the ship breaking industry of bangladesh - an exploration of the accountability of the shipping...

8/22/2019 The Ship Breaking Industry of Bangladesh - An Exploration of the Accountability of the Shipping Companies

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The Ship Breaking Industry of Bangladesh: An Exploration of the Accountability of the

Shipping Companies.

Abstract

The paper explores the social and environmental information disclosure practices of global

shipping companies with specific reference to how they account for the lifecycle of ships

under their control. The paper sheds light on the working conditions, violations of humanrights, and damage of ecology within the ship breaking yards of Chittagong, Bangladesh. We

have collected the annual reports of ten large shipping companies for the year 2010 to

understand their disclosure practices relating to how they account for their end-of-life ships.

We have found that the extent of disclosures is relatively high for some of the organisations

and the nature of the disclosures are predominantly positive, therefore reflecting a positive

perspective of the organisation. The disclosures appear to have been made with the intension

of securing/ or maintaining the legitimacy of the organisation, and/or to meet community

expectations. However, we find no information from the shipping companies about where the

ships actually go at the end of their lifecycle.

Keywords: Ship breaking industry, Bangladesh, Human rights, Ship recycling, Social

and environmental disclosure.


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1. IntroductionShip breaking means breaking or recirculation of old ships for financial return (Neser et al.

2008). Of the approximate 45,000 ocean-going ships in the world about 700 are taken out of

service every year. At the end of their sailing life, ships are sold so that the valuable steel -

about 95% of a ships mass, can be reused (Greenpeace, 2006).

Old ships contain a wide range of toxic materials and oily waste and during the breaking of

the ships these substances pollute the environment and have damaging health impacts on the

workers and communities surrounding ship breaking yards (Greenpeace, 2003). Bangladesh

was the most prolific ship recycling nation from 2004 with 220 ships in 2009, and 300 ships

in 2010, being sent there for recycling (Ahmed and Fabi, 2011). The ship breaking industry

creates employment opportunities for Bangladesh, where huge numbers of people are

otherwise unemployed and live below the poverty line. Despite, the fact that the ship

breaking industry is a rising industry for Bangladesh in terms of both employment and

satisfying local demand for steel, the social and environmental impacts of this industry, and

the related accountability issues of the ship suppliers, tends to be ignored. For example,

Greenpeace (2003) notes that the extent of damage caused by the breaking of ships to the

environment, to the livelihoods of the fishing community and peasants that share the

environment, and to the lives and health of the workers in India, Bangladesh, China, Pakistan

and Turkey is not known to this day. Also it has attracted very little attention form the

academic community, which is evident from Cairns (2007, p.275), who states:

Whilst organizations such as Greenpeace and the Basel Action Network (BAN, 2006)

continue to fight for stringent control on the global market in redundant vessels, and

with some success, the ship breakers of Chittagong (Bangladesh) continue to ply their

trade. Whilst the industry continues to attract little or no attention from the academic

community, it has become a topic of great interest

Greenpeace (2006) notes that about 1.55% of the ocean-going ships are recycled every year

and these ships eventually arrive in the ship breaking yards of Bangladesh, India or Pakistan.

But there is no available study which explores how the shipping companies describe or

explain what happens to their ships at the end of their lifecycle. However, like all industries,

shipping companies have accountability for their action that is; they have a duty to providean account or reckoning of those actions for which they are held responsible (Gray, Owen


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and Adams, 1996). Like other industries, shipping companies are expected to provide an

account of those attributes of performance for which the community believes they have a

responsibility, else face the risk of breaching their social contract. The concept of social

contract is used to represent the multitude of implicit and explicit expectations that society

has about how the organization should conduct its operations, inclusive of how it provides an

account of the impacts of those operations (Deegan, 2011, p325). We are interested to

explore how the shipping companies provide accounts of the lifecycle of the ships under their

control, and particularly how or whether they address the social and environmental issues

associated with ship recycling. For this research, we define accountability as: initially

requiring an acceptance of particular responsibilities; then, the undertaking of subsequent

action to comply with these responsibilities; and then, ultimately, the provision of an account

(report) to confirm (or otherwise) that actions taken throughout a specified period were

consistent with the accepted responsibilities.

The structure of this paper is outlined as follows. Section two provides the background to the

research. Section three highlights the importance/significance of the research. Section four

describes the objective of the research, and section five discusses relevant prior studies.

Section six provides the underlying theoretical background to the study, and section seven

describes the research methods. Section eight analyses the findings and finally, theconclusions and direction for further research are presented in section nine.

