The European Union adopted new standards in 2022 that require companies to report sustainability-related information – US shipping companies that meet specific requirements must also comply. These standards include writing plans to reduce carbon emissions, how extreme weather and lowering emissions will impact their revenues, and scope 1, 2, and 3 emissions.
Calculating emissions data is difficult, timely, and inaccurate. For example, the Boston Consulting Group studied 1,290 companies and found that only 9% of these companies can quantify their emissions accurately. Of those surveyed, 40% responded they had estimated errors in their calculations. Calculating emissions also requires a lot of data about how much energy is being used over time.
Fortunately, SailPlan has solved this issue by creating a software and hardware suite that accurately and directly measures emissions in real-time. This technology shows emissions levels at any given time right out of the vessel’s stack and can instantly aggregate emissions over time to be automatically reportable to regulators.
While the EU’s regulations are beginning next year, the US has struggled to require companies to disclose their own emissions and climate information. The Securities and Exchange Commission (SEC) released a similar proposed ruling requiring climate information from publicly traded companies, including scope 1, 2, and 3 greenhouse gas emissions. The proposed SEC rule would require publicly traded shipping companies to comply. Because of the lack of regulations, US companies that do not have SailPlan’s technology are not currently ready to get this information together.
The SEC ruling, however, has yet to be finalized because of significant pushback from industry players. Many US companies are waiting to see what the SEC will do, but with these new EU regulations, companies must prepare to meet this new EU mandate to submit disclosures in 2025.
The new EU standards will require US companies that raise money on European stock exchanges to comply with the new regulations. This includes any US-based companies with an EU branch of more than 250 employees, more than $42 million in local revenue, or a balance sheet above $21 million. Currently, it’s estimated that 3,000 US businesses will be required to provide these disclosures, and shipping companies will be included in that estimate.
Real-time emissions monitoring systems can simplify emissions reporting regulations for shipping companies. For example, because SailPlan can measure emissions from the stack of a vessel or tap into information from energy systems like HVACs, SailPlan can provide accurate and quickly reportable Scope 1 and 2 emissions.
Scope 3 emissions are difficult for shipping companies to understand and include indirect emissions that occur in a company’s value chain. If SailPlan or technology like SailPlan were measuring Scope 1 and 2 emissions from companies throughout the value chain, and that information was shared back to the company, Scope 3 emissions would be easy to determine.
The EU’s regulations and the proposed SEC ruling show that regulators are moving towards requiring companies to disclose specific information about their emissions footprints. Companies need to gear up to understand how to provide this information with ease, and SailPlan can help.