ESRS 2 – General disclosures
Basis for preparation
General basis for preparation of the Sustainability Statements
This year, the Sustainability Statements have been restructured and new disclosures have been included to align with the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS).
Our Sustainability Statements have been prepared on a consolidated basis, aligning with the scope of the financial report for 2024. This report is our mandatory annual statutory sustainability reporting in accordance with chapter 2 of the Norwegian Financial Statements Act and the EU Sustainable Finance Taxonomy.
The scope of our Sustainability Statements mirrors our financial statements, ensuring consistency and comprehensive coverage of our operations and activities. Our Sustainability Statements cover both upstream and downstream aspects of our value chain. A focus is placed on our own operations and our first-tier suppliers.
All data points found in the topical standards have been subject to a double materiality assessment (DMA). For a detailed description of the scope, methodology and assumptions of our DMA process, please refer to ESRS 2 IRO-1 below.
The Sustainability Statements follow the categorisation of the short-term time horizon as defined in ESRS 1, section 6.4. However Höegh Autoliners has deviated from medium- and long-term time horizons (please refer to ESRS 2 BP-2 (9)).
No information corresponding to intellectual property, know-how or the results of innovation has been omitted from the Sustainability Statements.
Disclosures in relation to specific circumstances
In line with the adaptation to the CSRD and the ESRS, Höegh Autoliners has restructured its sustainability reporting format. These modifications include:
- The Sustainability Statements now include new disclosures and metrics required by the ESRS.
- The layout of the Sustainability Statements has been revised to comply with the ESRS reporting demands.
Time horizons have been applied for impacts, risks, and opportunities. ESRS 1 section 6.4 defines the short-, medium- and long-term horizons for reporting purposes, where short-term is defined as 0-1 years, medium term is defined as 1-5 years and long-term is defined as more than 5 years. Höegh Autoliners has deviated from the defined medium- and long-term horizons as guided by ESRS 1 and has defined medium term as 1-10 years and long-term as more than 10 years.
This approach is based on Höegh Autoliners’ corporate strategy to ensure comparability between strategic periods and sustainability assessments. The rationale builds on the longer cycles in the shipping sector and a longer-term decarbonisation target by 2040. Höegh Autoliners also operates an asset base with an expected lifetime of 30 years.
Scope 3 emissions are calculated using the methodology as described in the Greenhouse Gas Protocol (Technical Guidance for Calculating Scope 3 Emissions). This involves using external proxies, such as widely recognized emission factors and sector average data. Until we can obtain accurate primary data throughout our value chain, these proxies and sector averages represent our best estimates.
For detailed accounting policies on Scope 3 data, please refer to section E1 – Climate Change.
List of disclosure requirements incorporated by reference
| Disclosure requirement | Paragraph | Section |
|---|---|---|
| ESRS 2 GOV-1 | Composition and diversity of the administrative, management and supervisory bodies | Board of Directors |
| ESRS 2 GOV-3 | Integration of sustainability-related performance in incentive schemes | Remuneration report, page 6 |
| ESRS 2 SBM-1 | Strategy, business model and value chain | Strategy and business |
| E1-5 | Net revenue, Note 2 in to the financial statements | Financial Statements (Note 2 - page 13) |
| E1-6 | Net revenue, Note 2 in to the financial statements | Financial Statements (Note 2 - page 13) |
In 2024, Höegh Autoliners has chosen to exercise the following phase-in provisions: ESRS 2-SBM-1 paragraph 40b-c, ESRS 2-SBM-3 paragraph 40e, E1-9, E2-6, E4-6, E5-6, S1-7, S1-8, S1-11, S1-12 and S1-14 (related to non-employees).
Governance
The role of the administrative, management and supervisory bodies
Höegh Autoliners’ Board of Directors (BoD) consist of 9 members, consisting of eight directors and one deputy director. No member of our executive management serves on the board. Board members possess diverse expertise relevant to our sector, service, and geographic locations. This includes individuals with extensive experience in the shipping industry, sustainability, finance, and global market dynamics, ensuring well-rounded insights into our operations. The entire board is composed to possess strong experience and skills in the conduct of business leadership. Leveraging these skills enhances our ability to proactively manage and capitalise on opportunities associated with sustainability, contributing to our overall resilience and responsible business practices.
