A key ingredient

Corporate social responsibility can no longer be considered a sideline issue for the business world, and ports are no exception. Health, safety, security, and environment issues go without saying these days and, beyond those operational matters, there are plenty of examples of port operators getting stuck into local projects, supporting everything from health centres to schools.

All very laudable, of course; but when it comes to port concession negotiations, the CSR pressure can be immense.

One consultant, asking to remain anonymous, says: “First it was environmental issues, EIAs, etc. – now we have jumped on the CSR bandwagon. Port operators negotiating concessions are supposed to justify the business case but that is very difficult with all the add-ons. If I was a port operator and the regulator or port authority decided they wanted a certain CSR [clause], my reaction would be – ‘not another one’. How do you build these things into your business case and go through due diligence? It is very difficult to know what’s required.”

And how far should CSR requirements go? If a supermarket chain is required to build a new roundabout in order to get planning permission for a new store, for example, this is often referred to as ‘planning gain’.

There are less pretty words, of course, and some planning conditions, both within and outside the ports sector, simply buy off the objectors to an expansion or new development, says the consultant – and he believes the two issues are inextricably linked. “What with local residents, statutory objectors, and so on, everybody is allowed to have a shot [in a planning proposal] and it has all developed from there. If a couple of local residents are not happy that a project is going to put an extra train on, you have to mitigate.”

He adds: “Sweeteners, planning gain, call it what you will – I have seen it quoted that CSR liability can be expected to come in at 15% of the capital costs of the development. When you build your business case and plan the project at the outset, you can’t determine what the cost of your ‘planning gain’ or CSR obligations might be, so logic says just add 15%.”

CSR issues are very important to the Port of Gothenburg, and featured strongly in recent concession awards.

“Corporate Social Responsibility, or what we usually call Sustainability, includes social, environmental and economic concerns in a long-term perspective,” says Åsa Wilske, Port of Gothenburg’s senior manager sustainability. “We believe that the best way to handle this concern is to integrate it in our business mission and business plan – therefore, it is one of our core values. This has been secured in our policy documents and recently strengthened in our new code of conduct.”

When customers are asked about the values most connected with the Gothenburg port brand, sustainability is the highest, says Ms Wilske.

During the concession processes for the port’s ro-ro and container operations, CSR/sustainability was a fundamental issue and essential if companies were to be included in the evaluation; bidding companies had to report their CSR/sustainability ambitions in general terms. However, she adds: “We are convinced that the terminal operators are dealing with CSR/sustainability in a very ambitious way.”

Gothenburg’s environmental demands are very specific and dealt with through a special board. The social demands were put in more general terms. “We don’t see any constraints; we do believe that ambitious social and environmental concerns will add to our competition and strengthen our business,” says Ms Wilske.

Money first

Neil Davidson, senior advisor – ports at Drewry, agrees that CSR is growing in importance: “Certainly it is clear that all the big terminal operators are putting increasing emphasis on demonstrating CSR generally, and this naturally finds its way into bids. Also, port authorities and governments offering concessions and privatisations typically do include a requirement to demonstrate this aspect along with other non-financial aspects like track record, market strategy, operational plans, etc. Evidence of a sound environmental policy and procedures is also becoming increasingly important.”

Some sources suggest that in concession negotiations, CSR obligations are now more important than the financial side of the bid. However, Mr Davidson says: “I can’t say I have seen any examples that CSR is becoming more of an issue than the money when it comes to concessions. At the end of the day, it is usually about weighing up the financial and qualitative issues, and financially there is always a minimum threshold to be reached first and foremost.”

APM Terminals puts CSR at the heart of its operations. APM Terminals spokesman Tom Boyd says: “APMT’s goal is to be the best terminal operator and to do this we clearly want to be a responsible operator. CSR issues are therefore very important to us and we consider CSR to encompass a range of sustainability issues across four strategic areas: social responsibility, environment & climate change, responsible business practices and health & safety.

“As a responsible business working in many world markets, we place significant emphasis on CSR plans and future performance into our evaluation process. Each port has unique needs on regional, national and local levels, which we try and identify through our holistic approach.”

Are sometimes unrealistic CSR-related terms placed on operators? “We don’t feel so,” says Mr Boyd. “Ports play an important part in social and economic progress and there should be lasting impact and transparency.”

He adds: “We view CSR as an integral part of our business activities and have structured our organisation and business planning to reflect that. Each region has different needs and we design our programmes to suit them.”

Wide reach

Across the world, ports are frequently involved in ongoing charitable fund-raising programmes, as well as specific efforts to tie in with anniversaries and other events.

As part of the Port of Immingham’s centenary celebrations this year, Associated British Ports has set up an Immingham 100 Legacy Fund, through which all money raised with go to provide sustainable funding for local projects. ABP is working with two community organisations – Immingham OneVoice and Oasis Academy Immingham – to support local community and educational initiatives.

A group of ABP employees abseiled down the Grimsby Dock Tower – other fund-raising activities included staff, customers and suppliers completing the Three Peaks Challenge, an eight-a-side football tournament and a 100 holes golf challenge.