Environmental performance

A comprehensive benchmarking exercise was undertaken during 2008 which compared group environmental management practices with best practice and trends within the global marine transport sector. The exercise confirmed that the group is on track in this area and that the majority of key performance indicators (KPIs) are following best practice measures to minimise the impact of operations on the environment.

During the year, the board approved the adoption of a new Grindrod group environmental policy which can be found on the company website. The policy, which applies to all subsidiary operations in which Grindrod has a controlling interest, has raised the bar in terms of overall environmental performance within the group and facilitated the further development of company-level environmental management systems, in line with the decentralised approach to managing environmental risks.

A further key achievement was meeting for the third year in a row, the target of zero significant spills (more than one barrel of oil) for all ships under the group’s control. This once again demonstrates the working commitment of ships’ crews to minimising the environmental impact of operations on the world’s marine ecosystems.

There were no material incidents of non-compliance with applicable environmental regulations in any jurisdiction that the group operated in during the year under review.

FOLLOW UP ON COMMITMENTS FROM PREVIOUS YEAR

In the previous report the group committed to improving the accuracy and completeness of monitoring and reporting energy consumption data and to developing more appropriate measures of energy-use efficiency and greenhouse gas (GHG) emissions.

To meet these commitments the group:

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improved the accuracy and completeness of data collection across the group and undertook greater interrogation of the data received from subsidiaries, challenging and querying figures where appropriate; and

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clarified the scope of energy-use reporting for the Shipping division, moving closer to the goal of being able to report in line with International Maritime Organisation (IMO) CO₂ emission indexing working guidelines. For the first time the group is able to measure and report normalised CO₂ emissions CO₂-e) in line with these guidelines for the majority of the fleet (see Shipping division section below). The objective going forward is 100% coverage. It should be noted that during 2008, the IMO continued to examine methodologies and guidelines. Grindrod is following these developments closely.

KEY ENVIRONMENTAL PERFORMANCE INDICATORS

The data below is for the whole group, including office-based Trading and Financial Services divisions, and represents more than 95% of the group by revenue and the full spectrum of shipping activities, which poses the greatest environmental risks.

	2008
Electricity usage in company buildings	15 093 464 kilowatts
Diesel usage in land-based vehicles	18 671 kilolitres
Petrol usage in land-based vehicles	497 kilolitres
Water usage	116 813 kilolitres measured and 125 000 kilolitres total estimated
Unrecycled general waste	421 tonnes
Paper and cardboard recycled	505 tonnes estimated
Total estimated GHG emissions	450 000 tonnes CO₂-e

Further environmental KPIs and achievements are reported below for the Shipping and Freight Services divisions. It is to be noted that data, although reflective of absolute performance for the group, is not directly comparable in terms of year-on-year eco-efficiency performance given the changes to group structure and growth of businesses that occurred during the year, as well as improvements in completeness of data collection achieved in 2008.

Shipping

Key environmental inputs and outputs for vessels:

Grindrod acknowledges that climate change is a key risk to the business and in particular marine operations. As a shipping company, a significant amount of fossil fuel is burnt adding to the accumulation of GHG in the atmosphere that are now known to be accelerating human-induced climate change. Burning of marine fuel oil also results in the emission of SOx, NOx and particulate matter (PM). The marine operations are also exposed to the observed increase of unexpected weather patterns and extreme weather conditions. It is therefore in Grindrod’s best interests to help reduce emissions where it can. The group continues to demonstrate its commitment to following best practice in this area.

Environmental reporting has been significantly improved in the Shipping division by clarifying the scope of inclusion for vessels in terms of their environmental footprint, following international best practice and guidelines provided by the international GHG protocol.