2. Background of the researchThe context of the research is Bangladesh asitis the home to one of the worlds biggest ship

recycling yards (Ahmed and Fabi, 2011)and it dismantled about 50% of the ships sent to

scrap yards globally (BSBA, 2011). The ship breaking industry of Bangladesh is located

about 15-20 kilometres from the second biggest city of Chittagong. At present there are 125

ship breaking yards (69 are operating) along the Sitakunda coastal zone (Bdnews 24. com,

April 22, 2011). Bangladesh Ship Breakers Association (BSBA, 2011) listed about 138 ship

breakers as their members in their websites while Hossain et al (2008) states that there are 50

shipping companies directly engaged in the ship breaking activities of Chittagong,

Bangladesh. This industry, which employs thousands of people and supplies Bangladesh

with almost all its steel, began with an accident - a cyclone.This is documented by CBS news

in September 2, 2007. Specifically:


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In 1965, a violent storm left a giant cargo ship beached on what was then a pristine

coastline. It didnt take long before people began ripping the ship apart. They took

everything and businessmen took note - perhaps they didnt need a storm to bring

ships onto this beach here. To do the same work in America or England would be

very expensive. (CBS, 2007).

This is how the ship breaking industry began in Bangladesh. The ship breaking task is

difficult, and dangerous, but Bangladesh is a poor country and ship breaking is steady work

that knows no off-season, unlike farming (The New Nation, 27 December, 2009). The

salvaged metal from the ships is melted down at mills and recycled into construction

materials. As already noted, a significant proportion of new building construction in

Bangladeshi cities and towns uses metal cut from the ships that sailed the oceans of the world(The Bangladesh Observer, 9 November, 2007).

The working conditions and the violation of human rights within the ship breaking yards of

Chittagong, Bangladesh have recently been addressed by some researchers. For example,

Cairns (2007) notes that the ship breaking industry of Bangladesh is criticised on a number of

grounds including the dangerous working conditions and the number of deaths arising from

these, environmental pollution, and the impacts of working with asbestos and other materials

that are hazardous to human health. Karim (2009) also states that the government and the ship

breaking industry are violating the fundamental human rights of the people in ship breaking

yards. Hossain et al (2008) notes that accidents are seldom reported or recorded, and

employers conceal the information, even from the families of victims and typically avoid

paying any compensation. Also, the use of child labour is very common in the ship breaking

yards of Bangladesh with about 20% of workers below the age of 15, and therefore

considered as child labour according to the Child Labour Convention (Karim, 2009). About

75% of the workers of the ship breaking yards of Chittagong are employed temporarily with a

no work no pay basis of employment and they get their wages daily at the rate of US$ 1.5 to

US$ 3 per day depending on experience (Hossain et al, 2008). This happened at the same

time that the shipowners receive more than 1 billion US dollars annually by exporting old

ships to India, Bangladesh, Pakistan and China for scrapping (Greenpeace, 2003). These are

the aggregate amounts received by the original ship owners.

Despite all these poor and unsafe working conditions, and the violation of human rights in the

ship breaking yards, the major shipping companies appear to assume limited responsibility


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and/ or accountability for selling their ships to these ship breakers who might eventually

cause great harm to society and to the environment (Karim, 2009).

It is difficult to identify the shipping companies that sell or supply the wrecked ships as most

ships are sold through ship brokers and cash buyers to the ship breakers, and in many cases

ships are renamed and reflagged during, or prior to, the final voyage (Greenpeace, 2003).

This is also evidenced by Bhattacharjee (2009) who notes that ship owners can avoid the

jurisdiction of a more vigilant state by changing the registration of ships. Greenpeace (2003)

states that ship owners who dump end-of-life-ships containing hazardous substances often

reside in OECD (Organization for Economic Cooperation and Development) countries, but

the ships they own are registered elsewhere and not in the effective ownership countries. In

this way ship owners escape the existing body of law in the home country and the shipowners make it possible to avoid international treaties such as the Basel Convention (1992).

By changing the ship names and avoiding stricter regulatory regimes, the shipping companies

can effectively escape potential legitimacy threats associated with being linked to ship

breaking act ivities. It is very difficult to identify shipping companies that dump their ships in

the ship breaking yards of Bangladesh. With the above information in mind, we have

collected the annual reports of the global top ten shipping companies to understand their

disclosure practices with respect to providing information about the lifecycle of their ships.Our view which is obviously very normative is that given that all shipping companies

eventually dispose of end-of-life ships, and given that there is always a real possibility that

such disposal will be done in a less that ideal way, then it is incumbent upon shipping

companies to disclose their policies pertaining to ship disposal. That is, we believe an

accountability is due. Our research explores whether this accountability appears to be

demonstrated.

