FAQ

Please send any questions to the Secretariat of the Sea Cargo Charter Association at: info@seacargocharter.org

Background

The maritime sector has provided efficient economic services that have played a key role in enabling the growth of global trade and global economic development. However, this has not been without some adverse consequences unique to the maritime sector. The continued success of the maritime sector is intrinsically linked to the well-being and prosperity of society. Therefore, all industry participants must play a role in addressing adverse consequences.

The Sea Cargo Charter was developed in recognition of charterers’ role in promoting responsible environmental stewardship throughout the maritime value chain. They are an initiative unique to charterers and bridge climate change commitments set out by the International Maritime Organization (IMO) as well as the corporate expanding environmental expectations.

The Sea Cargo Charter was developed through a global consultation. The Charter borrows the concept of creating globally agreed common baselines that can act as established minimum standards from the Poseidon Principles. By making valuable asset-level climate alignment data available to Signatories, the Sea Cargo Charter is supportive of the United Nations’ Sustainable Development Goals, the Global Logistics Emissions Council (GLEC) Framework, the Carbon Disclosure Project (CDP), Energy Transitions Commission, and the many others that are developing to address adverse impacts.

Background

The IMO (International Maritime Organization) is the United Nations’ specialized agency with responsibility for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships. The IMO approved an Initial Greenhouse Gas (GHG) Strategy in April 2018 to reduce GHG emissions generated by shipping activity. This Initial Strategy sets out the following levels of ambition:

  1. To reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008.
  2. To reduce CO2 emissions per transport work by at least 40% by 2030, pursuing efforts towards 70% by 2050 compared to 2008.

According to the IMO, the shipping industry’s governing body, the sector currently accounts for 2.2% of global emissions. Left unchecked, shipping emissions are expected to grow by 50-250% by 2050.

While CO2 represented almost all of the industry’s GHG emissions (98%), methane (CH4) emissions from ships increased over this period (particularly over 2009–2012) due to increased activity associated with the transport of gaseous cargoes by liquefied gas tankers due to methane slip. There is potential for this trend to continue in the future if shipping moves to liquefied natural gas (LNG)-powered ships.

Nations pledged in the 2015 Paris Agreement “to achieve a balance between anthropogenic emissions by sources and removals by sinks of GHG in the second half of this century”. This means getting to “net zero emissions” between 2050 and 2100. 2050 therefore represents a key milestone in the Paris Agreement, which the IMO explicitly references in its Strategy.

The Strategy does not alone secure 1.5°C or clearly show that efforts have been pursued to achieve this. The Strategy increases the possibility of being able to keep global average temperature increases within this limit. Immediate measures to implement the Strategy will be required to urgently peak and reduce GHG emissions in line with 1.5°C. The Strategy will be reviewed in light of the United Nation (UN)’s Intergovernmental Panel on Climate Change (IPCC) 1.5°C report in September 2018. Critical to the viability of 1.5°C is whether the Strategy is converted into significant GHG reductions before 2023, and this is dependent on the outcome of future IMO meetings and their ability to agree and then rapidly deploy policy measures.

The Sea Cargo Charter

The Sea Cargo Charter is a framework for assessing and disclosing the climate alignment of chartering activities. The Sea Cargo Charter creates common global baselines that are consistent with and supportive of society’s goals to better enable charterers to align their chartering activities with responsible environmental impacts. The four Principles constituting the Sea Cargo Charter are:

  1. Assessment of climate alignment
  2. Accountability
  3. Enforcement
  4. Transparency

The Sea Cargo Charter

The Sea Cargo Charter sets a standard for reporting emissions, thus enhancing transparency and creating a global baseline to support and work towards the greater goals for our society and the goal to align charterers’ maritime activities to be environmentally responsible. The objective is to organize a group of aligned and committed charterers to take ownership of a set of principles to integrate climate considerations into charterparties, consistent with the climate-related goals of the IMO.

The Charter aims to be voluntary, practical to implement, verifiable, fact-based, and effective. Signatories commit to implementing the Charter in their internal policies, procedures, and standards.

The Charter is intended to evolve over time following a regular review process to ensure that the Charter is practical and effective, is linked to and supports the IMO’s GHG measures developed through 2023, and that further environmental factors are identified for inclusion.

