the 540 supply chain, and automation and digitalisation can also accrue environmental sustainability benefits.

3.1 Raising awareness, competence and training

Environmental sustainability is fundamental to long-term value creation and defines the future of our industry. It will be increasing important for Members to deliver on their responsibility to respect and protect the environment. This is not only the right thing to do but is also governed by regulation to 545 varying degrees. To do so effectively, requires an informed and engaged workforce and supply chain.

Ensuring environmental sustainability in our industry, further entails raising awareness, capacity-building, and ensuring competence at Board and executive management level for those charged with overseeing and managing environmental and climate-related matters. It also entails cascading awareness and responsibility throughout Member companies and their supply chains. Changes in 550 behaviour and organisational culture will also be needed.

Sustainability terms such as materiality, value creation, climate resilience are not consistently used by Members. It is also important to recognise that the language and the science is less familiar and make it difficult to be accessible to the offshore marine contracting industry’s workforce. Training and capacity-building materials need to be developed to help translate these concepts and embed them 555 into the day-to-day operations of the offshore marine contracting industry. There is also a need to view environmental sustainability holistically, alongside occupational, health, safety and risk management, and in the priority of life, environment and asset.

Without raising the awareness and competence within Members, it will be very challenging to meet the environmental sustainability objectives ahead of us. IMCA will engage further with the Members 560 to explore what support is needed including any further guidance, awareness-raising, competence, capacity-building and training.

3.2 Engaging with the supply chain Members depend on the performance of their sub-contractors and suppliers to deliver environmental 565 performance and improvements in project delivery. In particular, in Engineering, Procurement, Construction and Installation (EPCI) projects, the volume of work delivered by our supply chain may exceed the volume of deliveries by the operator or primary installation contractor. Therefore, it is imperative to manage the environmental impacts and performance of the supply chain. Engagement with the supply chain, including undertaking due diligence, is key to helping to advance environmental 570 sustainability across the offshore marine contracting industry, although it is recognised that the nature and level of engagement will vary across the IMCA membership. In procurement, Members may wish to refer to ISO20400 standard on sustainable procurement36. It is also recognised that the supply chain can contribute to provide innovative solutions and support 575 to Members in optimising processes and deliveries that will reduce environmental impact, whilst at the same time reducing costs. This will require a pro-active and collaborative engagement with the supply chain and may involve the need to explore partnerships or incentives for improved environmental performance.

36 Home | ISO20400.org

20 © IMCA Trading Ltd Environmental Sustainability

This Code of Practice aims to provide guidance on the mechanisms of environmental management of 580 suppliers, including a recognition that there will be a need to differentiate the level of control and engagement depending on the risk level. As the field of environmental sustainability is broad and constantly evolving, there is a need to drive stakeholders towards results related to assets, technology, materials, systems, etc. Collaboration 585 within the supply chain must be to move towards a system of sustainable economy, where strategies are in place to:

• Develop and select energy efficient technologies and practices;

• Reduce GHG emissions and work towards achieving carbon neutrality; 590

• Eliminate waste, reuse materials, and prioritise recycling;

• Minimise impacts on species, habitats and maintain ecosystem integrity; and

• Collaborate to bring sustainable substitutes and services to the market. To achieve the above, IMCA stakeholders will need to establish a common understanding of relevant 595 material environmental sustainability issues, metrics and success criteria in order to align efforts and leverage investments towards a more environmentally sustainable industry. Based on the above, it is considered good practice to adopt the following:

• Ensure that environmental sustainability objectives are cascaded to the supply chain; 600

• Establish a risk- and opportunity-based approach (“criticality”) to engagement with and influencing suppliers (See Figure 13);

• Embed criteria for determining which suppliers are critical to the environmental performance as an aspect of the overall supplier evaluation;

• Set expectations and provide incentives to improved environmental performance through 605 the contract; and

• Follow up on performance and evaluate after delivery (e.g., progress meeting, audits, reporting, lessons learned).