3. Importance/Significance of the researchOur research has considerable significance for both global shipping companies and from the

perspective of the economy of Bangladesh. Hossain et al (2008) notes that about 250,000

people (directly and indirectly) earn their living from ship scrapping yards and the industry

supplies much of the demand for iron and steel within the country. In spite of creating

employment opportunities and satisfying local demand for steel and iron, the dark side of this

industry is that it has created significant negative social and environmental impacts within

Bangladesh. For example, the dangerous and harsh working conditions of the ship yards,


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huge causalities from various accidents like explosions, falling plates, explosions from toxic

gases, and the existence of asbestos throughout the ship breaking yards (Karim, 2009).

According to existing national laws, ship owners (shipping companies) have to make a

declaration of hazardous substances on board upon arrival at a yard for dismantling (The New

Nation, 27 December, 2009). But, in several cases, Greenpeace found that end-of-life vessels

have been exported to a ship breaking country without the importing authorities being alerted

(Greenpeace, 2006). In addition to existing national laws, there are some international laws

and regulations that are supposed to guide this industry. For example, the International

Maritime Organization (IMO) Guidelines identify measures that need to be taken by ship

owners as well as by relevant actors in ship breaking countries (IMO, 2010). Ships are now

required to carry a Green Passport specifying the hazardous substances that are on board,and ship builders now have to start building clean ships1 (IMO, 2010). Unfortunately, none of

these requirements appear to be followed in Bangladesh (The New Nation, 2009). Rather

shipping companies find it as an opportunity to bring their wrecked or aged ships into a

country where there are weak legal systems and chronic corruption in both the public and

private sectors (Gani, 2010). For example, ships that are not accepted in OECD countries due

to various environmental, health and safety issues are often sent to the breaking yards of

Bangladesh, India, Pakistan, and Turkey for scrapping (Stuer-Lauridsen et al, 2003).

However, the shipping companies appear to assume limited responsibility regarding the

social and environmental harm that they are committing by exporting their out-of-service

ships to Bangladesh. Nevertheless, they arguably should be held responsible (and

accountable) because of the norms of the social contract which exists between the

organizations in question, and the society in which they operate. With heightened social

expectations it would normally be anticipated that successful business corporations will react

and attend to the human, environmental and other social consequences of their activities

(Heard and Bolce, 1981). It has been argued that society increasingly expect business to

make outlays to repair or prevent damage to the physical environment, to ensure the health

and safety of consumers, employees, and those who reside in the communities where

products are manufactured and waste are dumped (Tinker and Neimark, 1987, p.84). Whether

1The Clean Ship is a ship designed and operated in an integrated manner to eliminate harmful operational

discharges and emissions; it is a ship that is constructed and can ultimately be recycled in an environmentally

acceptable way, and one that is energy and resource efficient in its daily operation (http://www.seas-at-risk.org/n3.php?page=67).


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these expectations extent to shipping companies in respect of their scrapped ships is

something that we investigate.

From a CSR (Corporate social responsibility) point of view it can be argued that the shipping

companies are accountable for their actions and it is their duty to provide an account or

reckoning of those actions for which they are held responsible (Gray, Owen and Adams,

1996). Here the actions of shipping companies include the selling or supply of the end-of-life

ships to the ship breaking yards of Bangladesh and it is their duty to account for those

actions. As such, and accepting that companies have a duty to provide an account of the

social and environmental implications of their operations, the shipping companies should

disclose information about how they are discharging their accountability regarding the

recycling of end-of-life ships. Such an account could be provided in such media as annualreports, or any other publicly available documents.

Finally, we are motivated by Cairns (2007) who provides evidence that this area of research

is being neglected by the academic community despite the real suffering and damage this

industry appears to be causing. Thus we think our research will contribute to the literature

and fill some of the existing viod.

4. Objective of the researchAs should now be clear, the prime objective of our research is to understand the social and

environmental information disclosure practices of shipping companies with specific reference

to how they account for the lifecycle of ships under their control. In this paper, which

represents the initial phase of a broader study, we review the annual reports of the worlds top

ten international shipping companies. Our view is, that regardless of whether some of these

companies are specifically sending their ships to ship-breaking yards in developing countries

(and there is obviously a very strong possibility that some of the companies are) they should

nevertheless inform interested stakeholders about the processes they have in place regarding

end-of-life ships.

In the second part of our broader study (not reported in this paper), we will try to identify

those specific shipping companies that are responsible for supplying their old ships for

dismantling to Bangladesh. We will then drill down to try and identify any avenues in

which they are being transparent about such activities. We argue that as there are many

pressure groups like Greenpeace, BELA (Bangladesh Environmental Lawyers Association),Basel Action Network (BAN) and local and international human rights groups who are active


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in relation to the violation of human rights and the damage to the coastal environment of

Bangladesh by the ship breakers, shipping companies would have certain motivations to

disclose information pertaining to ship recycling. Thus, central to our research, we are

interested in investigating how, or whether, the sample shipping companies publicly disclose

information about the social and environmental issues associated with ship breaking..