Additionally, the members of the BoD evaluate annually its performance and expertise. Over the next 12 months this self-assessment will be expanded to also include sustainability skills and expertise.
Regarding gender diversity, our board comprises 44% female and 56% male members. Five of the directors (56%) are independent from the Company’s major shareholders, contributing to a robust governance structure and a substantial proportion of unbiased decision-making within our unitary board. We currently do not have any employee representatives on the board. Further information on our board members can be found here.
As illustrated by our governance model, the board of directors is the governing body responsible for approving the Company’s overall strategy and the necessary investments to achieve our targets and goals. By approving and issuing new and revised policies, the board integrates all aspects of Höegh Autoliners’ business, including climate change and other sustainability topics. The board oversees Höegh Autoliners’ sustainability approach, monitors performance, and approves the double materiality assessment, including material impacts, risks, and opportunities. It also reviews and approves the annual Sustainability Statements.
Our Audit Committee oversees our reporting and audit processes, including our system of internal controls and compliance with laws and regulations. In addition to monitoring regulatory reporting and the audit process, the Audit Committee’s 2024 focus included overseeing the Group’s compliance work, risk management, IT security, and its environmental, social and governance reporting processes.
The Governance and Compensation Committee (GCC) ensures thorough and independent preparation of matters relating to the governance and compensation of the Company’s executive management. For most of 2024, the committee was known as the Sustainability, Governance, and Compensation Committee (SGCC), also focusing on sustainability. However, this responsibility has since been transferred to the board of directors, and the committee has been renamed to the Governance and Compensation Committee.
During 2024, the GCC reviewed compensation elements for both staff and the Executive team, along with long-term organizational development plans, considering the shift towards achieving our sustainability goals. Additionally, the GCC reviewed and assessed the DMA on behalf of the board of directors, ensuring comprehensive oversight of sustainability reporting.
The Company has established a Nomination Committee, consisting of three members elected at the annual general meeting. The board of directors has approved instructions for the committee’s work. The Nomination Committee ensures the board of directors is composed to meet the shareholders’ interests and the Company’s needs for competence, independence, and diversity. It is also responsible for proposing remuneration for the board of directors and the Nomination Committee members.
The responsibility of defining and implementing our strategy and targets lies with our management. Relevant sustainability topics are assigned to their respective departments, defined, and prioritized within the framework of our four strategic priorities. This work is supported by our cross-departmental strategic projects, where each strategic project is owned and sponsored by a member of the management team, who drives the project and is responsible for the final content presented to the management team and the board.
Sustainability is embedded in our strategy, represented by environmental, social and governance aspects as reported in their respective sections in these Sustainability Statements. Dedicated controls and procedures are integrated into the relevant departments to effectively manage impacts, risks, and opportunities. Integration ensures alignment with other critical internal processes, reinforcing comprehensive risk and sustainability management throughout the organisation.
Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies
Throughout the year, we consistently monitor various impacts, risks, and opportunities. To ensure effective performance monitoring, we track our progress against targets and report this in our quarterly and annual reports. Updates on our performance are also reported to the Board of Directors quarterly. Health and safety are routine topics of discussion at these meetings (more details are found in the social S1 – section). Similarly, climate-related topics, including our efforts towards achieving decarbonization goals, are frequently reviewed by our governance bodies. For additional details see the E1 – section.
Governance topics including anti-corruption, are also addressed and discussed in the Board meetings.
The Audit Committee has been thoroughly upskilled to competently oversee the CSRD reporting process. Through targeted training sessions and workshops, committee members have enhanced their understanding of the relevant standards and requirements. This ensures they are well-equipped to provide effective oversight and guidance, aligning with the company’s commitment to transparency and accountability in sustainability reporting.