Figure 13 - Key factors to consider in determining supplier criticality

610 Examples of expectations may include the supplier’s ability to demonstrate:

• An operational Environmental Management System (EMS) (e.g., certified to ISO 14001 or similar);

• A broader sustainability and/or environmental policy and commitment (e.g., based on UN 615 SDGs, UN Global Compact or similar);

• Their impact on material environmental aspects (i.e., identifying environmental hazards associated with the scope of the services, assessing risk, controls, and mitigating consequences, to ALARP);

• Reporting of performance (qualitative and/or quantitative), evaluating effectiveness and 620 demonstrating continuous improvement; and

• Managing their sub-suppliers that have a critical impact on their or Members’ environmental performance (e.g., by considering a life cycle approach in keeping with the circular economy concept). 625

Key factors to consider in determining supplier criticality include: • Contract size;

• Potential of environmental harm associated with the delivery, activity, product end-use and associated waste disposal (direct and indirect impacts);

• Local environmental and habitat conditions;

• Suppliers’ abilities to meet local legislative requirements; and

• Suppliers’ environmental track records and reputation.

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The level of expectations needs to be adjusted or decided based on the determined criticality as described above.

3.3 Embracing automation and digitalisation and the associated environmental benefits

Members are encouraged to keep abreast of emerging developments and how they fit with current operations. IMCA’s Environmental Sustainability and Digitalisation committees will collaborate in 630 exploring with Members how environmental sustainability and digitalisation can be mutually reinforcing. .

Digital technologies can unlock new benefits and possibilities which can make positive contributions to environmental sustainability and awareness. Digital automation solutions are independent of one particular energy sector or technology, e.g., oil and gas, renewable energy, CCS, etc. 635

Considering data as an asset is of primary importance in the context of digitalisation initiatives. Members’ data (i.e., ‘the data we gather every day’) is the primary commodity which may be used to gain insights for improving energy efficiency.

Examples of common requirements within the offshore marine contracting industry are listed below. Digitisation brings possible increased accuracy and repeatability in data gathering, which should unlock 640 measurable improvements in environmental sustainability.

Today the offshore marine contracting industry are conducting data gathering using traditional analogue means, such as visual measurement or quantity estimation using basic equipment to provide volume estimates. These measurements may involve an element of inaccuracy and/or lack of replicability. Automated and digitised gathering of data can deliver the accuracy and repeatability 645 required to enable informed decision-making. This will enable realisation of within energy consumption efficiencies. For example, estimates based on real-life digital data gathering and analysis indicate up to a 20% reduction in vessel fuel consumption when conducting certain activities. (Source: Kongsberg Offshore). 650 Any approach to solving a problem in an offshore marine environment will benefit from planning and adoption of a structured data gathering and analysis approach. Many different systems exist offshore, each of varying age and complexity. To maximise the possibilities for reaping environmental benefits, the following aspects are 655 fundamental to success:

• Standards based sensor technology, e.g., Internet of Things (IoT);

• Leverage software architecture standards;

• Awareness of real time environmental data, e.g., weather conditions, wave predictions;

• Industry-driven joint venture initiatives to develop open standards for long-term 660

sustainability;

• Robust data communications;

• Secure data communication;

• Robust authentication mechanisms;

• Applicable agreed marine industry standards; 665

• Open interface specifications;

• Adoption of standardisation of communication protocols, e.g., Universal Serial Bus (USB);

• Adoption of standardisation or open access to data formats, e.g., Institute of Electrical and

Electronics Engineers (IEEE);

• Consider joint ventures and industry collaboration to help reduce proprietary data formats 670

and protocols;

22 © IMCA Trading Ltd Environmental Sustainability

• Consider simulated environments and associated standards of operation, e.g., DNV/digital

twin standard;

• Machine vision, e.g., text and numeric recognition;

• Open-source software; and 675

• Employ artificial intelligence such as machine/deep learning where data volumes and

patterns exist.

Please refer to IMCA Digitalisation Committee for further information and consultation on these aspects. 680

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4 Measuring and monitoring industry progress

To make progress on environmental sustainability, the adage of “what matters gets measured and what is measured matters” applies. In this respect, it is important to establish a baseline for measuring and monitoring our industry’s progress towards achieving environmental sustainability. Reporting and disclosure are key for our industry to own the narrative on its environmental performance and 685 progress towards achieving environmental sustainability.

