ODFJELL AIMS TO ACHIEVE SUSTAINABLE DEVELOPMENT FOR ITS STAKEHOLDERS, SUCH AS INVESTORS, CUSTOMERS, EMPLOYEES AND THE LOCAL COMMUNITIES IN WHICH WE OPERATE, BY BALANCING FINANCIAL RESULTS AND CORPORATE SOCIAL RESPONSIBILITY. SAFETY IS PARAMOUNT, AND WE ACTIVELY PROMOTE A SUSTAINABLE AND PROACTIVE QUALITY, HEALTH, SAFETY AND ENVIRONMENTAL(QHSE) CULTURE.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In 2011 we signed up to the UN Global Compact (UNGC) programme. We have established a CSR Council including subgroups to facilitate an implementation of the United Nations’ ten principles with regard to human rights, labour, environment and anti-corruption. Annually we submit a Communication on Progress (COP), including current and new goals for the coming period. The COP reports can be found on www.odfjell.com/AboutOdfjell/CorporateSocialResponsibility.

Odfjell has contributed with a three year financial support programme for the Norwegian Church Aid’s work in Puntland in Somalia from 2014. The aim is to give former pirates an alternative to piracy. Norwegian Church Aid does this through vocational training and business training. Norwegian Church Aid also conducts general information campaigns among the population mobilising people to dissociate themselves from piracy, thereby reducing the recruitment base among young people.

Maritime Anti-Corruption Network (MACN)
Since August 2013, Odfjell has been member of the MACN, a global business network working towards a maritime industry free of corruption.

QUALITY, HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION (QHSE)

Odfjell Safety Day
Each year we arrange an Odfjell Safety Day, a global event both at sea and on shore dedicated to safety. Our emphasis in 2015 was on working at heights/fall protection and risk assessment  in general.

Corporate QHSE and finance audits
Odfjell has a programme for internal audits, focusing on QHSE, accounting, financial control, ICT security and compliance with CSR requirements such as anti-corruption requirements. Corporate QHSE supported by Finance and ICT conducts system audits on operative and staff units to ensure compliance with corporate and management level requirements and guidelines.

In 2015 we carried out 11 internal corporate system audits, including seven audits of owned or managed terminals and four audits of overseas offices. In addition to the corporate programme a large number of other internal, external and customer audits are conducted in operative units and on our vessels. These audits are for the main part triggered by regulatory requirements, certificates or contracts. None of the audits have resulted in withdrawal or suspension of certificates or contractual cancellation in 2015.

SHIPPING

Piracy and armed robberies
Piracy and armed robberies continue to be a challenge for international shipping. The main areas of concern are the Gulf of Guinea including Nigeria, Somalia and adjacent waters, and Southeast Asia including the Singapore Straits and Indonesia. In 2015 there were no successful hijackings in the Gulf of Aden and Indian Ocean. The pirate activity in the Indian Ocean ceased, and the defined high risk area was reduced in December 2015 to include Southern Red Sea, Gulf of Aden and north-eastern part of the Indian Ocean. Privately contracted security personnel are still being used to protect some transits. Armed robberies and hijackings in the Far East, particularly in the Singapore Straits and adjacent waters, have become a concern. The main targets for hijacking in Southeast Asia are smaller vessels (‹10.000 dwt) with cargo that is easy to trade. Increased measures are being implemented on relevant Odfjell managed ships.

Refugees in the Mediterranean Sea
Refugees in the Mediterranean Sea crossing the central and eastern Mediterranean Sea are a major concern. Odfjell ships that transit the area frequently have been equipped and prepared to participate in search and rescue operations to assist refugee vessels in distress.

Safety
The work to secure a sustainable safety performance has continued, and we see very positive results. The lost time injury frequency (LTIF) indicator for Odfjell-managed ships was 0.72 in 2015, the same as in 2014. The total recordable case frequency (TRCF) was 2.64, whereas in 2014 the figure was 2.94. Our target values are 1.20 for LTIF and 4.00 for TRCF respectively. The figures represent a considerable drop in the number as well as the severity of personnel injuries. Odfjell Ship Management holds an ISO 14001 certification covering 45 vessels under own management. The certification identifies relevant environmental considerations and lists key issues that are followed up in an environmental programme.