Administrative, management, and supervisory bodies evaluate the implementation of due diligence, effectiveness of policies, and the outcomes of actions, metrics, and targets. Reviews are conducted annually, with special sessions convened when significant changes occur, or new risks emerge. From 2025, quarterly reporting of impacts, risks, and opportunities will inform the administrative, management, and supervisory bodies discussions on the business’s strategy, major transactions, and risk management processes.
During the reporting period, executive management and the Board of Directors have reviewed specific IROs related to our most material topics, including climate change, biodiversity, health and safety, and governance.
Integration of sustainability-related performance in incentive schemes
Höegh Autoliners integrates sustainability-related performance in management’s short-term incentive scheme. This aligns goal achievements with corporate objectives and sustainability ambitions, covering both environmental and social topics. For more details on this incentive scheme, please refer to our Remuneration Report available on our website.
Statement on due diligence
The following table includes a mapping of the information provided in these Sustainability Statements regarding the due diligence process.
Risk management and internal controls over sustainability reporting
The corporate reporting department is responsible for developing group-wide annual reports, including Sustainability Statements. This involves organizing and leading essential activities such as the Double Materiality Assessment, climate-risk assessments, and data collection. These efforts are carried out in close collaboration with our cross-functional sustainability team to ensure accuracy and alignment with our strategic goals.
Gathering relevant data and information for the annual report is a continuous effort, and the process is exposed to risk of material misstatement due to human errors or missing data. To manage this risk, the Company is establishing relevant internal controls over sustainability reporting. This includes standardisation of definition, calculations, and critical metrics such as emission factors in accordance with the GHG Protocol and other recognised industry standards.
The goal is to adopt a centralized reporting approach, enabling the department to act as an information hub that identifies and corrects inconsistencies or errors in data submitted by business units. Over the past years, additional resources have been allocated to enhance overall sustainability governance and reporting.
The corporate reporting department regularly informs the management team about the progress of sustainability reporting, and the management team then subsequently updates the board quarterly. Starting in 2025, the progress and performance of the Group’s sustainability reporting will be reported quarterly to the Audit Committee.
Strategy
Strategy, business model and the value chain
Höegh Autoliners is a leading global provider of Roll-on Roll-off (RoRo) ocean transportation services, specializing in port-to-port transport of automobiles, mining equipment, and breakbulk cargo. We operate a global network with Pure Car and Truck Carrier (PCTC) vessels, making over 2 000 port calls annually. Each year, we transport around 1.6 million car equivalent units (CEU) and other rolling and static cargo. Our clients range from global vehicle manufacturers to producers of heavy construction equipment and other rolling and non-rolling stock. Höegh Autoliners currently operates a fleet of 38 PCTC vessels, with 34 owned and 4 chartered.
Our vision is a near-zero emissions shipping future. We have clear strategic targets where we aim to reduce our carbon footprint and support the decarbonization of our customers’ supply chains by becoming the leading green PCTC operator and the preferred partner for sustainability-focused customers.
Our newbuilding program for near-zero GHG emission-ready Aurora Class vessels is a key part of realizing this vision. The first four Aurora Class vessels were delivered in 2024.
Höegh Autoliners has a fully integrated global organization with significant in-house expertise in commercial and operational management, technical services, and crewing. We have over 400 onshore employees and more than 1 200 seafarers, with 24 different nationalities, working out of 16 offices around the globe. More information about the employee characteristics can be found in section S1 – Own Workforce.
Our vision is a zero emissions future, and our ambition is to operate a fleet with net zero GHG emissions by 2040. For more details on our net-zero ambitions, please refer to E1-1.
We have defined four core strategic priorities to reach that ambition. We want to be:
- Customer centric, by delivering shipping services that create customer satisfaction and loyalty.
- Greener, by becoming the greener deep-sea operator to secure our future.
- Highly efficient, by reducing voyage costs and maintain a lean operating model to reduce unit costs.
- Digitally enabled, to leverage digital tools to improve customer experience and improve efficiencies.
Our corporate purpose and development goals are aligned with the three core sustainability pillars, Planet, People and Prosperity. To achieve our strategy and corporate purpose, all goals are cascaded throughout the organisation and assured through our integrated reporting framework.