4.1 Reporting and disclosure

This part of the Code aims to set the bar for disclosing environment and climate-related information by Members. Members are encouraged to report progress on the most material environmental 690 aspects through their chosen disclosure vehicle (e.g., an annual, sustainability or integrated report, etc.). They are also encouraged to regularly self-evaluate or reflect on how to improve their environmental performance, in keeping with IMCA’s overall mission of improving performance in the offshore marine contracting industry. 695 As good practice, every Member should be able to demonstrate how it addresses/manages environmental aspects in its operational and business endeavours. This Code aims to provide guidance, strives to advance harmonized cross-industry reporting and ensures, at minimum, a focus on four environmental aspects (i.e., emissions reduction, energy management, life below water, and circular economy) significant to our industry. 700 Being transparent and reporting publicly on environmental practices and performance is high on the agenda of our key stakeholders (i.e., owners, clients, banks, insurers, regulatory authorities and wider society). Members should therefore prepare for more stringent reporting requirements for its material environmental topics in line with legal requirements and the need for mature, robust, reliable, 705 consistent, comparable and decision-useful information (See Figure 14). The adage what gets measured gets done is key: Reporting transparently means explaining why and how the environmental and climate-related risks and opportunities are taken on-board in business strategies and operations. Additionally, identifying environmental targets and reporting progress 710 through relevant indicators will build stakeholder trust. Reliable environmental data is key: Today there is a need within the offshore marine contracting industry for standardised and reliable information on material environmental topics. There is also a need to establish a baseline. 715 The need for industry-specific guidance on material environmental indicators is relevant. This will help to position IMCA and its members as a trusted partner in stakeholder engagements on environmental issues, whether locally, regionally or on the global scale. 720 There are a number of international frameworks and standards which can help members to communicate their environmental performance in a consistent, comparable and decision-useful way:

• CDP37, a not-for-profit charity, runs a standardised global disclosure system for organisations to manage their environmental impacts. Companies respond to its annual questionnaires 725 (e.g. on climate change and supply chain) and are scored which aids in identifying best practices and benchmarking.

37 www.cdp.net

24 © IMCA Trading Ltd Environmental Sustainability

• GRI38 (the Global Reporting Initiative) has an international set of standards, the GRI Standards, for reporting the positive or negative impact towards sustainable development on universal and material topics for an organisation. 730

• SASB39 (the Sustainability Accounting Standards Board) has developed a set of industry-specific Environment, Social and Governance (ESG) financially-material standards to facilitate communication between companies and investors.

• TCFD40 (The Task Force on Climate-related Financial Disclosures) - established by the G20’s Financial Stability Board released its final report in 2017. The voluntary TCFD framework 735 provides a set of 11 recommended disclosures in four core areas of governance, strategy, risk management, metrics and targets, and aims to improve disclosure of information on climate-related risks entities, including companies41.

• IPIECA, American Petroleum Institute (API) and International Association of Oil & Gas Producers (IOGP) have developed Sustainability Reporting Guidance for the Oil and Gas 740 Industry covering 21 sustainability issues and 43 indicators categories, which aids in disclosing on climate, energy, environmental and other ESG matters42. They also have a supplemental Climate Change Reporting Framework43 which maps their guidance to TCFD, ISO 14064 (standard on GHG reporting), GRI and CDP.

745 Appendix 2 signposts to the key areas where illustrative voluntary key performance indicators for the significant environmental aspects for the offshore marine contracting industry by international frameworks and standards for consideration of their applicability by Members. Standards allow for presentation of data and information in different ways (certified, financial or performance).

