Sustainable Growth Podcast

Jane: [00:01] Hello and welcome to the LSEG Sustainable Growth Podcast, where we talk to leading experts about sustainability and finance and pretty much everything in between. I'm Jane Goodland, and this week I had the opportunity to spend time with Carlin Naidoo, Group Director of Sustainability at DP World. Now it's an interesting time to be talking with DP World, because it's an integral part of the global supply chain, moving about 10% of global trade through its internet interconnected network of ports. I was going to say that again. Now, it's an interesting time to be talking with DP World, as it's an integral part of the global supply chain, moving about 10% of global trade through its interconnected network of ports, terminals and logistics hubs. Before we hear from Carlin, a quick reminder to follow us and rate us on Spotify, Apple Podcasts, or any other platform you use. So enjoy the show.

Jane: [00:42] Hi, Carlin. Welcome to the show. Thank you so much for joining us today. I'm really looking forward to our conversation. How's the day working out for you in Dubai?

Carlin: [00:51] It's a lovely sunny day here in Dubai.

Jane: [00:53] Excellent. Probably always is, though, right?

Carlin: [00:56] And getting sunnier.

Jane: [00:58] True. Well, we'll come on to that later, actually. So, look, you work for DP World, and our listeners may or may not be familiar with what your organisation does. So can you just give us the headlines? What does DP World do?

Carlin: [01:12] Sure. So just in summary, Jane we're a global logistics leader. We operate across over 78 countries and six continents. And globally, we have a workforce of over 115,000 employees. I think over the years, we've evolved as an organisation from a local port operator, then to a regional port operator and now a global port operator in the same period, we've also evolved our operations to become a global supply chain operator, and we offer fully integrated solutions across our various different business pillars, which includes our ports and terminals business, as well as our Marine services division, logistics as well as technology. I think across all our business pillars, we do significantly leverage technology led solutions, which really helps us to reduce and enhance efficiency across the supply chain.

Jane: [02:06] Okay, so you basically help your customers move things around the world. So actually a really topical issue right now is global trade, of course. And so the logistics company moving all this stuff around the world who better to talk to. So, sustainability is obviously super important and material for DP world, given the fact that you're kind of heavily into transportation and obviously kind of sustainability is a big factor there. Tell me a bit more about your strategy on sustainability and why it matters for DP World.

Carlin: [02:40] Sure June. So we developed our sustainability strategy back in 2019. And this was really based on a group wide materiality analysis, which we had conducted, and at that stage it was done in line with global best practices. Now, the sustainability strategy which we have defined, which we refer to as our world, our future, really ensures that we as DP World operate as a responsible business. Prioritising sustainability as well as the impact on our people, the environment and the communities in which we operate. Now, the first part of our strategy, which is our world. Includes very ambitious commitments that we have across our seven priority areas and very much linked to our core business. The second part of our strategy, which looks at our future, really focuses on the lasting legacy that we want to leave based on our industry, as well as the society in which we operate. In particular, it focuses on three legacy areas where we believe that we as a group can really make a positive difference for future generations. This includes areas such as women, education as well as water. Now strategy is fully aligned with the United Nations SDGs as well as various international frameworks, standards and reporting commitments such as GRI, CDP and now more recently ISSB.

We're also rated by a number of leading international agencies, rating agencies such as MSCI, Sustainalytics, Moody's, Ecovadis, and more recently, ISS. And we're very pleased about the fact that the scores that we have from each of these rating agencies really reflects the positive impact and the way that we manage our ESG risk within our business. Now, supporting our strategy is a very robust governance framework which we've put in place. The governance framework actually consists of two levels, one at a board level where we have a dedicated Governance and Sustainability Committee. The committee is really responsible for reviewing and approving the sustainability strategy for the group, as well as overseeing management of material ESG topics. Taking this down one level to the management, we have put in place an Executive Sustainability Council, which really provides internal oversight of the sustainability programs and the agenda, and they ensure that the program that we've developed is DP World meets best practices and supports our sustainability and business aspirations.

Jane: [05:14] And Carlin, one thing I'm really curious about is how sustainability is effectively linked with your value creation strategy as a business. And I think that was the first part of the strategy that you talked about, which I think you mentioned seven priorities. But how is sustainability helping you to deliver long term value?