Competence and training
During 2015 our seaborne personnel performed about 2,770 inhouse course man days and 12,900 days of external training, of which 1,073 days were related to our Leadership and Followership Development Programme. The increase in external training was brought about in compliance with the required Maritime Labour Convention (MLC) training among Filipino seafarers and the Safety Refresher Training stipulated in the new International Convention on Standards of Training, Certification and Watchkeeping for Seafarers. The training man days reflects our strategy in developing the competencies of the seafarers in a three-fold manner – having the right knowledge, right skills and the right attitude.

The Odfjell Academy training facility was transferred from Subic to Manila in 2015, allowing the Academy to perform in-house Marinfloc and Framo trainings and in turn supply the maritime industry with competent crew.

Crewing operations
As part of our social responsibility Odfjell has started hiring crew from Boys Town (an orphanage). This gives them an opportunity to improve their lives. For our crewing personnel, we launched a basic shipping familiarisation course, enabling them to become significant contributors to the sustainability of the Philippine seafaring industry.

An enhanced pre-employment medical examination and a Project Healthy Living’s BMI Watch campaign have been implemented, educating seafarers and their families of the importance of making health and well-being their topmost priority. Regional allottee  chapters in Manila, Cebu, Davao and Iloilo have as well been established, providing a sense of community and a reliable help network among families of Odfjell’s seafarers. The 50 seafarers awarded for 25 years of service during 2015 once again affirmed the Company’s reputation as being a sustainable and dependable employer.

ENVIRONMENT

Carbon Disclosure Project (CDP)
In 2015 our response to the annual CDP covered the shipping business, the headquarters in Bergen and our terminals in Rotterdam and Houston. Based on the reported figures from 2014, our disclosure score improved from 72 to 91. The disclosure score reflects the quality and completeness of the Company’s response. The average for our dedicated industry in the Nordic region is 81. The maximum disclosure score is 100. We also received performance band D for the assessment of our actions, which contribute to climate change mitigation, adaptation and transparency. This is the same as in 2013, compared to C in 2014 (highest score is A), due to changes in the scoring methodology of CDP. Our carbon dioxide emission was further reduced by 6.6% in 2014 compared to 2013. Due to our propulsion project and other environmental initiatives we reached a further reduction of our carbon dioxide emissions for 2015 by about 13% for the fleet, which will make a positive effect on the CDP future score.

Environmental impact of the Odfjell fleet
In 2015 the Odfjell fleet reduced the consumption of marine fuels by 39,555 tonnes (8.4%) compared with 2014. In terms of CO2 emissions, this represents a reduction of 123,000 tonnes. Our total marine fuels consumption during the year was 432,000 tonnes, of which 68,500 tonnes were distillates. Our distillate consumption increased 226% compared to 2014, primarily driven by the Emission Control Area (ECA) regulations which took effect as of 1 January 2015. Most of the overall consumption reduction is due to a decrease in fleet size, however 8,000 tonnes were achieved through reductions in the daily fuel consumption.

SOx emissions
Based on all consumption in 2015 (both in port and at sea), Odfjell’s vessels emitted on average 0.11 grams of SOx per tonne cargo transported one nautical mile (10% reduction). Total emissions of SOx decreased to 8,600 tonnes, reflecting reductions both in fuel volumes as well as in fuel sulphur content. All fuels purchased by Odfjell are externally tested. Test results of the fuel purchased in 2015 (all fuel grades) indicate the average weighted sulphur content at 1.90% compared to 2.12% in 2014. The global limit in 2015 was 3.50%.

CO₂ emissions
Based on the consumption of 82 vessels, total emissions of CO₂ in 2015 amounted to close to 1.3 million tonnes, a 13% reduction compared with the previous year. In 2009 IMO’s Marine Environment Protection Committee circulated guidelines for voluntary use of an Energy Efficiency Operational Indicator (EEOI), defined as the amount of CO₂ emitted per unit of transport work. Since 2008 Odfjell has calculated the EEOI at ship and fleet level in accordance with IMO guidelines. Including fuel consumption both in port and at sea, in 2015 the EEOI for the Odfjell fleet was 17.62 grams of CO₂ per Based on the consumption of 82 vessels, total emissions of CO₂ in 2015 amounted to close to 1.3 million tonnes, a 13% reduction compared with the previous year. In 2009 IMO’s Marine Environment Protection Committee circulated guidelines for voluntary use of an Energy Efficiency Operational Indicator (EEOI), defined as the amount of CO₂ emitted per unit of transport work. Since 2008 Odfjell has calculated the EEOI at ship and fleet level in accordance with IMO guidelines. Including fuel consumption both in port and at sea, in 2015 the EEOI for the Odfjell fleet was 17.62 grams of CO₂ per tonne cargo transported one nautical mile (g/tnm), an improvement of 3.5% compared with 2014 and the best result since we started our measurements in 2008.