750 755

38 www.globalreporting.org/about-gri/ 39 Standards Overview - SASB 40 Task Force on Climate-Related Financial Disclosures (fsb-tcfd.org) 41 2020-TCFD_Status-Report.pdf (bbhub.io), p.2 42 Sustainability reporting guidance | IPIECA IPIECA, Energy API, IOGP March 2020. Sustainability reporting guidance for the oil and gas industry: Module 3 Climate change and energy; Module 4 Environment 43 https://www.ipieca.org/resources/good-practice/ipieca-climate-change-reporting-framework/

Principles for Effective Disclosure The Task-Force on Climate-related Financial Disclosures (TCFD) [Task Force on Climate-Related Financial Disclosures (fsb-tcfd.org)] provides a set of principles for effective disclosures, which can be applied to the reporting by Members of the four significant environmental aspects identified above. Disclosures should:

1. present relevant information; 2. be specific and complete; 3. be clear, balanced and understandable; 4. be consistent over time; 5. be comparable among organisations within an industry; 6. be reliable, verifiable, and objective; and 7. be provided on a timely basis.

Figure 14 – Principles for enhancing the quality and decision-usefulness of IMCA members’ disclosures on climate and environmental matters

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Figure 15 - Measuring emissions reductions for the offshore marine contracting industry

Carbon footprint intensity metrics may also be used to aid in benchmarking internally and externally. This may include using operational or other factors such as revenue, hours of operation, gross total power, work hours as applicable to company activities or projects. At IMO, IMCA has argued that, since the offshore marine contracting industry does not carry cargo or passengers, ‘transport work’ which has been proposed as a metric for the shipping industry in general, is not an appropriate measure of the carbon intensity of our sector. In a joint submission with the Russian Federation, IMCA proposed two possible alternative proxies for measuring carbon intensity to the IMO (See Appendix 3). IMCA’s MPRA Committee has been monitoring discussions at the IMO but, before a final decision on a suitable proxy can be taken, data must be gathered and analysed. IMCA has proposed to oversee the data collection process by gathering data from Members to submit to the IMO which will inform the final decision which is taken. For more see, Fuel consumption data collection – IMCA (imca-int.com).

760 Figure 16 - Measuring emissions reduction progress in the supply chain

Good practice in line with the Paris Agreement requires setting an absolute reduction target of Scope 1 and Scope 2 GHG emissions that is time-bound and setting a specific Scope 3 target based on your supply chain assessment. For further guidance on Scope 3 see Scope 3 Calculation Guidance | Greenhouse Gas Protocol (ghgprotocol.org)). Scope 3 targets may include absolute reductions or engagement on sustainability initiatives.

4.2 Updating the Code of Practice and areas for further work

765 IMCA and the ESC acknowledge that for some of the environmental matters in this Code of Practice, particularly those associated with climate change, there can be uncertainty; however, in accordance with the accepted precautionary principle of environmental law, this should not be a reason for inaction. We therefore expect that this Code of Practice will be revised over time in keeping with evolving industry practice and regulation on environmental sustainability matters. 770 Accompanying detailed supplementary guidance based on member demand and emerging issues will be produced. IMCA will follow developments related to environmental sustainability, and related data and information. IMCA will also maintain an open dialogue with its members and other stakeholders to ensure IMCA’s added value in further environmental sustainability. 775

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5 Appendices

Appendix 1- Multi-stakeholder initiatives and commitments

Members are engaged in a plethora of multi-stakeholder initiatives related to environmental 780 sustainability, highlights of which include:

• The United Nations Global Compact44 (UNGC) supports companies to do business responsibly by aligning their strategies and operations with its 10 Principles, and to take strategic action to advance broader societal goals (e.g., the SDGs) through innovation and collaboration;

• The Nippon Foundation-GEBCO Seabed 2030 Project45 aims to collate all available bathymetric 785 data to produce a definitive and publicly accessible map of the world ocean floor;

• The UN Decade of Ocean Science for Sustainable Development46 is a common framework for ensuring ocean science fully supports countries in achieving the 2030 Agenda for Sustainable Development by strengthening international cooperation, including with business, to develop scientific research and innovation technologies; 790

• Oil and Gas Climate Initiative47 is a CEO-led initiative, aiming to accelerate the industry response to climate change, with its member companies explicitly supporting the Paris Agreement and leveraging their collective strength to help achieve net zero emissions;

• Natural Climate Solutions Alliance of public and private stakeholders, convened by the World Economic Forum (WEF) and World Business Council for Sustainable Development (WBCSD),48 795 aims to identify opportunities and barriers to investment into carbon credits in new, and existing markets, to increase financing for natural climate solutions; and

• Leaders of Sustainable Biofuels (LSB)49 is an industry coalition of leading advance biofuel producers and technology developers driving development of advanced biofuels in Europe.