Carlin: [05:36] Yeah. As I mentioned, within our strategy, those seven core business areas focus on topics such as safety such as ethics, people development as well as community engagement. So we have a number of these topics across the business. And by focusing primarily on these topics, we're able to really generate value for the business, either by mitigating risks that we're exposed to as an organisation or by creating value both on the top line as well as on the bottom line for the group.

Jane: [06:10] Okay. Got it. Good. So one of the things I'm quite keen to dive into, Carlin, is around DP World's sustainable finance framework, because when I saw that you had this, I thought, oh, curious. I'm not used to logistics firms having these types of frameworks. I'm used to the financial sector having sustainable finance frameworks. And I'm guessing this is, you know, good territory for you, you come from a banking background. But tell me a bit more about why DP world created the sustainable finance framework in the first place. And, and kind of what's been done since really? I'm really curious.

Carlin: [06:48] I'd love to start off by saying that sustainable finance at DP world was is not new to us. The first sustainable financing framework was actually developed way back in 2019. And at that stage, it would have allowed the group to issue any sort of green social or sustainability bonds or loans. I think over the years, you know, between 2019 and 2023, when I actually joined the group a lot had changed in the industry and a number of new standards and practices had come about. And a decision was taken in 2023 to align with the evolving best practices which were out there in the market at that time. And we made a decision then to update our sustainable financing framework and align it with the, the latest international standards. And we also included a new element to  the framework, which was to include a sustainability linked component. Now, this was purely just to allow us to benefit from an extended range of sustainable financing instruments should the, the group decide to pursue any of those at those options. At the time that we actually published the framework, I was very proud of the fact that it was the first public combined use of proceeds as well as sustainability linked framework from the port sector. So that was quite an achievement and quite happy by that fact.

Now, off the back of that framework, we issued our first ten year green sukuk. So this was a US dollar, 1.5 billion sukuk. This was issued in September 2023. And then we I think it was in December or towards mid 2024 following the recent validation of our decarbonisation targets by the Science Based Targets Initiative. As well as the publication of A Practitioner's Guide on Bonds to Finance the Sustainable Blue economy. We had made a decision to update or relook at our framework again to ensure that it was up to date with the latest standards and targets that we had set. And we decided that it was time to refresh it and update it with not just our new near term, as well as net zero SBTI validated targets, but also to introduce new use of proceeds categories. Now these were the blue use of proceeds categories, which allowed us to actually contribute towards the sustainable blue economy. I think when we look at the framework again, it's quite developed and mature for, you know, for a non-banking financial institution. So again, very proud of the fact that we are able to actually have such a comprehensive and robust framework, which gives us a lot of flexibility when it comes to sustainable financing.

Jane: [09:33] And in terms of like the number of bonds that you've issued through that framework, do you know, like how many have been issued and what's is there a total amount that you've raised in that in this way?

Carlin: [09:42] Yeah. I mean, if you look at the 2023 framework, off the back of that, we issued $1.5 billion for green. And then of the 2024 framework, we issued the $100 million blue private placement. And this really helped and supports, you know, the initiatives that we have put in place around driving the sustainable blue economy.

Jane: [10:05] Can I ask you about that, actually, I wanted to delve into more is because you guys have issued a blue bond, which I believe is the first of its kind in the region. So I'm really curious, again, logistics company issuing a blue bond. I'm so curious. What is it? What is it going to be used for? Tell me more.

Carlin: [10:29] Sure. I think we're well aware of the challenge that exists today when we talk about the ocean. When we look at our business, for example, 90% of global trade today is carried by marine transportation. And we're a big player in that space. But we're very well aware of the fact that our oceans and water resources are really under threat. The ocean sector or ocean-linked sectors contribute significantly to the global economy. And I believe the latest figures that I've seen shows that it supports over 30 million jobs across the world. I think one of the challenges which the ocean linked sectors as well as SDGs when it comes to life under water, is SDG 14 being underfunded of all the SDGs. I think between 2015 and 2019, this goal had received less than $10 billion of funding. Whereas estimates on requirements show that it requires at least $175 billion annually. That's why we at DP World were very pleased to show our commitment to environmental sustainability. And we're really proud when we were able to issue $100 million, five year blue bond in December 2024. Now, this, as you pointed out earlier, was quite an achievement and a highlight. It was the first issuance from a company in Central and Eastern Europe, Middle East, as well as Africa. And I think, when we look at the blue bond, for example, it aligns perfectly with the various strategies that we've put in place across our business, covering our oceans decarbonisation, as well as water. Now, within each of those strategies that we have, we've put in place a number of initiatives which are aimed at either reducing marine pollution conserving marine ecosystems, as well as enhancing biodiversity. All the while, when you look at all of these initiatives, they all collectively point towards our commitment to the blue economy. Now, within the blue bond itself, the eligible projects that we've included across four use of proceeds categories. This includes sustainable marine transportation, sustainable ports development, marine ecosystem conservation and restoration, as well as marine pollution.