Bilge water treatment plants
In order to reduce the oil content in the bilge water, 30 owned vessels have been upgraded with the installation of highly effective oily water separators (bilge water treatment plants). The bilge water discharged overboard from the vessels, on which such equipment has been installed, contains less than two parts per million (ppm) oil, while MARPOL requirements stipulate not more than 15 ppm. Three vessels were upgraded in 2015 and the project is now completed. This technical project contributes to reduce environmental impacts beyond the minimum requirements stipulated in current regulations.

Ship recycling
To secure a controlled ship recycling process, Odfjell regularly audits recycling yards and now use the Baltic and International Maritime Council’s new standard recycle contract (RECYCLECON). We also obtain ‘Green Passports’ for all ships before the age of 25. Our vessels establish an inventory of hazardous materials (IHM) that provides an inventory of materials on the vessel that could potentially harm environment or personnel during the recycling. A recognised authority performs an on board survey and issue a IHM statement of compliance. To date, 19 of our ships have been certified, another four are due in 2016. Odfjell use yards which are certified as compliant with the Hong Kong Convention and the 2012 Guidelines for Safe and Environmentally Sound Ship Recycling and we also require that the recycling yard follows a ship recycling plan.

Environmental management system plan
Odfjell cooperates with US authorities to enhance our environmental management system. The aim of the programme is to further reduce the probability of any pollution, and the programme addresses hardware solutions, procedures and environmental awareness.

Environmental challenges
Several future challenges have been identified involving different stakeholders such as authorities, customers and investors. For instance, there will be a significant increase in the use of low sulphur fuel, more stringent ballast regulations, NOx and SOx requirements, introduction of carbon taxes (CO₂) and climate changes. Another challenge will be the management of an increasing amount of local, national, regional and international regulatory requirements. We also handle requirements from an increasing number of states to establish agreements with oil spill recovery organisations prior to any entry into national waters.

ENERGY EFFICIENCY

Speed/consumption reduction scheme
In 2015 Odfjell Tankers operated 45 vessels in reduced speed mode. Compared with full-speed mode this generated net fuel savings of about 75,000 tonnes, corresponding to emission savings of approximately 234,000 tonnes of CO2 and 713 tonnes of SOx.

Mewis duct
Odfjell decided in 2010 to install Mewis ducts on 22 vessels with the purpose to cut fuel consumption by an average of 10% and thus, to reduce emissions. The project was completed in 2015 and all 22 vessels are now fitted with Mewis ducts. In addition, the last four vessels recently delivered to Odfjell had Mewis ducts installed at the yard. As such, 26 of Odfjell vessels now have Mewis ducts installed and our statistics document significant fuel savings.

Improved propulsion efficiency
In 2015 we decided to upgrade the propulsion line on our Kvaerner and Poland class vessels in order to further reduce fuel consumption by approximately 20% and thus, to reduce emissions. New energy efficient propeller blades, rudder-bulb and technical upgrades of the main engine, turbo chargers and shaft generator gear were part of the project. The savings have been confirmed by full scale sea trials. The vessels will be amongst the most energy efficient chemical tankers in the world, and will achieve the highest score on the RightShip energy rating, A+. Four vessels have been retrofitted in 2015 and the remaining 15 vessels will be upgraded in 2016 and 2017.

Fresh water production by using reversed osmosis technology
In order to further reduce our consumption on auxiliary boilers we installed reversed osmosis plants on six vessels, enabling more energy efficient production of fresh water. In addition to the direct fuel savings for heating the boilers, we also expect this initiative to reduce time spent for tank cleaning. In 2016 we plan to retrofit plants on 19 additional vessels.

Engine room lights switch-off
In order to further reduce our auxiliary engine consumption, we made adjustments in the engine room (E/R), which automatically switch off the lights in the E/R when the room is unmanned. More than 30 vessels were included in this project in 2015, and the project is completed.