For more details, please refer to the Strategy and Business section of our annual report.
- Coal: 0% of our business activities are related to coal extraction.
- Oil: 0% of our operations involve oil extraction and sales.
- Gas: 0% of our business revolves around gas production.
- We have no taxonomy-aligned economic activities related to fossil gas.
Interests and views of stakeholders
Active stakeholder engagement is a fundamental aspect of our strategy. This interaction shapes our understanding of material issues and supports solutions and initiatives that form our roadmap and sustainability commitment.
We engage across various areas of our organization, from daily operational matters and regulatory engagements to regular sales meetings. We identify key stakeholders throughout the value chain, encompassing both external stakeholders—such as customers, suppliers, investors, and regulators—and internal stakeholders, including employees and board members.
The views of our stakeholders are essential inputs both to our annual materiality assessment and continuous due diligence efforts. How we engage with key stakeholder groups, as well as the purpose and outcomes are summarized in the following table.
| Key stakeholders | How we engage | Why we engage | Examples of outcomes from engagements |
| Marketplace | |||
| Customers | Customer support and discussions in day-to-day operations | Understand our customers' expectations and requirements | Strategic partnerships for our segment leading green service offerings Development of solutions serving customer expectations and requirements |
| Tender processes and contract renewals | Provide green and sustainable solutions to assist decarbonization of their supply chains | Longer contracts with customers sharing our business philosophy | |
| Sanctions screening | Risk management, reputational protection and ensure compliance with laws and regulations | Business relationships with responsible counterparties Informed selection of customers |
|
| Customer's ESG questionnaires | Understand our customers' expectations and requirements | Updated policies and procedures | |
| Suppliers | Discussions through day-to-day operations | Understanding our suppliers sustainability impacts | Sustainable sourcing of goods and services |
| Supplier questionnaires and on-site due diligence assessments | Ensure compliance with our code code of conduct throughout our supply chain | Enhance effectiveness of supplier practices and engagements | |
| Sanctions screening | Risk management, reputational protection and ensure compliance with laws and regulations | Informed selection of suppliers | |
| Workplace | |||
| Employees | Active engagement through the working environment committee (AMU) and communication through internal channels | Understand employees expectations and requirements | Action plans, improved working environment and updated internal policies and procedures |
| Yearly engagement surveys | Detect improvement areas | Action plans for improved working environment | |
| Training and upskilling | Provide our employees with necessary knowledge and understanding | Feedback with improvement points on current available training | |
| Financial community | |||
| Investors, analysts, banks, insurance | Regular investor updates | Build credibility and showcase our strategy and performance | Improved sustainability communication in all sources |
| Annual and interim reporting | Keep new and existing investors updated on performance and plans | A robust strategy to meet investors expectations |
|
| Investor meetings, presentations and roadshows | Understand expectations and requirements | ||
| ESG ratings | Promote transparency towards external stakeholders | Gap analysis and plans to improve current ESG ratings | |
| Society | |||
| Governments, regulators and International policy makers | Dialogue with governments and policy makers | Identify and address climate-related transition risks and opportunities | Set our decarbonisation strategy and plans on the agenda |
| Regulatory tracking and analysis | Ensure compliance within operations and reporting | Resilient business model and strategy | |
| Media | Regular external communication in several channels | Inform and build trust among stakeholders | Good reputation among stakeholders |
| Industry and sustainability associations | Direct dialogue with industry and sustainability associations | Assist the industry to engage policymakers | Good reputation among stakeholders |
Own workforce
Our workforce plays a crucial role in shaping our commitment to a safe working environment, equal treatment and opportunities and respect of human rights. We engage with them through various channels, such as internal communications, town halls, focus groups, and surveys, to understand their experiences and perspectives. By promoting an inclusive and diverse environment, we ensure that all employees, regardless of background, have equal access to opportunities. Upholding their right to equality is essential for fostering trust.