Jane: [12:44] Can I just ask you. So when you're looking at those categories, if I was to say, okay, so the sustainable transportation, marine transportation, is there an example of the sort of thing that money, the use of proceeds? What sort of thing might you be investing in or developing? What would you be using those funds for just to bring it to life a bit?

Carlin: [13:04] Sure. Just to bring it to life. I think earlier when I explained our core business operations, we have a division or business pillar, which is the marine services division. And within that we actually have vessels. So when we talk about sustainable marine transportation, we're talking now about investments that we have made into research, development and procurement of alternative fuels to support those vessels as they look to reduce their emissions as well as investments that we're making with regard to technology and the vessels themselves, to make them run more efficiently and to consume less energy and fuel.

Jane: [13:43] Okay, cool. That makes sense. I think it's so fascinating really thinking about a logistics company. And I've got to admit, I don't spend a lot of time thinking about logistics companies. But hearing you speak, I think there's so many challenges that you guys are having to address and think through and actually the use of sustainable finance. I just think it's a really good example of how sustainable finance is being used to actually drive, real world change. Real world. Changing your operations, investing and researching and developing different ways of doing things. So I think it's really fascinating. And thank you for giving us this example.

Now I want to come on to the fact that DP World is fundamentally about global connections and effectively, I guess you exist in order to connect the world, don't you? So partnership must be something which is absolutely central to your DNA, really as a firm. And I know that obviously you're involved in an a whole raft of different partnerships, but I'd be really keen to understand how your engaging in strategic partnerships to advance some of your sustainability objectives. Maybe you could give us a couple of examples of some of the more exciting ones, shall we say, not to not to pick favourites, but, share the interesting ones.

Carlin: [15:03] Sure. I think we have a number of partnerships across the group, but probably just to highlight a few of those. And when we talk about partnerships, these are really platforms that we use to accelerate and scale up a lot of the initiatives that we have across the group, and they're really focussed on driving long term value creation for us and our partners as well as our broader ecosystem. So we have a number of business focussed partnerships which really help to support the decarbonisation and sustainability within our supply chain, because that's really a priority for our customers. So one that I probably want to highlight is just the zero emissions Port Alliance. Now, this is an industry partnership which we're involved in, which really aims to make battery electric container handling equipment more affordable and accessible.

Jane: [16:02] Go over that again, because I am not a technical expert. Battery what? Say that again slowly.

Carlin: [16:12] Battery electric container handling equipment.

Jane: [16:15] What is that?

Carlin: [16:16] So if you had to visit any of our ports today, the majority of equipment that you would see would be known as container handling equipment. And I think over the years, these have predominantly been fossil fuel powered equipment. And what you have seen over the last few years has been a significant change in terms of the power sources. So now it's moving to electric. And we as DP World have been investing significantly in electrifying our container handling equipment.

Jane: [16:45] This is containers coming off of ships into ports getting moved around. Okay, got it.

Carlin: [16:51] And the equipment that moves it.

Jane: [16:53] Got it. Okay, fine. Excellent. Okay. So you're working on how you electrify all of that basically.

Carlin: [17:00] Exactly.

Carlin: [17:01] Absolutely. And, through this alliance, we've recently published three reports, white papers on this. And the reports actually speak about how we view or how the industry views the surge of demand in this container handling equipment that's required over the next few years, as not just us, but ports across the globe are required to electrify their fleet. I think one of the things that the papers also highlight is also the need for design standardisation just to improve the efficiency of this container handling equipment as well as it started to we're starting to outline some of the strategies that are required for port power and setting up the correct infrastructure for this electrified equipment in these ports.

