ON CSR DFDS GROUP September 2019 Disclaimer The statements about - - PowerPoint PPT Presentation

PERSPECTIVES ON CSR

DFDS GROUP

Disclaimer The statements about the future in this announcement contain risks and uncertainties. This entails that actual developments may diverge significantly from statements about the future.

Content

• IR and CSR

Søren Brøndholt Nielsen, Head of IR & Corporate Planning

• DFDS’ CSR strategy

Sofie Hebeltoft, Head of CSR

• CSR from a Board perspective

Claus Hemmingsen, Chair of DFDS’ Board of Directors

DFDS’ business model builds on 3 core activities

Ferry routes

Door-door solutions Contract logistics

DFDS’ ferry and logistics network

• DKK 16bn revenue
• DKK 3.6bn EBITDA
• 8,000+ employees
• 23 ferry routes – incl.

9 passenger routes

• 8 port terminals
• 35 logistics locations

Roll on, roll off

• Ro-ro/ro-pax shipping: roll on, roll off of freight units

and passenger cars

• Routes carry both unaccompanied and accompanied trailers
• Other types of cargo, e.g. heavy industrial goods and containers,

are placed on carrying equipment (mafis) and tugged on to the ship

FERRY TYPES

Our customers: Forwarders, industrials and passengers

Passengers 17% Forwarders and hauliers 47% Manufacturers and retailers 36%

0.4 3.2

• 0.5

DFDS structure, ownership and earnings split

DFDS Group

People & Ships Finance

Ferry Division

• 23 ferry routes –

freight and passengers

• 57 ferries
• 8 port terminals

Logistics Division

• Door-door transport
• Contract logistics
• 5,600 trailers and

3,500 containers

• 2 sideport ships and

VSA/SCA*

DFDS facts

• Founded in 1866
• Activities in 20

European countries, Turkey and Tunisia

• 8,000 employees

Shareholder structure

• Lauritzen: 42%
• Free float: 56%
• Nasdaq Copenhagen
• Foreign ownership

share: ~30%

5.3 11.1

• 2

DFDS key figures – IFRS 16 applied from 2018

IR AND CSR

IR and CSR

• Almost zero focus on CSR from analysts
• Limited focus from investors – how are they ‘incentivised’?
• A few exceptions
• Questions concern mostly profit risk related to CSR-driven changes
• Push or pull CSR-agenda — other topics in focus, e.g. Brexit and

Turkish market development

• Investment criteria seem overwhelmingly to be financial
• Company size may shift focus to CSR

DFDS’ CSR STRATEGY

The CSR journey in DFDS

• Dedicated resource responsible for

environmental issues for +15 years

• Investments in scrubbers since 2009
• Group CSR strategy in 2018
• Innovative collaborations towards

zero-emission

DFDS’ CSR journey

• Nature of business has always fostered a high level of

responsibility

• Annual consumption of around 700,000 tons of bunker
• Dedicated resource responsible for environmental issues

for +15 years

• Investment in scrubber development since 2009,

implemented 2015

• Group CSR strategy developed and approved in 2018
• Focus on innovative collaborations towards zero-

emissions

DFDS’ current CSR reporting

• Annual CSR report covering:
• Environment
• Social and employee conditions
• Human rights
• Bribery and corruption
• CSR strategy - underlying ambitions:
• CO2
• Health & Safety
• Gender in top management
• Bunker consumption

DFDS’ possible future CSR reporting

• SDG’s
• CO2/unit
• Gender split on all levels
• Renewable energy
• Recycling and waste management

Focus on employee engagement

• CSR portfolio
• Internal

communication

• SoMe activity

External reporting needs keep on increasing Customer requests Our experience

External reporting needs keep on increasing Our experience

Customer requests via benchmark tools Investor requests via benchmark tools Investor analysis on public information Benchmark related to the industry or market

External reporting needs keep on increasing Our experience Time consuming Value adding Prioritisation and navigation Lack of standards and alignment

BOARD PERSPECTIVE

Board involvement in DFDS’ CSR development

Board responsibilities include:

• Monitoring development in society
• Engaging Management and setting the agenda
• Support Management, issue mandate to act/invest/change

Board focus in DFDS:

• Marine, Land and Employee Safety (HSSE)
• The Organisation, Employees and working conditions
• The 17 Global Sustainable Development Goals

External demands on Board for CSR development

• Demands are mostly “soft” and not mandatory requirements
• Board interprets and filters what happens in communities around us
• Community demands not formalised - need to be filtered and

assessed in relation to DFDS

• Investor demands rarely expressed and seldom discussed
• Employee demands often the most clear and worthwhile listening to
• Board needs to act responsibly, safeguarding the overall

sustainability of the company

• Balance CSR Investments (time, money, partnerships etc) with

Outcome (impact, image, profitability)

Management of engagement between Board and Management

• Ideally CSR/Sustainability is an integral part of the

interaction:

• Place CSR/Sustainability firmly on the Board’s agenda
• Formally include Sustainability in the Board’s Annual

Wheel

• Engage next level management, i.e. below C-suite
• Place appropriate attention to the CSR/Sustainability

reporting:

• Goal setting, medium and long term
• Reporting granularity
• Follow up on outcomes

Keep balanced sector perspective in mind

• DFDS is part of the infrastructure, both sea transport

and logistics

• Environmental footprint from emissions is key impact
• Transport and logistics — on the other hand — enables

trade and travel among nations, people and businesses

• Positive impact on communities all over the world
• Transport and logistics supports the social SDG’, e.g.:

– No Poverty, Zero Hunger, Quality Education, Gender

Equality, Decent Work & Economic Growth

• MASH Energy produces

biofuel from agricultural waste

• The biofuel is CO2 neutral

and can be used in ships

• DKK 10m investment for

potential 24% ownership

• CSR investment criteria vs

traditional financial criteria

Example 1 – Investment in MASH Energy

DFDS invests to improve air quality – key criteria

Develop a sustainable and commercially viable marine biofuel to reduce environmental impact Scale up production to make it a serious alternative to fossil fuels Replace fossil fuels on DFDS vessels and become CO2 neutral without changes to engines and equipment

Example 2: Energy 2.0: New propulsion systems underway, partly driven by regulatory developments

• DKK 1bn investment in renewal of

Amsterdam-Newcastle ferries

• 30 year plus ferries swopped for

ferries with 15-year lifetime

• 30-40 year lifetime for a new

ferry

• 5-10 year horizon before new

standard for ferry propulsion system likely to emerge

Example 2 – Investment in long term ferry assets

Example 3 – collaborative strategy for zero-emissions

• Huge task to transform energy

infrastructure of transport sector

• DFDS a niche European company
• Independent strategy not a

realistic option

• DFDS part of ZEEDS project with

complementary partners

• Task: To develop infrastructure for

green bunkering

Zero Emission Energy Distribution at Sea

Concept builds on renewable energy, fuel production and autonomous distribution – all at sea All based on known technology

74 wind turbines required to supply each hub. Upper deck ammonia production facility, lower deck hydrogen production from water for upper deck process

36

The DFDS network

8.000

employees

5.000

trailers

60

vessels

10

terminals

EPV: Energy providing vessels tank from bunkering bouy

Bunkering takes 2 hours at 6 knot speed Each hub can supply 147 ships with their annual energy consumption

Annual reduction of 1 000 000 tons CO2

per hub

DFDS’ purpose - We move for all to grow

Q&A