Employees are encouraged to raise any concerns through our dedicated reporting channels, and safety-related concerns via our independent reporting system. Acknowledging their human rights is vital for building trust, as well as incorporating their views and concerns into our health & safety strategy is essential to ensure a safe working environment.
Workers in the value chain
Höegh Autoliners engages value chain workers through collaboration with suppliers, implementing human rights and ethical business policies, and conducting regular audits to ensure fair treatment and safety. An independent whistleblowing mechanism allows any stakeholder to report concerns with full confidentiality, and with the option of reporting anonymously.
Remediation processes are in place to address potential negative impacts, and supplier onboarding and risk assessments support alignment with ethical standards. These measures aim to protect the rights and well-being of value chain workers, fostering a responsible and ethical business environment.
Material impacts, risks and opportunities and their interaction with strategy and business model
In 2023, Höegh Autoliners conducted its first Double Materiality Assessment, laying the groundwork for 2024 ESRS compliance and identifying key sustainability topics. This process involved collaboration with a diverse range of stakeholders, including employees, suppliers, customers, investors, analysts, and financial institutions, using interviews, workshops, and extensive research to pinpoint material sustainability impacts, risks, and opportunities.
The Group annually assesses material impacts and risks as part of its strategy review, evaluating the resilience of its business model over the medium term. A qualitative climate-related analysis has demonstrated the business model’s resilience with adequate measures in place.
Environmental topics are largely systemic to the industry. Among these topics, Höegh Autoliners is having the largest impact on climate change due to the nature of the business. Shipping is contributing to about 3% of total GHG emissions globally, and the industry has significant potential for climate change mitigation through decarbonisation efforts, which is why Höegh Autoliners has developed a decarbonisation plan to meet its net zero ambitions by 2040. Pollution, including air pollution, water pollution and noise pollution from underwater noise and vibrations, is a systemic negative impact. We have not identified any material adjustments to our financial statements for this year or the next reporting period.
Biodiversity impacts are identified through potential introduction of invasive species via ballast water and anti-fouling operations. Resource use and circular economy impacts are noted through steel consumption in newbuilding activities and waste from vessel operations. Höegh Autoliners’ strategy, policies, and procedures are informed by regulations from IMO, the EU, and other bodies to maximize operational efficiency while focusing on environmental protection.
Our strategy prioritizes workforce health and safety, addressing systemic risks such as fire, adverse weather, and equipment handling. Transporting electric vehicles and using new fuels like LNG and ammonia introduce additional safety risks, requiring specialized equipment and training for safe bunkering and handling. A key positive impact is our integrated strategy, which supports long-term seafarer careers, continuity, belonging, and essential skills development through comprehensive training, assessments, and certifications.
For our value chain workers, key groups include those at yards (newbuilding and dry-docking activities), third-party seafarers on Höegh-operated vessels, and workers at recycling facilities. Addressing potential negative impacts on these workers is important for Höegh Autoliners, and our supplier due diligence processes are designed to identify and mitigate such impacts.
Being a responsible business partner is vital for Höegh Autoliners. Issues related to anti-corruption, bribery, and facilitation payments are systemic in the industry. We are members of the MACN network, promoting anti-corruption through transparency, training, and awareness programs.
All material impacts, risks, and opportunities identified during the materiality assessment are further discussed in these Sustainability Statements, alongside the relevant ESRS topics: E1 Climate Change, E2 Pollution, E4 Biodiversity and Ecosystems, E5 Resource Use and Circular Economy, S1 Own Workforce, S2 Workers in the Supply Chain, and G1 Business Conduct. In addition to the IROs corresponding to sub-topics prescribed in the ESRS, an entity-specific sub-topic (Noise pollution) is included as part of E2 Pollution.
Impact, risk and opportunity management
Description of the processes to identify and assess material impacts, risks and opportunities
During 2024, Höegh Autoliners updated its materiality assessment in accordance with the ESRS. The foundation of such an assessment involved identifying and objectively assessing impacts, risks and opportunities (IROs). This resulted in a completed DMA. Our assessment is set to cover the full value chain, focusing on our own operations and our first-tier suppliers. Actual and potential negative impacts, as well as actual and potential positive impacts are also included in the evaluation. The same applies for the financial risks and opportunities.