Jane: [17:46] Presumably obviously to have those on masse at every port, then you need different type of energy infrastructure.

Carlin: [17:54] Absolutely.

Jane: [17:55] Plugging into those ports. Okay.

Carlin: [17:57] Probably just another one to highlight with regard to decarbonisation is, we're a strategic partner of the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping. Now this is an independent research and development centre who was really looking for driving zero carbon solutions for the shipping sector. So we are actively involved with the centre and we are looking and working with them into identifying the different pathways that are potentially available for the industry.

Jane: [18:28] Is this about fuel Carlin? If it was equivalent of thinking about airlines. It's about sustainable aviation fuel. Is this about sustainable maritime fuel or?

Carlin: [18:40] Absolutely. It’s looking into the fuels which are available. And at the moment, there's a variety that you could potentially look at. These include like things such as methanol, ammonia, hydrogen, etc. but there are significant challenges with regard to the supply of fuel. And, we're working with various stakeholders now to understand what are the challenges that are available and what are what are the things that need to be done or what are the signals that need to be created to drive or spur the development of alternative fuels in the shipping sector.

Jane: [19:15] Okay. Interesting. So partnership is obviously a really key part, and research is critical. And I guess it's those sorts of things which really underline why a whole of industry approach is needed. Because it's no good DP World just finding a solution to those alternative fuels, because it's actually the whole sector that needs to move at the same time.

So sustainability and sustainability reporting is of course a hot topic, as it were at the moment. And I understand that you've been appointed to the ISSB Sustainability Reference Group, which is fabulous. Can we talk about your disclosures a bit more? Because I know that you've done something quite interesting, which is around the sustainable development impact disclosure which is really about linking your work with the SDGs. And that's not, I guess, something that we see all over the place. So tell me more about, like, why you're doing that and what it involves.

Carlin: [20:19] Yeah, certainly. I think here at DP World, we really understand that for a successful transition, it has to be broader than just climate action. It's really about ensuring that the journey to net zero is really inclusive and inequitable. So we have to take a lot of people along with us. And our focus is really beyond just decarbonisation. We really look to promote development impact through the way that we operate our businesses. Now, whilst we as a group invest a large amounts of capital in the developments in the Global South, we do understand that there is a funding gap in these emerging markets and there's really a need to accelerate funding. When we look at sustainable investors, they're always looking for bankable, scalable, compatible long term investments in these markets. However, one of the issues that they consistently face is just a lack of transparency, as well as market information, which really impacts their abilities to assess risks when they're looking to invest in emerging markets. Now, to address this, we committed at Cop 28 to becoming the first global corporate to adopt the guidance that was being developed at that stage by a joint JP Morgan and Natixis-led Taskforce, and we committed to publishing a Sustainable Development Impact Disclosure. A framework now alignment, the framework itself and the guidance was very much aligned with emerging reporting standards. And that was one of the factors which made it quite attractive to us because, we as I would say a reporter against a number of different standards.

And as an early adopter of ISSB, for example, having a framework that already leverages existing standards, it really helps us to reduce our reporting burden as an organisation and allows us to focus on the things that matter which allows us to make real impact. I think one of the things that we're very bullish about when it came to the framework itself, was that it wasn't just about reporting on your positive impact. It really helped us as an organisation to understand where the potential environmental and social risks that are prevalent. And how do we manage and report on that in a way that external stakeholders can understand it correctly? So in April last year, we published the first sustainable development impact disclosure. We had covered two countries at that stage, which were India and Somaliland. And then later in the year, we actually extended the Sustainable Development Impact disclosure to include another three markets South Africa, Senegal and Brazil. What we like about the framework or the impact disclosure is that it really helps us to communicate effectively now and articulate how our strategy is aligned with the national agenda for each of these countries, and how the investments that we have made in these markets are actually contributing towards the advancement of the SDGs in these markets.

Jane: [23:20] It sounds like quite an advanced way to be reporting. How much of a lift is it in terms of. I mean, you mentioned reporting burden, and I think many people listening to this podcast will probably sort of feel the pain of the kind of the reporting that rules and the changing landscape. But how much of a lift would it be for you guys, for example, to do this impact reporting versus the regulatory requirements that are ongoing?