The Sea Cargo Charter

Principle 1 – Assessment of climate alignment
This Principle provides step-by-step guidance for measuring charterers’ climate alignment with the agreed climate target. It establishes a common methodology for calculating the carbon intensity and total GHG emissions, and thus also provides the input needed to track the decarbonization trajectories used to assess Signatories’ alignment.

Principle 2 – Accountability
To ensure that information provided under the Principles is practical, unbiased, and accurate, it is crucial that Signatories only use reliable data types, sources, and service providers.

Principle 3 – Enforcement
This Principle provides the mechanism for meeting the requirement of the Sea Cargo Charter. It also includes a recommended charter party clause, the Sea Cargo Charter Clause, to ensure data collection. While the wording of the Sea Cargo Charter Clause is strongly recommended, it is not compulsory for Signatories. However, if all Signatories start using it, it will de facto be in common usage.

Principle 4 – Transparency
The intent of the transparency principle is to ensure both the awareness of the Sea Cargo Charter and that accurate information can be published by the Secretariat in a timely manner. Furthermore, transparency is key in driving behavioral change.

The Sea Cargo Charter

Climate alignment is currently the only environmental factor considered by the Sea Cargo Charter. This scope will be reviewed and may be expanded by Signatories on a timeline that is at their discretion.

All charterers are eligible to join the Sea Cargo Charter: those with interest in the cargo on board; those who simply charter out the vessels they charter in; disponent owners; all charterers in a charterparty chain; companies involved in pools.

The Sea Cargo Charter must be applied by Signatories in all bulk chartering activities that are:

  1. on time and voyage charters, including contracts of affreightment and parceling, with a mechanism to allocate emissions from ballast voyages,
  2. for voyages carried out by dry bulk carriers, chemical tankers, oil (crude and product) tankers, and liquefied gas carriers,
  3. and where a vessel or vessels are engaged in international trade (excluding inland waterway trade).

Until 31 December 2021, vessels under 5000 gross tonnage are excluded. Starting from 1 January 2022, vessels under 5000 GT are also included.

In recognition of the diversity of a charterer’s role, the Sea Cargo Charter adopts a twin approach: firstly, flexibility as to the Signatories’ choice of reporting segments, so as to encourage the widest adoption possible; secondly, certain minimum reporting requirements so as to maximize impact. This results in four reporting segments, which are thoroughly described in the Sea Cargo Charter Technical Guidance.

The Sea Cargo Charter

The Sea Cargo Charter was launched at the Global Maritime Forum Virtual High-Level Meeting on 7 October 2020.

The Sea Cargo Charter

Workshops and presentations were held in late 2018-early 2019 in Singapore and Geneva to elicit feedback from a wide group of stakeholders (charterers and owners) on the development of the Sea Cargo Charter. The development of the Sea Cargo Charter was led by a drafting group constituted in October 2019 and chaired by Jan Dieleman, President of Cargill Ocean Transportation. The drafting group was spearheaded by representatives from all major segments in the industry – Anglo American, Dow Chemical, Euronav, Norden, Stena Bulk, Total, Trafigura – with support from Stephenson Harwood
and in collaboration with the Global Maritime Forum, UMAS, and Smart Freight Centre.

The Sea Cargo Charter

Shipowners of varying sizes and geographies have been engaged and consulted throughout the process of developing the Sea Cargo Charter and some shipowners were members of the drafting group.

The Sea Cargo Charter

The Global Maritime Forum, Smart Freight Centre, and UMAS have been part of this work since its inception. They have also been working with other initiatives – such as the Poseidon Principles – to ensure that various initiatives within the shipping sector are compatible.

A broader group of NGOs and other stakeholders have been kept informed throughout the process.

The Sea Cargo Charter

The ambition to develop the Sea Cargo Charter finds its source is the very early stages of the Poseidon Principles. The four core Principles are the same for both the Poseidon Principle and the Sea Cargo Charter, but the two frameworks rely on different metrics. The Poseidon Principles uses AER and can therefore rely on the IMO DCS to collect data, while the Sea Cargo Charter uses EEOI and thus have a different approach to source data.

The Sea Cargo Charter

Signatories to the Sea Cargo Charter recognize that the Charter is intended to evolve over time and agree to contribute to a review process when they, as Signatories, decide to undertake it. This process will ensure that the Sea Cargo Charter is practical and effective, is linked to and supports the goals set by the IMO, and that further adverse impacts are identified for inclusion.