The impacts, risks and opportunities identified through the DMA are described under the relevant topical ESRS sections in this report.
The initial phase focused on evaluating Höegh Autoliners’ activities and business relationships, value chain and affected stakeholders to pinpoint relevant sustainability matters as outlined in ESRS 1, paragraph AR16. We have established a longlist of ESG topics that are relevant to our business operations by adding relevant information on industry good practices, media, and prevailing sustainability reporting standards.
The longlist serves as a starting point in our DMA process, through which the material topics are identified at a sub-sub-topic level, in accordance with the ERFRAG list of data points and were evaluated accordingly with the ESRS disclosure requirements.
This approach ensured a thorough examination of critical sustainability topics through a sector-specific perspective, alongside the exploration of company-specific matters. Immaterial sustainability topics and sub-topics that did not align with Höegh Autoliners’ business model were excluded from the assessment.
Key internal stakeholders, with insights into affected stakeholders and users of Sustainability Statements, were included in the DMA process. Their role was vital in highlighting sustainability challenges, identifying, and evaluating important reporting outcomes (IROs), considered to be a foundational assumption of the methodology. Höegh Autoliners’ policy on internal stakeholders’ engagement emphasises the acting engagement and understanding of the stakeholders expectations. These insights inform our business strategy, due diligence processes and DMA.
External stakeholders, including investors, financial institutions, suppliers, customers, and regulatory bodies were also engaged in the impact assessment. Interviews with both stakeholder groups were conducted with the aim of identifying impacts, risks and opportunities on a sub- and sub-subtopic level.
The actual and potential impacts on our operations, as well as the financial risks and opportunities linked to sustainability-related development were identified through the stakeholder engagement. This process enables us to understand the significance of these impacts, risks, and opportunities for our business and our stakeholders.
To evaluate the impact materiality of each identified ESG topic, we established a scoring method and criteria in accordance with ESRS 1 requirements. Both negative and positive impacts were prioritized based on severity (scale, scope, irremediable nature of the impact) and likelihood.
In assessing scale, we evaluated the magnitude of the impact on the environment or society, categorizing it as ‘low’, ‘medium’, or ‘high’. Indicators such as potential affected areas, geographical regions, and number of employees were used to measure the extent of the impact. Scope was scored as ‘limited’, ‘medium’, or ‘global’. In terms of remediability, we considered the complexity of reversing the damages in terms of cost and timeframe, scoring negative impacts as ‘easy to remediate’, ‘difficult/costly to remediate’, or ‘irreversible.
Likelihood was applied to potential impacts to determine how likely it is that the impact will occur, scored on a scale of 1 to 5.
To score risks and opportunities for our business, we considered financial consequences and likelihood. We assessed the magnitude of financial metrics in the event of a risk or opportunity, scoring the financial consequence as ‘low’, ‘medium’, or ‘high’. Likelihood was used to cover how likely it is that the financial consequence will occur.
The scoring process was disaggregated at the specific impact, risk, and opportunity level, involving key internal stakeholders to accurately determine the significance of the IROs.
Whenever feasible, the scoring incorporated timeframes and thresholds from Höegh Autoliners’ Enterprise Risk Management (ERM) processes, aligning sustainability-related risks and opportunities with other enterprise risks and opportunities. Thresholds were further supported by Höegh Autoliners’ internal approval matrices, due diligence processes, including human rights and climate risk assessments, supplier audits, and a multitude of certifications and policies.
The quantitative assessment was complemented by a qualitative evaluation when relevant to determine the final scoring results. A sustainability topic is deemed material or not, based on the final scores for the specific IROs.
Topics falling below the set thresholds were concluded to be immaterial. A workshop with key internal stakeholders served as the validation session to finalize conclusions on material sustainability topics.
Höegh Autoliners will revisit the DMA process annually to identify, assess, and prioritize IROs, considering evolving trends, underlying assumptions, and regulatory changes.