As part of this process we will explore to what extent the sample shipping companies are

disclosing the appropriate policies and procedures prescribed by local and international

monitoring bodies for ship breaking. To do that we have collected available documents that

prescribe the rules and standards for ship recycling which we have then used to develop a

disclosure index. The index will be a contribution to the research and will be available for

other researchers who might aim to conduct research into the disclosures of social andenvironmental information by major global shipping companies.

5. Literature ReviewExploring CSR reporting and accountability issues is not a new phenomenon within social

accounting research. Nevertheless, accountability remains difficult to define (Mulgan, 2000)

because it has many connotations and frequently it is not easy to identify the specific

meaning which is intended to apply in particular circumstances. Bovens (2007) defines

accountability as a relationship between an actor and a forum, in which the actor has an

obligation to explain and to justify his/her conduct, and the forum can raise questions and

pass judgement, with the actor may facing any consequences that might result from this

process. In more practical terms, Gray, Owen and Adams (1996, p. 38) define accountability

as the duty to provide an account or reckoning of those actions for which one is held

responsible. One way of discharging accountability could be the disclosure of social and

environmental information in publicly available documents, although, accountability is not

just about disclosure.

Belal and Momin (2009) argues that environmental disclosure is an important element in

CSR and for addressing climate change, poverty alleviation and human rights. Deegan and

Gordon (1996) note, however, that the environmental disclosures found within the Australian

companies are often limited, self-laudatory, and largely qualitative in nature. In another study

regarding environmental disclosure, Deegan and Ji (2008) find that there is an overwhelming

lack of publicly available information about Australian contaminated sites, despite the belief

that there are thousands of contaminated sites exist within Australia. Further, the


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accountability that is demonstrated appears to be lower than would be expected if the

organisations acted in compliance with existing corporations law requirements. However,

there is scarcity of research regarding contaminated sites including ship breaking yards

globally as well as locally.

Globally, most of the research conducted in the ship breaking industry focuses on health and

environmental issues (see for example, Mitra, 2005; Neser et al., 2008; Rousmaniers and Raj,

2007; Bhattacharjee, 2009). Although the Basel Convention exists, within developing

countries like Bangladesh, where there is weak legal, political and economic infrastructure,

the ship suppliers and their local agents are dismantling the toxic ships in harsh and unsafe

working environments. Though the ship breaking industry began in the early 1970s, there is

still a scarcity of available literature regarding this industry. Some early research withinBangladesh focused on the reasons for the growth of the ship breaking industry (see for

example, Sobhan and Ahmad, 1980; Anderson, 2001; YPSA, 2005).Most of the research

finds that asBangladesh is a developing country specialised with cheap labour, this provides

the necessary stimulus for the ship breaking industry within Bangladesh.

Greenpeace (2003) research confirms that in Bangladesh and Turkey, shipowners do not pass

the inventory of hazardous materials to the ship breakers as promoted by the voluntary

Industry Code. Hossain et al (2008) also states that most of the workers of ship breaking

yards (of Bangladesh) are not aware of the ship borne poisons and their impacts on health and

thus they continue work without any protective measures. Cairn (2007) sheds light on the

complexity and ambiguity of the lives of the workers of the ship breaking industry of

Bangladesh, and he argued that their situation cannot be assessed by application of

developed world notions of ethics, environmentalism, and good and bad. In further

research, Cairns (2011) argues that the ship breaking industry of Bangladesh has complex and

ambiguous social, economic and environmental impacts and implications with regard to

broad stakeholder interests, concern and power structures which need to be addressed by

further research (Cairns, 2011). In response to call for research by people such as Cairns, and

also considering the void in the existing literature, we investigate the public accountability of

the suppliers or exporters of the wrecked ships.

6. Theoretical perspective of the researchResearchers in the social and environmental accounting literature use a variety of different

theoretical lens to explain their respective findings. For example, Chen and Roberts (2010)


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provide a broader theoretical understanding of legitimacy theory, institutional theory,

resource dependence theory and stakeholder theory to support and promote social and

environmental accounting research. We use legitimacy theory and stakeholder theory as our

theoretical basis to understand the disclosure practice of the shipping companies.