800 Multi-stakeholder initiatives, such as those listed above, afford opportunities for knowledge exchange, collaboration, for showcasing Members’ good practices, and for ratcheting up ambition on environmental sustainability by agreeing to deliver their underlying commitments. 805

44 Homepage | UN Global Compact 45 The Nippon Foundation-GEBCO Seabed 2030 Project 46 The Decade of Ocean Science for Sustainable Development (oceandecade.org) 47 About OGCI | Collaborating for climate change | Our members (oilandgasclimateinitiative.com) 48 Home > Natural Climate Solutions Alliance | World Economic Forum (weforum.org) 49 MEMBERS | Advanced Biofuels Coalition

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Appendix 2 - Key environmental aspects found in global frameworks and standards where illustrative KPIs can be found

Table 1 – Greenhouse gas emissions

General GRI CDP/TCFD SASB (including IIRC) - drawn

from across the following Industry classifications – Engineering & Construction Services; Marine Transport and O&G – Exploration and Production

IPIECA API and IOGP Sustainability Reporting Guidance for the Oil & Gas Industry

ISO 14001, ISO 50001 and ISO 14064

UN Sustainable Development Goal (SDG) [link]

GHG Scope 1 GHG Scope 2 GHG Scope 3 General Emissions per type: CO2 CH4 NOx SOX CO PM Other

GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions 305-2 Energy indirect (Scope 2) GHG emissions 305-2 Other indirect (Scope 3) GHG emissions 305-5 Reduction of GHG emissions 305-7 NOx, SOX and other significant air emissions

CDP CC Questionnaire 2021 C2.4 (Climate-related opportunity drivers, including use of lower-emissions sources of energy and net technologies, etc.) TCFD Recommend Strategy Disclosure a) describe the identified climate-related risks over the short, medium and long-term. C4.1 (Emissions and other climate-related targets and performance for scope(s)) C4.2 (Net zero targets) C4.3 (Emissions reduction initiatives and methods) C5 (Emissions reduction) C6 (Emissions data) C7 (Emissions breakdown, e.g. by GHG, business division, activity etc. and emission performance) C10 (Verification of reported emissions) TCFD Recommend Metrics and Targets Disclosures a), b) and c) describe the metrics and targets used to manage climate-related risks and performance against them, and disclose scope 1 and 2 and if appropriate scope 3 emissions and related risks

See GHG emissions disclosure topics and related accounting metric for disclosing the reporting entity’s gross global Scope 1 emissions. The Marine Transport standard accounting metric TR-MT-110a.1. (Gross global Scope 1 emissions) requires entity to disclose gross global Scope 1 GHG emissions for the 7 GHGs addressed in the Kyoto Protocol, in accordance with the GHG Protocol. TR-MT-120a.1 offers a further accounting metric for disclosing NOx, Sox and PM. See also EM-EP-110a.1 accounting metric in the Oil & Gas – Exploration and Production industry standard and the air emissions accounting metric EM-EP-120a.1 which also includes a requirement to disclose VOCs.

ENV-5 (Emissions to Air)

See ISO 14064-1:2018 with its principles and requirements for GHG emissions reporting. See ISO 14064-2:2018 on project level quantification, monitoring and reporting of activities intended to cause GHG emission reductions. See ISO 14064-3:2018 on validation and verification.

SDG 7 (Affordable and Clean Energy) SDG 9 (Industry, Innovation and Infrastructure) SDG 12 (Responsible Consumption and Production) SDG 13 (Climate Action) SDG 17 (Partnership for Goals, including sustainable technologies)

810

28 © IMCA Trading Ltd Environmental Sustainability

Table 2 – Energy Management

General GRI CDP/TCFD SASB (including IIRC) - drawn

from across the following Industry classifications – Engineering & Construction Services; Marine Transport and O&G – Exploration and Production

IPIECA API and IOGP Sustainability Reporting Guidance for the Oil & Gas Industry

ISO 14001, ISO 50001 and ISO 14064

UN Sustainable Development Goal (SDG) [link]