Elements considered for future reviews include (the following list is not exhaustive):

  1. The move to continuous decarbonization trajectories to overcome the stepped approach induced by the IMO 4th GHG Study’s vessel category size bins that was acknowledged to cause inequity, especially for vessels that fall close to the edges of their respective category (size bin). By adopting continuous trajectories, the Sea Cargo Charter will move away from the stepped approach to one that constitutes a continuous curve for carbon intensity against cargo capacity for each ship type based on data from the IMO 4th GHG Study. Continuous trajectories have been approved; they are currently being finalized by the Secretariat and will replace the current decarbonization trajectories in time for the 2021 reporting.
  2. The Sea Cargo Charter aims at including fuels’ lifecycle emission factors in the methodology.
  3. The quantification of GHG emission intensity according to the Sea Cargo Charter will, initially, be expressed in terms of CO2 emissions, with the intent to move to CO2 equivalent in line with any changes agreed by the IMO.

Becoming a Signatory

All charterers are eligible to join the Sea Cargo Charter: those with interest in the cargo on board; those who simply charter out the vessels they charter in; disponent owners; all charterers in a charterparty chain; companies involved in pools.

While the Sea Cargo Charter has been primarily developed for the traditional cargo owners, many shipowners, even though this is not their primary activity, also have significant chartering activities and can thus become Signatories to the Sea Cargo Charter, too.

Becoming a Signatory

Becoming a Signatory of the Sea Cargo Charter creates a standardized method to request information from owners and measure climate alignment in a way that is useful for the industry for meeting the IMO’s Initial Strategy. This not only allows Signatories to benchmark themselves vis a vis other Signatories but also provides them with a better understanding of their emissions related to their chartering activities, which have become increasingly important in their relationship with business partners, lenders, shareholders, etc.

Becoming a Signatory

Organizations wishing to become a Signatory of the Sea Cargo Charter must submit the Standard Declaration, Signatory Application, and Membership Agreement to the Secretariat of the Sea Cargo Charter Association. Once accepted into the Association, the Signatory will have five months to complete and submit the Self-Assessment to the Secretariat. All documents are available from the Secretariat.

 

Becoming a Signatory

The Standard Declaration is the formal commitment required of charterers to become a Signatory. It announces the intent of the charterer to follow all requirements of the Charter. The Standard Declaration is available from the Secretariat.

Becoming a Signatory

Along with the Standard Declaration, a charterer wishing to become a Signatory must complete the Signatory Application. This document outlines who is responsible for contact, reporting, invoicing, and other necessary functions to implement and maintain the Sea Cargo Charter within the Signatory’s organization. The Signatory Application is available from the Secretariat.

Becoming a Signatory

The third document an organization must submit in order to become a Signatory to the Sea Cargo Charter is the Membership Agreement. This document outlines legal obligations for Signatories. The Membership Agreement is available on the website.

Becoming a Signatory

The purpose of the Self-Assessment is to ensure that each Signatory has made appropriate arrangements to fulfil its obligations under the Sea Cargo Charter and identified any challenges in doing so. The Self-Assessment is as brief as possible to reduce the administrative burden, while still addressing the core responsibilities of Signatories to the Sea Cargo Charter. The Self-Assessment questions are available from the Secretariat.

Becoming a Signatory

The Sea Cargo Charter is designed from and in line with the Poseidon Principles and is also intended to support other initiatives, such as the United Nations’ Sustainable Development Goals, the Global Logistics Emissions Council (GLEC) Framework, the Carbon Disclosure Project (CDP), Energy Transitions Commission, and the many others that are developing to address adverse impacts.

Becoming a Signatory

The Signatory Fee for 2021 is EUR 7,500 and is paid to the Sea Cargo Charter Association when becoming a Signatory. The Annual Fee for 2021 is EUR 4,000 and is paid annually to the Sea Cargo Charter Association in accordance with the Governance Rules. In the first year, the Annual Fee is required in addition to the Signatory Fee. Please reach out to the Secretariat for information on the 2022 fees.

Because the budget of the Sea Cargo Charter Association is set in euros, the fees are also set in euros to avoid currency risks.