Legitimacy theory has been used by many researchers (see for example, Deegan & Rankin,

1996; Deegan & Gordon, 1996; Gray, et al., 1995; ODonovan, 2002; Belal & Owen, 2007;

Islam & Deegan, 2008, 2010; among other) on the basis of a view that an organization

maintains its license to operate in society by complying with the expectations of that

society. It is assumed within legitimacy theory that society allows the organizations to

continue operations to the extent that it generally meets societys expectations (Deegan, 2011,

p.325). An organisation is deemed to be legitimate to the extent that there is congruencebetween the social values associated with or implied by their activities and the norms of

acceptable behaviour in the larger social system of which they are a part (Dowling &

Pfeffer, 1975, p.122). When disparity, actual or potential, exists between the two value

systems, there is a threat to the entitys legitimacy, (Lindblom, 1994, p.2). We believe that

given that ship breaking has been negatively associated with many adverse social and

environmental consequences then organisations will need to demonstrate that they are not

linked to such activities.

As Greenpeace (2003) finds that a number of shipping companies sell their old ships through

ship brokers and cash buyers who in turn sell the ships to the ship breakers. In many cases

ships are renamed and reflagged during, or prior to, the final voyage. Perhaps this is done to

protect the organisations from the potential legitimacy threats that would otherwise arise.

Thus we are going to use the legitimacy theory to explain the motivation for disclosure, or

non-disclosure, of social and environmental information by the shipping companies.

However, to conceptualise the organization as part of a broader social system wherein the

organization impacts on and is affected by, other groups within the society (Deegan, 2002),

we perhaps need to consider stakeholder theory framework as well.

Jose and Lee (2007) state that corporations disclose information about their social and

environmental performance in response to stakeholder demands for environmental

responsibility and accountability. In other words, Jose and Lee (2007) argue for stakeholder

theory to explain the disclosure of social and environmental information. Deegan &

Blomquist (2006) also note that organizations disclose social and environmental information


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to satisfy powerful stakeholders. Stakeholder theory derives in part from Freeman (1984, p.

46) who defined a stakeholder as any group or individual who can affect or is affected by

the achievement of an organizations objectives. Deegan & Blomquist (2006), Belal &

Owen (2007), Islam & Deegan (2008) are among others who apply stakeholder theory to

explain the impact of particular stakeholders on the social and environmental disclosure

practices. Deegan (2002) identifies two branches of stakeholder theory, one is normative

(ethical) branch and the other is positive (managerial) branch (Deegan, 2002).

We believe that our research will be descriptive in nature and will follow the positivist

approach to research. The positive (managerial) approach is an approach to explaining what

is and it seeks to explain and predict particular phenomenon (Deegan, 2011, p 256). Thus,

this area of research finds that an organization reports social and environmental informationto manage its stakeholders (see for example, Ullman, 1985; Arnold, 1990; Tilt, 1994; Deegan

& Blomquist, 2006; Belal & Owen, 2007; Islam & Deegan, 2008), to secure or maintain

legitimacy, and/or to meet community expectations (see for example, Deegan, 2002;

ODwyer, 2002).

We seek to explain our findings within the dual frameworks of legitimacy theory and the

managerial branch of stakeholder theory. Combining these two theories will enrich ourunderstanding of corporate social disclosure practices of the shipping companies.

7. Research methodsOur research involves the review of annual reports of the top ten global shipping companies.

We choose annual reports rather than sustainability reports for a number of reasons. First of

all, the compilation of sustainability reports is typically voluntary throughout the world

(Parliamentary library, Australia, 2010). By contrast, annual reports are mandatory. Second,

when we searched for the sustainability reports of the selected shipping companies, we did

not find the sustainability reports for all of our selected companies. A number did not produce

such reports. So to ensure conformity, we have used the annual reports. Finally, annual

reports have been used by many social accounting researchers such as Hackston & Milne,

1996; Gray, et al., 1995; Unerman, 2000; Deegan & Gordon, 1996; Deegan & Rankin, 1996;

Islam and Deegan, 2008; Kamal and Deegan, 2011; among others.


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We have selected the top ten shipping companies from the The Alphaliner Top 100 2 list.

We have collected the annual reports of these top ten shipping companies for the year 2010

and analyse these reports to see how (or if) these shipping companies describe/ explain what

happens to their ships at the end of their lifecycle. For the purpose of our research we are

going to select only those shipping companies that are listed on security exchanges and have

their annual reports available on a website. It should be stressed again that the results in this

paper relate to annual report disclosures only. Whilst not yet undertaken, we will nevertheless

broaden the scope of our analysis to investigate other disclosures being made by the

companies (such as sustainability reports, and other publicly available information reported

through the respective companies websites) even though we know that these alternative

disclosure media will not be consistent across the sample companies. However, annual

reports are the main document addressed to shareholders and arguably shareholders will have

a right-to-know, or an interest in the lifecycle of the ships under the companies control.

Hence such disclosures arguably should appear in the annual report.