Energy Consumption (by type) Electricity Purchased (by type) Energy Intensity (E/C)

GRI 305: Emissions 2016 305-4 GHG emissions intensity

CDP CC Questionnaire 2021 C2.4 (Climate-related opportunities with substantive impact potential, including resource efficiency, and resilience, such adoption of energy efficiency measures, and resource substitutes and diversification) TCFD Recommend Strategy Disclosure a) describe the identified climate-related risks over the short, medium and long-term. C4.1 (Emissions and other climate-related targets) C4.2 (Other climate-related targets, including metrics o energy consumption and efficiency) C4.3 (Emissions reduction initiatives) TCFD Recommend Metrics and Targets Disclosures a) and c) describe the metrics and targets used to manage climate-related risks and performance against them C7 (Emissions breakdown and performance) C8 (Energy, e.g. energy-related activities and energy consumption)

SASB uses energy management as a “surrogate for Scope 2 emissions in 35 of 77 industries”. See SASB General Issue Category related to Scope 2 emissions on energy management. See, e.g., Life Cycle Impacts of Buildings and Infrastructure in the Engineering & Construction Services Industry Standard, which includes accounting metric IF-EN-140a.1 (No. of commissioned projects certified to a third-party multi-attribute sustainable standard and active projects seeking such certification. This includes disclosures related to energy efficiency in infrastructure construction.

ENV-5 (Emissions to Air) IPIECA CCE-6 Energy Use

See ISO 50001 with requirements for setting up, implementing, maintaining and improving an energy management system.

SDG 7 (Affordable and Clean Energy) SDG 12 (Responsible Consumption and Production) SDG 13 (Climate Action)

815

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Table 3 - Circular Economy and Waste Management

General GRI CDP/TCFD SASB (including IIRC) -

drawn from across the following Industry classifications – Engineering & Construction Services; Marine Transport and O&G – Exploration and Production

IPIECA API and IOGP Sustainability Reporting Guidance for the Oil & Gas Industry

ISO 14001, ISO 50001 and ISO 14064

UN Sustainable Development Goal (SDG) [link]

Water Consumption (mT) Waste Produced per MARPOL Type (A – H per [mT]) Waste Recycled Water Withdrawal

GRI 306: Waste 2020 GRI 301: Materials 2016 301-1 Materials used by weight or volume, -301-2 Recycled input materials used 301-3 Reclaimed products and their packaging materials (e.g. indicator 301.3a Percentage of

CDP CC Questionnaire 2021 C4.2 (Other climate-related targets, including metrics on water management and on resource consumption and efficiency) C4.3 (Emissions reduction initiatives, including on waste reduction and material circularity) C6 (Emissions data) C9 (Additional metrics, e.g. waste) C12 (Value Chain engagement) TCFD Recommend Metrics and Targets Disclosures a) and c) describe the metrics and targets used to manage climate-related risks and performance against them.

See, e.g., Life Cycle Impacts of Buildings and Infrastructure in the Engineering & Construction Services Industry Standard, which includes accounting metric IF-EN-140a.1 (No. of commissioned projects certified to a third-party multi-attribute sustainable standard and active projects seeking such certification.

ENV-2 (Discharges to water) ENV-7 (Materials management, i.e. waste generation, disposal, recovery)

See ISO 14001 standard on environmental management systems aimed at improved environmental performance.

SDG 6 (Clean Water and Sanitation) (Target 6.1; SDG12 Responsible Consumption and Production, including material footprint, corporate sustainability reports…) SDG 7 (Affordable and Clean Energy) SDG 12 (Responsible Consumption and Production)

30 © IMCA Trading Ltd Environmental Sustainability

Table 4 – Marine environmental risks

820 General GRI CDP/TCFD SASB (including IIRC) - drawn

from across the following Industry classifications – Engineering & Construction Services; Marine Transport and O&G – Exploration and Production

IPIECA API and IOGP Sustainability Reporting Guidance for the Oil & Gas Industry

ISO 14001, ISO 50001 and ISO 14064

UN Sustainable Development Goal (SDG) [link]

Oil Spills [#] [mT] [(un)contained] [destination]

GRI 304 Biodiversity 2016 GRI 303 Water and Effluents 2018

CDP CC Questionnaire 2021 C2.2 (risk management process) C2.3 (climate-related risk drivers and risks with substantive impact) TCFD Recommended Risk Management Disclosures a) and b) describe the organisation’s processes for identifying and managing climate-related risks; and TCFD Recommend Strategy Disclosure a) describe the identified climate-related risks over the short, medium and long-term. See also CDP’s Water Questionnaire.