Becoming a Signatory

The Sea Cargo Charter is only applicable to charterers: those with interest in the cargo on board; those who simply charter out the vessels they charter in; disponent owners; all charterers in a charterparty chain; companies involved in pools.

Currently, there is not an official way to endorse or formally support the Sea Cargo Charter. Please contact the Sea Cargo Charter Secretariat to register your interest so that you can be contacted should a pathway for endorsement become available.

Becoming a Signatory

The “preferred pathway” information flow in the Sea cargo Charter methodology recommends the use of verification mechanisms (from third parties / service providers) to maintain data veracity. While the Sea Cargo Charter recognizes the important role that verification mechanisms play in providing unbiased information to the industry, the Sea Cargo Charter Secretariat does not formally endorse any service provider.

Signatories are free to work with any third party / service provider of their choice. It is their responsibility to ensure that the provider performs services for them using the latest available Sea Cargo Charter methodology.

Alignment

For the purposes of the Sea Cargo Charter, climate alignment is defined as the degree to which voyage carbon intensity of a vessel category is in line with a decarbonization trajectory (produced by the Secretariat of the Sea Cargo Charter based on agreed and clearly stated assumptions) that meets the IMO’s goal of reducing total annual GHG emissions by at least 50% by 2050 based on 2008 levels (Absolute target). The IMO Initial Strategy’s Absolute target exceeds the Intensity targets of reducing GHG emissions by 40% by 2030 and 70% by 2050, such that meeting the Absolute target ensures that all IMO Initial Strategy objectives are achieved.

Alignment means that the annual activity of the Signatory is in line with the decarbonization trajectories over time. This may not happen every year; however, one misaligned year or two does not mean that it is impossible for the annual activity to align. It may take time to establish a downward trend in line with the trajectory over time.

Alignment

In shipping, carbon intensity represents the total operational emissions generated to complete one unit of transport work, which is measured in grams of CO2 per tonne-nautical miles. For the Sea Cargo Charter, this is measured using a carbon intensity measure known as Energy Efficiency Operating Indicator (EEOI), which is reported in unit grams of CO2 per tonne-nautical mile (gCO2/tnm).

Alignment

The values in Table 6 of the Technical Guidance can be extrapolated beyond 2023 using the linear relation presented in Figure 18 whose equation is y = -0,0198450665x + 40,9282738310. Note that the trajectories values in Table 6 are rounded.

Alignment

In the context of the Sea Cargo Charter, a decarbonization trajectory is a representation of how many grams of CO2 can be emitted to move one tonne of goods one nautical mile (gCO2/tnm) over a time horizon to be in line with the IMO’s minimum threshold of 50% absolute emissions reduction.

The IMO’s Strategy refers to GHG emissions for its absolute reduction but carbon intensity for its relative target. There is no reason for this distinction. The Charter derives its trajectories using an absolute reduction in carbon emissions. While this is a proxy for GHG emissions, it is the dominant source of GHG emissions in shipping and considered to be appropriate for now. In the future, other GHG emissions could be included in scope.

Decarbonization trajectories are specified by vessel categories defined by ship type and size because carbon intensities vary as a function of ship type and size, as well as a ship’s technical and operational specification. The trajectory is used to help calculate the alignment of voyages, vessel categories, and annual activity of Signatories.

Alignment

The Secretariat and official Advisors of the Sea Cargo Charter Association produce and provide standard decarbonization trajectories for each ship type-class and size for Signatories, based on agreed and clearly stated assumptions. The trajectories and vessel categories are based on the Fourth IMO GHG study and any update will be undertaken in due course.

They are produced in a format that allows for simple weighted aggregation. This is to ensure that once the carbon intensity of voyages is understood, it is simple and practical to understand climate alignment. This also ensures that numbers are comparable between Signatories.

Alignment

The trajectories are consistent with the IMO Strategy’s minimum threshold of a 50% reduction of absolute carbon emissions in international shipping. This alone does not secure the Paris Agreement’s well below 2°C global mandate and efforts to limit the temperature increase even further to 1.5°C.

Alignment

The annual alignment can be improved by chartering vessels with lower carbon intensity through better-performing vessels, more efficient operation, or higher utilization efficiency.

Alignment

Being a Signatory to the Sea Cargo Charter does not preclude the use of carbon offsetting, but these are not considered when reporting emissions and assessing climate alignment under the Sea Cargo Charter: the full extent of operational emissions is captured in the assessment of climate alignment.