To investigate the extent of disclosure of sample shipping companies, we developed an index

to measure the extent of disclosure (accountability) of the shipping companies. We identified

a number of documents outlining the social and environmental practices and related

guidelines to be followed by the shipping companies for ship recycling. We found thesedocuments relevant as these were mentioned by prior literature (see for example, Cairns,

2007) and were released by various NGOs and international monitoring bodies for shipping

companies. These documents address many issues that the shipping companies should

arguably disclose to demonstrate various aspects of their social responsibility and these

documents typically identified particular disclosures items that would be expected to be

found within the shipping companies related to ship recycling.Based upon these documents

we have developed an index to measure the extent of disclosures of the shipping companies.

Within our index we have sixty specific issues related with ship recycling. Specifically, we

reviewed the following documents to prepare the index.

Basel Convention on the Control of Transboundary Movements of Hazardous Wastesand their disposal (1992).

Industry Code of Practice on ship recycling (February, 1999).2

The Alphaliner TOP 100 provides a constantly updated ranking of the 100 largest container/liner operators aswell as global capacity figures taking into account the fleets of virtually all container operators worldwide.


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Draft technical guidelines for the environmentally sound management of the full andpartial dismantling of ships (Basel Convention Working group, 2001).

A Guide for Ship Scrappers: Tips for Regulatory Compliance (US EPA) (Summer,2000).

The IMO Guidelines on Ship recycling by Greenpeace International (2003). Information resources on Recycling of ships by International Maritime Organization

(IMO, 2011).

Hong Kong International convention for the safe and environmentally sound recyclingof ships (2009).

Safety and health in ship breaking guidelines for Asian countries and Turkey, byInternational Labour Organization (ILO office, Geneva 2001).

International Convention for the Prevention of Marine Pollution from Ships(MARPOL, 1978).

Basel Action Network (BAN, 2006). The criteria for the inclusion of a particular itemin our index should be that this particular item must be present in at least two of the

documents. After preparing the index, then we conduct annual report content

analysis to understand the social and environmental disclosure practices of the

shipping companies.

We use the content analysis (Krippendorff, 1980) methods to evaluate the disclosure

practices of the shipping companies regarding their end-of-life ships. Krippendorff (2004)

states that content analysis aims to reduce the raw data into manageable amounts for analysis.

He defines it as a research technique for making replicable and valid inferences from texts

(or other meaningful matter) to the contexts of their use (p. 18). Certain technical

requirements, for example, the unit of analysis and the basis of classification have to be

clearly defined for content analysis to be effective (Guthrie et al, 2004; Guthrie and

Abeyeskera, 2006).

The common units of analysis used by the accounting researchers includes word counts (e.g.

Campbell, 2003; Deegan & Gordon, 1996; Deegan & Rankin, 1996; Islam and Deegan,

2008), sentence counts (e.g. Buhr, 1998; Patten & Crampton, 2004; Perrini, 2005; Hackston

& Milne, 1996), page proportions (e.g. Gray, et al., 1995; Unerman, 2000) and frequency of

disclosure (e.g. Cowen, et al., 1987; Ness & Mirza, 1991; Haque and Deegan, 2010). We are

using frequency of disclosure as our unit of analysis since we primarily focus on thepresence or absence of particular social and environmental information. If the company


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disclose particular social and environmental information we assign them a score of 1

otherwise 0. The theoretical maximum would be 60, and the minimum would be 0.

8. FindingsWe have found 260 items out of 600 (10*1*60) have been disclosed - that is, the disclosure is

about 43% (Figure 1). Specifically, we have found the highest amount of disclosure for

CSAV shipping company followed by COSCO and Hapang-Lloyd. CSAV discloses 36 items

out of 60, which is 60%, COSCO provides 56% and Hapang-Lloyd provides 55%. The least

amount of disclosure is found in the case of Fedex and Maersk which is only 13 out of 60

(about 22%). CMACGM disclose about 26% whereas UPS, Evergreen and Mediterrean have

almost same amount of disclosure which is approximately 51% (figure 1).This disclosurelevel gives us the idea that shipping companies disclosure about ship recycling related

information is relatively extensive for some of the organisations. Given the exploratory

nature of this research, such results therefore provide the basis for subsequent research (such

as considering the benefits of disclosure, why some items are disclosed and others are not,

and so forth). When we considered the nature of the disclosures we also found that the

disclosures are predominantly positive and were reflecting a positive perspective of the

organisation rather than identifying negative aspects of the social or environmental

performance of the companies. This is consistent with the view that the disclosures are

intended to secure/ or maintain the legitimacy of the organisation, and/or to meet community

expectations (Deegan, 2002; ODwyer, 2002).