The company is, as always, responsible for spill prevention, waste management and water use for the ships owned and managed. Accountability for fuel consumption and the associated carbon and emissions (NOx, SOx and particulates) footprints is the responsibility of the company chartering the vessel and therefore, waste and water usage indicators are reported for the ships that are owned and managed by the group. In most cases the vessels are chartered out and therefore fuel consumption and the resulting GHG emissions are not within the scope of reporting for these vessels. However, the Shipping division also acts as the charterers on vessels that are owned and managed by a third party and the fuel usage for these vessels is included in the scope of reporting, but in this instance does not maintain records of waste and water use. This re-adjustment means the exclusion of fuel usage and resulting GHG emissions from the majority of the Unicorn fleet, but the fuller inclusion of emissions from IVS shipping operations.

All vessels operated by the group have integrated safety, health, environment and quality (SHEQ) management systems driven by ISO 9001:2000 for dealing with significant potential environmental risks. Unicorn Shipping once again maintained ISO 9001:2000 accreditation by Det Norske Veritas (DNV). Unicorn Shipping vessels also hold documents of compliance issued by the relevant maritime authorities in terms of International Maritime Organisation (IMO) legislation. All ships are subject to regular SHEQ audits by major oil customers, underwriters, certification and other bodies. Fleet managers within the group also conduct stringent internal SHEQ audits on a quarterly basis. Realistic emergency drills are carried out to test shipboard emergency response plans and shore management preparedness to deal with a variety of shipboard emergencies such as oil spills, collisions, fire, flooding or grounding. Seafarer training conducted by the Unicorn Training School, based in Durban, includes safety, health and environment awareness and response aspects to ensure that all seafaring staff can respond appropriately to emergency situations that could result in marine environmental impacts. Training continues on board in terms of each vessel’s SHEQ system.

Emissions KPIs for the Shipping division are summarised in the table below:

SOx emitted	33 tonnes
NOx emitted	38 tonnes
Total marine diesel oil consumed	7 154 kilolitres
Total heavy fuel oil consumed	108 396 kilolitres
Estimated GHG emissions from marine fuel usage	370 000 tonnes CO₂-e
Total estimated GHG emissions in the Shipping division (including other sources – e.g. refrigerant gas usage)	380 000 tonnes CO₂-e
Average per-ship CO₂ emissions efficiency (as per IMO guidelines)	12 g CO₂ per tonne. Nautical Miles (NM) (for 77% of total distance travelled and 79% of tonnage transported by the fleet that fall within the reporting scope for the year)
Range per-ship CO₂ emissions efficiency	2 – 33 g CO₂ per tonne. NM

Audits of ships during the year again confirmed full compliance with annexure VI of the International Convention for the Prevention of Pollution from Ships (MARPOL) that deals with air pollution from ships. The majority of ships owned and all new ships purchased, are fitted with the latest marine diesel and marine heavy fuel engines that reduce levels of SOx and NOx emissions.

Routine audits during the year ensured that all Grindrod ships were fully compliant with low sulphur fuel requirements for designated shipping areas.

Another environmental concern in the shipping industry is marine pollution, which can occur from accidents involving spillage of fuel oil or cargo. It is pleasing to report for the third year in a row there were no spills as a result of ongoing stringent measures on board all vessels under the group’s control.

The group policy objective is for 100% of owned vessels to have double-hulls to be constructed with materials designed to minimise corrosion and to promote robustness and longevity and to have the best available onboard navigation and safety equipment.

Discharging ballast water can also negatively impact marine biodiversity, transferring undesirable organisms from one ocean to another and as a result all vessels have a Ballast Management Plan that complies with IMO requirements, to minimise such impacts.

Other measures in place to prevent marine pollution and impact on marine biodiversity include:

•	continued non-use of Tributyl Tin (TBT) or lead containing anti-fouling paint;
•	continued operation on most of the ships of nonwater- based vacuum-operated sewerage treatment plants, minimising discharge of effluent at sea; and
•	vessels owned by Unicorn Calulo Bunker Services, in which Grindrod has a 74,9% stake, are classed as “Cleanship” (see http://www.cleanship.info). All solid and liquid waste is retained on ship and not discharged into the sea at all.

Water use for the Shipping division was 3 467 kilolitres. Most of the Unicorn fleet can generate up to 20 kilolitres per day of their own water, but only approximately eight kilolitres is required per day.