Calculating EEOI

The carbon intensity metric requires the following data to compute it:

  1. The amount of fuel consumed for each type of fuel in metric tonnes (over both ballast and laden legs)
  2. The GHG emission factor of each fuel type
  3. Actual distance travelled in nautical miles (while laden with transported cargo)
  4. Amount of cargo transported in metric tonnes over the given voyage as per the bill of lading (for liquified gas carriers, the amount of cargo discharged is to be used for the calculation of carbon intensity).

Signatories are only allowed to use measured data to calculate their climate alignment. Signatories are expected to already have all the necessary data for time charters so only need to source data from owners for voyage charters. If and only if measured data can’t be sourced for ballast legs, the Signatory will source estimated data exclusively for ballast legs.

Calculating EEOI

In order for all the actual emissions related to the transport work to be accounted for, the emissions from the previous ballast leg are to be included when calculating carbon intensity.

All ballast legs are accounted for in the calculations as estimated data must be sourced for missing ballast leg if measured data can’t be sourced.

Calculating EEOI

The carbon emission factors to be used can be found Resolution MEPC.308(73) and in Appendix 6 of the Sea Cargo Charter Technical Guidance.

Calculating EEOI

As shipowners and operators strive to keep up with emission reduction expectation, alternative fuels are being introduced to the industry. Currently, carbon factors for net or low carbon fuels based on lifecycle emissions are not considered. If desired, the consumption of these fuels can be documented in the supplementary fuel fields in the recommended Sea Cargo Charter Clause for data reporting, which is available on the website. In order to still account for this activity, a fuel mapping chart is provided in Appendix 6 of the Technical Guidance that specifies the carbon factors to be applied when calculating carbon intensity.

This is likely to evolve when new information becomes available from the IMO.

Calculating EEOI

Different fuels have different carbon content according to their chemical composition. This combines with the efficiency of the vessel’s operation to determine the carbon intensity of voyages. The carbon emission factors to be used can be found in Resolution MEPC.308(73) and in Appendix 6 of the Sea Cargo Charter Technical Guidance. It should be noted that low sulfur variants carry the same carbon emission factor as high sulfur equivalents.

Calculating EEOI

The impact of retrofits, improved ship design, and operational efficiency measures is accounted for through fuel consumption relative to the transport work carried out.

Calculating EEOI

The impact of operational efficiency measures is accounted for through fuel consumption relative to the transport work carried out.

Calculating EEOI

Typically, older vessels have higher fuel consumption meaning that carbon intensity may be higher; however, operational efficiency is also an important factor which may make up for the older technology.

Calculating EEOI

Given that the aim of the Sea Cargo Charter is not to create an absolute emissions inventory, there is no risk of accounting for the same emissions multiple times. Using carbon intensity as a metric precludes this problem from occurring.

Calculating EEOI

The data required for carbon intensity calculation is already readily available to vessel operators as it is collected for operational purposes and the keeping of mandatory logs. Therefore, no problems are envisaged with regard to data availability, although data requests and sharing may take time to be implemented; the recommended Sea Cargo Charter Clause ought to ease this process.

Signatories typically collect data on an ongoing basis so, it is expected that they will have collected all needed data by 31 January for the last voyages of the previous year.

Calculating EEOI

It is the opinion of the drafting group that they are well within their rights to ask their business partners for this information and that they will be able to source the data that is needed. A “message toward our business partners” is available on the resource page of the website to support Signatories socializing the Sea Cargo Charter with their business partners they will be requesting information from; this document aims at providing business partners with an overview of the Sea Cargo Charter, which data will the Signatory request, and how these data will be treated.

However, it is recognized that collecting 100% of relevant data may not be possible in some circumstances. In this instance, Signatories are required to disclose the percentage of their eligible reporting chartering activities for which they have non-disclosure to the Secretariat and their fellow Signatories. This information will be available to other Signatories. Please see Table 4 in the Technical Guidance of the Sea Cargo Charter for an example of this.

Calculating EEOI

There is no minimum threshold but Signatories are required to disclose the percentage of the eligible reporting chartering activities for which there is non-disclosure. If there are significant inconsistencies, it will fall to the governance system to determine how to address the issue. This is to preserve the integrity and legitimacy of the Sea Cargo Charter as this percentage is expected to improve over time.