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36

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34

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30

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Figure 1: Overall disclosure by top ten shipping companies

However, there are significant variations in respect of the disclosure of information related to

ship recycling among the shipping companies. Whilst at this stage we are speculating, the

apparent variation in disclosure patterns could be explained by the maturity of the ships

within the shipping companies. If the shipping companys particular ship or vessel is going to

mature/end its life soon, then possibly the organisation will disclose more information than

other companies. Therefore, perhaps COSCO, CSAV and Hapang-Llyod might have some

ships which are nearing the end of their lifecycle and that is why they disclose relatively more

information. On the other hand, Fedex and Maersk have relatively newer ships and there is

less likelyhood that some of their ships are going to be scrapped in the near future, so their

disclosures are relatively less. Most of the ships which are made up of in early seventies tolate eightys need to be recycled now, as these ships have useful life of about 30 to 40 years.

So we believe that the life of ships within a shipping company is a potential factor for

disclosure of information regarding the ship recycling or dismantling. Again, however, this is

conjecture but is a potential explanatory factor.

While reviewing the annual reports, we did not find any evidence that any of these top ten

shipping companies have exported their wrecked ships for recycling to any shipyard of

Bangladesh, or indeed, anywhere else. Such information would be of a negative nature and

would be inconsistent with a great deal of the other disclosures which were predominantly

positive in nature. However, we do believe that some of their old ships must have been sent

to some shipyards for dismantling. Subsequent research will involve various sources of

information to try and trace scrapped ships back to their original owners. This in turn might

show that companies within the sample changed their ship name or country of origin while

exporting the old ships for dismantling to escape from related legitimacy threat (again we

emphasise that there is a deal of research still to be undertaken as part of this research

project).

While investigating the available rules and regulations regarding ship recycling we found no

uniform international mandatory rules for ship recycling and apparently shipping companies

are taking this opportunity to sail their out of date ships in the safe heaven, which are located

mainly in the developing countries like Bangladesh where there is weak regulatory regime

and poor enforcement of laws. In the absence of international mandatory rules, ship owners

can and do avoid their responsibility for cleaning and safe dismantling of end-of-life ships.


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Most of the cases they are changing their flags or state names to avoid related legitimacy

threat.

During our research we find some stakeholders who are putting pressure for the disclosure of

ship recycle related information of shipping companies. Notable ones are Greenpeace, IMO,

and Basel Action Network among others. As we find about 43% disclosures, it is our

understanding that these disclosures are intended to satisfy these powerful stakeholders.

Subsequent research will investigate whether the disclosures being made are actually

satisfying the demands or expectations of various stakeholder groups.

9. Concluding remarksThis paper provides the results of some preliminary work that is being undertaken as part of a

broader research project that investigates various accountability issues associated with end-

of-life ships. The ship breaking industry is a rising industry in Bangladesh and at the same

time it is economically significant for the country as it provides almost all of its steel demand

and provides huge amount of employment. We have found that the level of disclosures is

relatively extensive for some of the organisations and the nature of the disclosures are

predominantly positive and therefore reflecting a positive perspective of the organisation.

However, and importantly, there was no indication by the shipping companies about where

the ships actually went at the end of their life cycle. Given the many issues associated with

ship breaking we are of the view that failure to indicate where ships ultimately are scrapped

reflects poor accountability.

As this is a part of our broader study, we concluded in this part that the global shipping

companies disclosure about ship recycling related information is relatively extensive on

average (with low levels of disclosure from some companies) and it possibly varies according

to the ships life maturity within the shipping company. However, we did not find any

evidence that these shipping companies are exporting their end of life ships to Bangladesh or

any parts of the world for dismantling their end of life ships. In further research, we intend to

find out the actual shipping companies which are exporting their end of life ships for

dismantling to the ship yards of Bangladesh. This is not a straight forward exercise (for

reasons discussed in the paper) but we intend to pursue this issue through in-depth interview

with various stakeholders including representatives from various local NGOs and news media

outlets. So, in the next stage we will collect data from the local ship breakers of Bangladesh

and their association called Bangladesh Ship Breakers Association (BSBA). We will conduct


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in-depth interview with Greenpeace (an international NGO), YPSA (Young Power for Social

Action, local NGO), Bangladesh Environmental Lawyers Association (BELA) and with the

workers working within the ship breaking yards of Bangladesh.

At present we are collecting data by conducting in-depth interview with different

stakeholders to get more insights about the ship breaking activities and surrounding social

and environmental issues within the ship breaking yards of Bangladesh. We hope to provide

further insights in near future!


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Appendix-1: Ship recycling related information disclosure index (SRIDI) .