Carlin: [23:47] The clear departure or the clear change for us here was that today we don't really do country level reporting. We do group level reporting. So I think that was the big shift for us. But I think what we appreciate from this exercise was that I think many times when people communicate about the SDGs and they impact the linkage between what you're doing as an organisation is not very clear with the actual, the goals and the targets that are set out by each of those various SDGs. I think what we appreciate from this exercise was that very clearly, we can show that how our investments in a specific market for example, in India where we are developing free trade and warehouse zones, for example. How those investments are helping to integrate Indian entities into the global supply chain and how that is facilitating investments for overseas companies which are looking to come into India. So I think making those direct linkages with the SDGs and the impact was quite an eye opener for us as well.

Jane: [24:55] Well, that's given me my homework to go and study your last impact report because I think that's it's a really interesting take on sustainability reporting, which is really focussed on the impact side.

So we're running out of time. So I want to move to the last question that I have for you which is really about reflecting on the fact that you're clearly doing some amazing things at DP World on sustainability. Whatever could be next, Carlin? Like what's in the pipeline for you in terms of what are some of the priorities that are coming through your sustainability strategy? And perhaps what's what are some of the key challenges that you foresee going forward?

Carlin: [25:34] Just in terms of pipeline, very busy pipeline ahead. But probably just to narrow in on a few things that are probably keeping us quite busy at this stage. I'm very proud to say that we've recently published our 2024 sustainability report. But I mean that doesn't stop because in parallel we're running a project at the moment. Now, I'm sure as you're aware, there's a lot of emerging regulations coming across globally which are also quite in a state of flux at this stage. But we're reviewing the external landscape with regard to reporting requirements and regulations. We're trying to ensure that we are ahead of the curve. I think that's the key focus for us as a group. We're looking into our revising, our materiality. And I think that for us is quite an important exercise because it helps us on two fronts. One is downstream the materiality will actually help us define what we need to report against. And then if we take that up a level the materiality will also help us to redefine and ensure that the strategy that we have as a group is actually, integrated within the corporate strategy as well as meets our growing requirements as we're moving forward. So definitely this is quite a big piece of work for us and we're quite excited by that. I think another area that we're really looking to support going forward on, and it's something that we as a group or group sustainability have done very well over the last few years, is really getting closer to the business.

I think in today's day and age, more than ever now, it's very important that as a function that you're able to demonstrate the value that you're able to support when it comes to the business. And that comes in a variety of different forms. It could be basic compliance, having the right or driving the right behaviours with regard to the policies that are required for your business or just your reporting that's required to, business development and enablement supporting the businesses to develop new solutions for customers, which may potentially help to drive top line revenue growth or to, you know, enhancing efficiencies or driving efficiencies in the business to actually help you to reduce your costs. So we are really pushing that that focus on business value and working closely with the business.

I think the last area that we will continue to engage on and support the group with is just with regard to our partnerships, I've mentioned two of the partnerships earlier on today, which really focussed on decarbonisation. However, we have a number of partnerships across not just decarbonisation but again across social as well as other environmental aspects, which we will continue to drive and leverage to ensure that we're able to make significant impact across not just the operations that we have, but also the communities that we operate in.

Jane: [28:40] Yeah. Fascinating stuff. I mean, I think, you started the call by saying that you're operating and I think it was 78 countries, and you've got 115 direct workforce. You're a massive organisation and in a sector where you're really connecting the world with lots of sustainability issues to think about. So, yeah, I think you're going to be a busy chap, Carlin. I don't I don't think there's going to be any resting up for you and the team. So look, all the best in your kind of future strategy and priorities, I think you're doing some great work. I think it's really, really a great example of some innovative leadership there. And thanks for sharing your, your experience and telling us about your strategy and your sustainable finance framework and, and the blue bond, which I find fascinating. So thank you so much indeed for joining us today.

Carlin: [29:27] And thank you for the opportunity, Jane, for us to share our experiences. And it was really a very nice discussion to have with you.

Jane: [29:35] I hope you enjoyed that episode with Carlin from DP world. Fascinating stuff. And of course very, very topical. If you've got questions, comments or someone you'd want us to talk to, then do get in touch by email at FMT. Com. That's all from me, but watch out for the next episode very soon.