Calculating EEOI

To minimize incorrect data reporting, the Sea Cargo Charter Association encourages using the standard Data Collection Templates which have strong validation rules in place to minimize typos and other low level reporting errors at source. These are available on the resource page of the website and in footnotes of the Sea Cargo Charter Clause.

Guidance on how to proceed in case incorrect data are received from owners can be found in the Technical Guidance:

  • Signatories are to ensure that obvious errors are corrected at source (vessels/shipowners from where the data originated). If data can’t be corrected at source, it should be categorized and reported under the percentage of eligible chartering activities non-reporting.

No filters/omission should be applied to voyage EEOI result calculation for the higher order reporting (vessel category and total annual climate alignments) if the input raw data for voyages are correct (e.g., distance, cargo, consumption etc.).

Enforcement of the Charter

The enforcement process is outlined in the Technical Guidance and is the primary guide to meeting the requirements of the Sea Cargo Charter. The Secretariat in conjunction with the Steering Committee will, as outlined in the Charter and the Governance Rules, update the Technical Guidance to ensure the Sea Cargo Charter is up to date.

Enforcement of the Charter

It was at the request of the drafting group and shipowners that were consulted that the Sea Cargo Charter should include a recommended charterparty clause to request data from owners so that Signatories do not have to negotiate similar wording with every business partner.

The Sea Cargo Charter Clause provides a suggestion to Signatories about how to request the data required to calculate climate alignment at the voyage level. Incorporating this Clause within charterparties will guarantee collection of the necessary data in a harmonized way across the activities of all Signatories.

To support data collection, various Data Collection Templates have been developed.

While the Clause wording is strongly recommended, it is not compulsory for Signatories. However, if all Signatories start using it in new contracts it will de facto be in common usage.

The Sea Cargo Charter Clause and Data Collection Templates are available on the website.

Enforcement of the Charter

The Secretariat will continue to engage with those organizations to whom the market has entrusted the production of contractual terms with a view to including the wording of the recommended Sea Cargo Charter Clause as part of the industry’s wider recognized standard terms.

Reporting & Transparency

Signatories annually assess climate alignment in line with the Technical Guidance for all eligible reporting chartering activities. This means that Signatories calculate the carbon intensity of voyages in order to assess vessel category climate alignments (by ship type and size) and their total annual activity climate alignment, using measured data and decarbonization trajectories produced by the Secretariat.

The timetable for implementation below highlights when there are important deadlines for alignment and reporting to comply with the Sea Cargo Charter.

*The first calendar year of reporting, the Signatory reports on its chartering activities for the previous year (year of becoming a Signatory), starting from the next fiscal quarter date after the date of becoming a Signatory. Fiscal quarters starting dates are set as follows: Q1 – January 1, Q2 – April 1, Q3 – July 1, Q4 – October 1. Starting from the second calendar year of reporting, the Signatory reports on the entire previous calendar year.

Reporting & Transparency

As a Signatory of the Sea Cargo Charter, the reporting requirements are:

(a) total annual activity climate alignment of a Signatory’s eligible reporting chartering activities reported as a +/- percentage,

(b) vessel category climate alignments (defined by ship type and size) of a Signatory’s eligible reporting chartering activities reported as a +/- percentage,

(c) scope’s segments included in eligible reporting chartering activities

(d) percentage of eligible reporting chartering activities non-reporting,

(e) percentages of the chartering activities for which preferred and allowed pathway tracks were used,

(f) percentages of eligible reporting chartering activities for which measured and estimated data was used and the source for estimated data,

(g) a list of the names of the third parties it used, if any, to complete steps 2 and 3 and the associated verification statement / report.

Only the Signatory’s total annual climate alignment score (a), the alignment scores by categories (b), and the scope’s segments (c) are published. All other information listed above is shared with other Signatories but  not made public. This is intended to establish a quality control mechanism for Signatories while also ensuring that information that may be regarded as sensitive by some Signatories is not publicly disclosed.

Reporting & Transparency

The Sea Cargo Charter recognizes that there are different types of charterers and wants to facilitate participation by giving Signatories reporting options. The reporting is, therefore, divided into four segments that ensure certain minimum reporting requirements so as to maximize impact while ensuring both flexibility and the widest adoption possible.

