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Norway’s enormous $1.3 trillion wealth fund announced a significant decision on Tuesday. It declared that it successfully advocated for the reinstatement of Thoresen Thai Agencies and concluded its monitoring of Hyundai Glovis. Both companies had previously engaged in the controversial practice of sending old vessels to be dismantled on the beaches of South Asia.
Thoresen Thai Agencies had faced exclusion from the fund back in 2018 due to its habit of sending decommissioned vessels to be scrapped in Bangladesh, where the working conditions were deemed “extremely poor.” However, the wealth fund revealed that the company had ceased this practice since 2018, making the original basis for exclusion irrelevant. The Council on Ethics recommended lifting the exclusion in May 2023.
In 2018, Thoresen Thai Agencies was one of four companies excluded from the Norwegian sovereign wealth fund for the practice of scrapping end-of-life ships in Pakistan, Bangladesh, and India, using the highly controversial beaching process for dismantling ships.
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Hyundai Glovis, on the other hand, had been under observation since 2022 for its practice of sending vessels for scrapping in Bangladesh and Pakistan. The company reportedly took corrective action by implementing a policy for the responsible disposal of decommissioned ships. This move prompted the Council on Ethics to suggest lifting the observation status.
A significant development in the maritime industry came in June 2023 when the Hong Kong Convention reached the required threshold for its entry into force in 2025. This international agreement aims to ensure the safe, secure, and environmentally friendly scrapping of vessels. Its adoption marked a crucial milestone, occurring over 14 years after the convention was initially adopted by the International Maritime Organization (IMO).
The European Union has also been actively addressing risky vessel-breaking practices through the European Ship Recycling Regulation. This regulation mandates that large sea-going vessels sailing with EU flags use approved vessel recycling facilities from the European List, meeting stringent safety and environmental standards. Notably, this regulation aligns with the principles outlined in the Hong Kong Convention. The list of approved yards has recently been updated to include 48 facilities located in Turkey and Europe.
These developments underscore a global shift towards more responsible and sustainable practices in the maritime industry. The actions taken by Thoresen Thai Agencies and Hyundai Glovis, under the scrutiny of Norway’s wealth fund, demonstrate a growing awareness and commitment to ethical and environmentally friendly business practices in the sector.
Moreover, the entry into force of the Hong Kong Convention signals a collective effort by the international community to address the environmental and safety concerns associated with shipbreaking. With the EU’s stringent regulations complementing these global initiatives, there is a clear push for transparency and accountability in the disposal of decommissioned vessels.
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As companies adapt their policies to meet these evolving standards, it becomes evident that sustainability is not just a buzzword but a tangible goal with far-reaching implications. The maritime industry, often criticized for its environmental impact, is taking strides towards a more conscientious and ecologically sound future.
Norway’s sovereign wealth fund, as a major player in global finance, is using its influence to encourage positive change within the companies it invests in. By reinstating Thoresen Thai Agencies and concluding the observation of Hyundai Glovis, the fund sends a clear message that responsible business practices are not only desirable but also essential for long-term success.
In conclusion, the recent developments in Norway’s wealth fund, the actions of Thoresen Thai Agencies and Hyundai Glovis, and the international milestones in maritime regulations collectively paint a picture of a shifting paradigm in the industry. As environmental concerns take center stage, companies are recognizing the need for sustainable practices, and regulatory bodies are stepping up to enforce these standards. The journey towards responsible shipbreaking is undoubtedly gaining momentum, promising a cleaner and safer future for the maritime sector.