Waste generated within the Unical and Unicorn shipping divisions was as follows:

•	galley waste: 31,1 tonnes; and
•	general non-recycled waste: 83,93 tonnes.

Biodegradable waste generated on all ships is disposed of at sea or incinerated onboard in strict compliance with MARPOL. Solid waste and waste oils are separated on board and where possible incinerated, in strict compliance with the relevant provisions of MARPOL. Any waste that may contain heavy metals is not incinerated on board. As vessels trade worldwide, it is not practicable to audit solid waste disposal sites, however, all company-run ships maintain garbage logs for solid waste and safe disposal receipts for any solid waste landed. Grindrod has maintained its policy of not transporting hazardous waste.

Protection and Indemnity Club cover of US$1 billion is maintained for each ship accident or collision for oil pollution and resultant environmental liabilities imposed by international convention, national legislation or common law.

Freight Services

Key environmental inputs and outputs for road freight:

Grindrod Terminals, based in Durban and Richards Bay, are in the advanced stages of implementing ISO 14001 compliant environmental management systems (EMS) and are in line to be certified within the next 12 to 18 months.

Carbon footprint for the Freight Services division:

		Tonnes CO₂e
Electricity usage - buildings	14 538 699,83 kWh	14 350
Diesel usage in land-based vehicles	18 652,52 kl	51 220
Petrol usage in land-based vehicles	447,47 kl	1 066
TOTAL		66 636

Measures to reduce air pollution included:

•	Grindrod Logistics – Auto Carriers:
	–	all trucks purchased in the last three years comply with EU emissions requirements;
	–	implementation of a stop-start system to reduce vehicle idling;
	–	increased use of low sulphur fuels where possible; and
	–	appointment of consultants to investigate the feasibility of using bio-fuels.
•	Grindrod Logistics – Bulk Transport:
	–	vehicles comply with “Euro 3 specification”. Furthermore, their fuel management system identified anomalies in fuel consumption.

Waste, by type, generated by the division was as follows:

•	General non-recycled waste: 295 205 kilograms;
•	Paper: 487 772 kilograms;
•	Steel/metal: 112 640 kilograms;
•	Wood: 141 150 kilograms;
•	Liquid chemical waste: 56 kilolitres;
•	Salt sweepings: 47 tonnes; and
•	Sulphur sweepings: 250 tonnes.

It is group policy that all land-based solid waste be separated at source into hazardous and non-hazardous streams and disposed of separately. Hazardous waste is disposed of by registered contractors to licensed hazardous waste sites. Full compliance with this policy was maintained during the year under review.

There were two environmental incidents within the Freight Services division. A major water leak that resulted from a vehicle damaging a water pipe at a Grindrod Intermodal depot in Durban caused the collapse of four tanks containing jet fuel. Local fire and emergency authorities were called out to attend to the accident and an external contractor successfully contained the resulting spill. In the second incident, a road tanker owned by Grindrod Tank Terminals was involved in an accident that caused the spillage of petroleum fuel. An external contractor successfully contained the resulting spill.

GROUP-LEVEL ENVIRONMENTAL OBJECTIVES AND TARGETS FOR 2009

Following the important groundwork completed during the year and the step-up improvement in environmental monitoring and reporting, Grindrod is committed to further improving its management of environmental risks as follows:

•	to commence roll-out of company-level management programmes and initiatives in line with the new group environmental policy;
•	aim to achieve a target of 100% coverage in terms of monitoring and reporting on ships emissions, following the new boundary guidelines established and in line with IMO CO2 emissions indexing best practice;
•	improve on measurement and reporting of normalised land-based electricity usage and associated GHG emissions, so as to start to explore more aggressive options and strategies in terms of reducing energy and GHG emissions from these sources;
•	investigate alternative renewable fuel and energy options where feasible; and
•	continue to maintain full compliance with MARPOL regulations regarding marine pollution and zero record in terms of significant spills to the marine environment.