Segments 1 and 2 are mandatory and any data falling under these two segments shall be included in the eligible reporting chartering activities, if applicable. If a charterer is unable to report any of this data, they need to include that into percentage of eligible chartering activities non-reporting (which is disclosed internally).

Segments 3 is optional. Segment 4 is optional and is only open to Signatories who are also reporting in Segments 1-3.

If chartering activities do not fall into any of the fours segments, they are out of scope of the Sea Cargo Charter and thus do not qualify as “eligible chartering reporting activities” and shall remain excluded from the reporting.

Reporting & Transparency

The main difference is that the European Union Monitoring, Reporting and Verification (EU-MRV) and the IMO Data Collection System (IMO-DCS) are annual aggregations which do not offer the granular insight that reflects the day-to-day reality for charterers. The Sea Cargo Charter obliges reporting on a voyage basis thus providing emissions data that charterers can use to make better climate-aligned decisions.

Reporting & Transparency

Every effort has been made to minimize the reporting requirements of the Sea Cargo Charter.

It is required that Signatories include their total annual activity climate alignment score and vessel category alignment scores in relevant institutional reports (e.g., sustainability reports) on a timeline that is appropriate for them.

Reporting & Transparency

The Sea Cargo Charter Association will publish the climate alignment scores of Signatories on its website by 15 June annually. The Association will also publish a report which will provide some context in order to put the alignment score in perspective and correctly interpret them.

Signatories are required to publish their own climate alignments in relevant institutional reports (e.g., sustainability report). There is, however, nothing to stop individual Signatories to publish their climate alignments together with additional information that go beyond their obligations under the Sea Cargo Charter.

Governance

The Sea Cargo Charter Associationmanages, administers, and develops the Sea Cargo Charter. The members of the Sea Cargo Charter Association are the Signatories to the Sea Cargo Charter.

Governance

Steering Committee

The Steering Committee is comprised of 10 to 15 representatives of Signatories to the Sea Cargo Charter, with one representative per Signatory. One member will act as Chair, one member as Vice Chair, one member as Treasurer. Management support roles may grow with the Sea Cargo Charter as determined by the Steering Committee. To this end, these roles will develop into the chairs of various working groups to incorporate a greater range of environmental and social factors and issues, adopted by the Steering Committee and Signatories as they see fit.

Steering Committee members must hold a senior position relevant for the Sea Cargo Charter. The Steering Committee leads the Annual Meeting and holds other meetings as necessary. Members of the Steering Committee are volunteers and are therefore not compensated by the Association.

Signatories

All Signatories are members of the Sea Cargo Charter Association and are encouraged to participate in and contribute to the management of the Association in a manner that supports the Principles and is appropriate for their institution.

The charterers who have become Signatories will appoint a senior representative to join relevant meetings of the Association, such as the Annual Meeting. Just as with the Steering Committee, the representative must hold a position relevant to the Sea Cargo Charter.

Signatories can nominate a representative from their institution to become a member of the Steering Committee. Nominees are then voted into positions by all Signatories and serve a term in the Steering Committee as outlined in the Governance Rules.

Technical Committee

At the 2021 Annual Meeting, the Signatories voted and agreed to establish the Technical Committee. Its role is to ensure methodological integrity of the Sea Cargo Charter within the scope agreed by the Steering Committee. The Technical Committee does not have decision-making power; it formulates proposals which are then brought up to Signatories.

The Technical Committee is composed of a subset of Steering Committee members and is supported by the Advisory and Secretariat. Technical Committee members must hold appropriate technical background.

Governance

Secretariat

The role of the Secretariat is to maintain the day-to-day business and administration of the Steering Committee, Charter, and the Signatories. The Secretariat serves a facilitating function in the Steering Committee, Technical Committee, and among Signatories.

The Secretariat role can be fulfilled by a relevant non-profit and independent third-party entity. This role is currently fulfilled by the Global Maritime Forum.

Advisory
The Advisory advises and guides the technical discussions and expertise of the Charter, including creating and revising the scope of the Charter or decarbonization trajectories and ensuring the used methodologies and data found in the Charter are current, relevant, and simple to implement for Signatories. The Advisory is also involved in working groups and takes part in the Steering Committee or Technical Committee meetings as needed.

Current technical advisors are Smart Freight Centre and UMAS. Current legal advisor is Stephenson Harwood.

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