Weather routing
Since 2009 we have had our own weather routing concept utilising both internal and external resources. The concept is applicable for both our owned fleet and the time-chartered fleet. In 2015, 732 sea voyages were subject to weather routing, reducing time at sea on these voyages by at least 40 days. This gave fuel savings of approximately 1,200 tonnes, equivalent to a reduction of about 3,700 tonnes of CO₂.

Intermediate hull cleaning and propeller polishing
To further improve our vessels energy efficiency, Odfjell carries out hull cleaning and propeller polishing also between dry-dockings. Cleaning intervals have been narrowed since 2013, and we will further improve this practice. This has offered significant reductions of fuel consumption and thus, of emissions of CO₂ and SOx. During 2015, a total of 78 hull cleanings were performed.

Ship energy efficiency management plan (SEEMP)
In 2012 Odfjell developed, in close cooperation with DNV GL, a SEEMP for the owned fleet, which was rolled out to the vessels during 2013. The SEEMP includes EEOI benchmarking for each vessel, vessel class and for the Odfjell fleet in total. This enables us to implement specific counter measures if a negative energy efficiency trend is observed. In 2015 we implemented auto-generated ship specific energy efficiency reports to form part of the SEEMP on all vessels, including the externally managed fleet, on a quarterly basis.

New fleet performance system
In 2015 we implemented, for all vessels in the fleet, a new, in-house made alert based fleet performance system, utilising dashboard technology for constant shore based monitoring. System operators act on alerts trigged in the system if a vessel is consuming fuel above defined vessel specific target values.

TANK TERMINALS

Odfjell Terminals strives to be a global leader in terms of quality, health, safety, environment and sustainability. We aim to achieve operational excellence through operational discipline and standardisation including minimising our environmental footprint, by being a responsible member of the communities we operate in and by doing the right things, the right way, every time. For 2015 the LTIF of the terminals operated and managed by Odfjell, was 0.30 against 0.80 for 2014. The decrease was due to a greater focus on the value of safety across the terminals organisation. The terminals ended the year with 87 spills larger than five litres which is above the 2014 results of 48. This is in part due to the need to have a greater focus on maintenance activities within the terminal division.

ISO certification and standardisation
International standardisation continues to be a focus across the organisation. All terminals are compliant to the international standards ISO 9001, ISO 14001 and Chemical Distrubition Institute-Terminals (CDI-T), and are audited by a third party to ensure confirmation to these standards. The focus on standardisation allows the terminals to have consistent management processes and common systems. Odfjell Terminals continues to develop key global standards in operations, engineering, and maintenance to continue to reinforce operational discipline across the organisation.

Auditing programme
2015 was the first year of the newly developed CDI-T based internal audit programme across the terminals organisation. The systematic approach to auditing was developed to help build a baseline assessment of where the terminals need to focus attention to continuously improve the terminals organisation across the board. The goals of the new audit protocol are to assure that the terminals are in compliance with local legislation and regulations and common international terminal practices, and are following Odfjell Corporate and Odfjell Terminals policies and standards. In addition it should assist local management in improving the QHSE performance of their terminals a well as to support them in achieving operational excellence.

Vapour recovery systems – Global
In the later part of 2015 the terminals began to focus on vapour recovery systems in Asia similar to the systems currently utilised in Europe and America. The new systems will cut pollutants emitted and help to continue to reinforce Odfjell Terminals commitment to the communities that we operate in.

New boiler system - Odfjell Terminals (Rotterdam)
Odfjell Terminals (Rotterdam) installed a new boiler system that further improves efficiency and sustainability of the terminal by utilising waste gas from ship transfer, and tank usage, as an energy source to limit the use of added fossil fuels as an energy source. The new boilers also help to reduce emissions from the boiler systems, as well as transfer operations, by utilising the waste stream which reduces CO₂ and other potential emissions.  The increase in efficiency and the reduction in emissions are key steps in ensuring the terminal continues on the path of being the frontrunner in sustainability and conservation efforts in the Rotterdam area.

ENERGY EFFICIENCY OPERATIONAL INDICATOR (EEOI) 2015

Gram CO₂ per tonne cargo transported 1 nautical mile (main ship groups)