See, e.g., the Environmental Impacts of Project Development Topic in the Engineering & Construction Services Industry Standard, which includes accounting metric IF-EN-160a.1 (No. of incidents of non-compliance with environmental permits, standards and regulation) and IF-EN-160a.2 (Discussion of processes to assess and manage environmental risks associated with project design, siting and construction). See, e.g., the Ecological Impacts Topic in the Marine Transport Industry Standard and in particular TR-MT-160a.3 (No and aggregate volumes of spills and releases to the environment). See, e.g., the Biodiversity Impacts Topic in the Oil & Gas Production Standard, and in particular accounting metric, EM-EP160a.1. (Description of environmental management policies and practices for active sites).

ENV-3 (Biodiversity) ENV-4 (Protected and priority areas for biodiversity conservation) ENV-6 (Spills to the environment)

See ISO 14001 standard on environmental management systems aimed at improved environmental performance.

SDG 14 (Life below Water including marine pollution, marine ecosystems, implementing international sea law) SDG 12 (Responsible Consumption and Production) SDG 13 (Climate Action)

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Appendix 3 – Carbon Intensity Indicator Proposed Proxies

Below are two proposed carbon intensity metrics for the offshore marine contracting industry extracted from “Further Technical and Operational Measures for Enhancing the Energy Efficiency of 825 International Shipping: Transport work for offshore and marine contracting vessels” submitted to the IMO by the Russian Federation and IMCA (MEPC74/6) dated 8 March 2019.

A. Proposal formula A (based on yearly energy consumption): 830

B. Proposal formula B (based on effective operational utilisation time of a vessel/fleet):

835

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6 Glossary

AI Artificial intelligence

ALARP As low as reasonably practicable 840

AM Advanced manufacturing

AUV Autonomous underwater vehicles

BAT Best available techniques

BET Best environmental practice

CCS Carbon Capture and Storage 845

CDP CDP (formerly known as the Carbon Disclosure Project)

DP Dynamic Positioning

EIA Environmental Impact Assessment

EOL End-of-life

EPCI Engineering, Procurement, Construction and Installation 850

EMS Environmental Management System

ESC IMCA’s Environmental Sustainability Committee

ESG Environment, Social and Governance

ESIA Environmental and Social Impact Assessment

GHG Greenhouse gases 855

GRI Global Reporting Initiative

IPCC Intergovernmental Panel on Climate Change

IMO International Maritime Organisation

IoT Internet of Things

IRM Inspection, repairs and maintenance 860

ISM International Safety Management

KPI Key Performance Indicator

LCA Life Cycle Assessment

MASS Marine autonomous surface system

MEA Multi-lateral Environmental Agreement 865

MEPC Marine Environmental Protection Committee of the IMO

MPRA IMCA’s Marine Policy & Regulatory Affairs Committee

PM Particulate Matter

ROV Remote operated vehicles

SASB Sustainability Accounting Standards Board 870

SBTi Science Based Targets Initiative

SDGs United Nations Sustainable Development Goals

SEA Strategic Environmental Assessment

SEEMP Ship Energy Efficiency Management Plan

SMART Specific, Measurable, Achievable, Results-Oriented, Time-bound 875

TCFD Task Force on Climate-related Financial Disclosures

UN United Nations

UNGC United Nations Global Compact

UNGP United Nations Guiding Principles on Business and Human Rights

UNFCCC United Nations Framework Convention on Climate Change 880

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USV Uncrewed surface vessels

WBCSD World Business Council for Sustainable Development

WEF World Economic Forum

VOCs Volatile organic compounds 885