February 26, 2023- Weston, CT - Carleen Walker, NAMEPA Co-Founder/CEO, announced the speaker lineup for its…
Shipping Legal and Financial Operations – Keeping the Wheels Turning
In any industry, there is a vast field of legal and financial operations keeping the wheels turning. Shipping is no different. From litigation to compliance to financial responsibilities, these firms lead the shipping industry through rough seas. For this month’s sector spotlight, NAMEPA spoke with Joan Bondareff, Of Counsel at Blank Rome LLP, and Neil Clemens, President at Ship Owners Insurance and Guaranty Company Ltd (SIGCo Group).
Like any industry, regulations are everchanging. Changes in regulations are driven by a number of factors such as social influence, technological innovation, climate change, and natural and commercial disasters. One such regulation, which resulted from an environmental disaster, is the Oil Pollution Act of 1990 (OPA90) following the Exxon Valdez oil spill in the Prince William Sound.
We’ve spoken to many shipping-related businesses before, and one constant among them all this year is how they plan to successfully transition, or in this case help others transition, into an environmentally sustainable business model. Joan Bondareff discussed the challenges of this, but also its prioritization: “There are countervailing forces in global trade—an increasing growth in demand for goods to be shipped worldwide and increasing pressures to cut carbon emissions. Shipping has led the way by moving cargo in efficient ways. However, policy goals to reduce gross shipping emissions, regardless of the number of items moved, will pose a challenge to the industry.” In no way does shipping seem to be slowing down.
Environmental regulations are getting stricter, and the race to decarbonization is on. While it seems like a paradox, these seemingly contradictory sections of shipping increasing supply and decreasing emissions support one another. As demand increases for transportation of goods, so does the incentive and the ability to reduce emissions. During this transitionary period, and always, all shipping will have to maintain a balance between conservation and commerce.
Many environmental regulations have been constant in the industry, prefaced by a crisis, like the OPA90. It amended the Clean Water Act, creating regulations regarding prevention, response, liability, and compensation. This also created The Certificate of Financial Responsibility (COFR) program which guarantees all vessels should bear any ensuing cleanup costs from spills or leaks. For SIGCo, upholding vessels to the standards of OPA90 has become the main service they provide to clients.
SIGCo President, Neil Clemens stated, “SIGCo’s core business is providing COFR guarantees, required under OPA90, for ships trading to the US. We continue to dominate this sector with over 70% of ‘blue water’ ships requiring a COFR using our services”. Not only is SIGCo successfully providing a needed service to its clients, but they’re also helping sustain a stable shipping industry environmentally. “Since the implementation of OPA90 oil pollution legislations, incidents have fallen dramatically in the US, and I would like to think as the preeminent guarantor over a 20 year period, we have helped to make the implementation of these regulations efficient and cost-effective for all parties.” Hopefully, we see the same success reaching future environmental goals as SIGCo has seen with OPA90.
In the past, constant counseling through sustainable regulations was not intertwined with business. Now, there really is no business without it–and it shouldn’t be feared. Joan Bondareff mentioned the consequences of this, stating “One misconception we often hear about our sector is that people say, ‘I hope I never have to call you,’ meaning they hope nothing bad happens. However, the majority of our services are not emergency, or crisis focused. We routinely help clients with their regular operations and always try to value to a client with representation.”
Much of the time, business is viewed as contradictory to environmentalism. Companies like SIGCo and Blank Rome are the link between these two. In order to foster a successful transitionary period into sustainable shipping, while meeting the increasing demand of worldwide transportation of goods, we will need companies like these two. This sector of consultation supports that bridge between shipping and business and sustainability and will be necessary for the future of expanding regulations. The green future of shipping requires legal/financial guidance, and luckily, can count on it.
NAMEPA serves as a bridge between commerce and conservation by promoting sustainable maritime industry best practices, preserving the marine environment and educating the public to Save Our Seas.