1. Disclosure of information regarding protection of occupational health and safety.

2. Disclosure of policies regarding how to prevent, minimize and, to the extent practicable, eliminate

accidents, injuries and other adverse effect on human health.

3. Disclosure of policies regarding safety for hot work, including cleaning, removal of toxic or highly

flammable paints from areas to be cut and testing before any hot work is performed.

4. Information regarding how the ship will be inspected and declared safe for hot work.

5. Information regarding the training procedures of personnel involved in ship dismantling.

6. Disclosures regarding adequate emergency response, marking of all hazardous materials and on-

breathable spaces.

7. Company makes disclosures regarding the provision of appropriate and sufficient use of PersonalProtection Equipment (PPE).

8. Company makes disclosures regarding disclosure of information such as safety records, training

programmes for workers and assessment of the work quality.

9. Company makes disclosures that the recycling facility has sanitation and rest room capability for

minimum of 50 workers, facility of adequate and clean drinking water; workers change room; first aid

facility; fire fighting facility and emergency response system.

10. Company makes disclosures that the recycling facility has material handling equipment and a list

of the trained labours of all disciplines including lighting, gas cutting, waste handling etc.

11. Company makes disclosures that the recycling facility has Asbestos and glass-wool handling,

removing and storage facility.

12. Company makes disclosures that that working procedures and operations are undertaken in a safe

manner, for example, safe access to all areas, compartment, tanks, etc. and ensuring breathable

atmosphere.

13. Company makes disclosures that Occupational Health and Safety (OS&H) management systems

is implemented by each ship recycler; Protecting the safety and health of all workers of the facility by

preventing work related injuries and diseases, ill health and incidents.

14. Company discloses detailed Ship Recycling Plan- a document that details how the ship will be

dismantled.

15. Company makes disclosure about its policy in relation to the selection of a recycling

16. Company makes disclosures that the ship recycling facility must maintain and monitor the ship in

a gas free condition and approved fit for hot work during the whole process of ship recycling.

17. Company disclose that the recycling state must check every ship before it accepts the ship for

recycling.


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18. Company disclose that it ensures a recycling facility that have the capability to recycle the ships

in a manner consistent with national legislation and relevant international conventions, for example,

the ship breaking rules of Bangladesh, 2011.

19. Company disclose that it will select a recycling facility that has the ability to handle safely, and

dispose of properly, any potentially hazardous materials that may be present in the ships such asAsbestos, PCBs, halons, petroleum products, and other residues.

20. Company disclose that it ensures minimizing the use of potentially hazardous materials and waste

generation during a ships operating life.

21. Company makes disclosure about the assuming the responsibility to address the issue of

environmental and worker protection in ship recycling facilities.

22. Company makes disclosures that it ensures final survey and certification before sailing its ship for

recycling.

23. Company makes disclosures that on completion of the final survey, an international Ready for

Recycling certificate must be issued by the flag state.

24. Company makes disclosures regarding obtaining Green passport or green design before sailing its

ships for dismantling.

25. Company disclose its policy to take due account of the ships ultimate disposal when designing

and constructing a ship, by using materials which can be recycled safely and which are

environmentally sound.

26. Company makes disclosures about its design of ships and ships equipment to facilitate recycling

and removal of hazardous materials.

27. Company disclose the information that its ship recycling plan properly reflects the information

and that the facility is properly authorized.

28. Company makes disclosures that its Recycling facilities are authorized and it will take the form of

an IMO document of Authorization for ship recycling facilities.

29. Company disclose information that it will take the responsibilities for decontamination prior to

recycling.

30. Company has disclosed its policies that it minimized the use of hazardous substances in theconstruction of new ships and their equipment.

31. The company has disclosed its policy that ship recycling activities do not harm the environment

at any cost.

32. Disclosure to enhance ship safety, protection of human health and the environment throughout a

ships operating life.

33. Company makes disclosures that it will not to allow exporting hazardous waste to a state if the

exporting party has a reason to believe that the waste will not be managed by the importing state in an

environmentally sound manner.


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34. Company makes disclosures that shipowners are obliged to ensure the availability of adequate

disposal facilities within the boundaries of ship breaking yards.

35. Company has disclosed its environmental practices prior to dismantling, particularly

decontamination of the ship before its final voyage for scrapping.

36. Company makes disclosure that it will get permission to beach a vessel, berthing certificate,

Environmental Clearance Certificate from the importing state or territory.

37. Company makes disclosure that its environmental policies are consistent with the environmentally

sound and efficient management of hazardous wastes.

38. Company has specific disclosure regarding the upholding and protection of human health and

environment against the adverse effects which may result from the movement of hazardous waste.

39. Company discloses that after ship has been accepted, the recycling state is responsible for

monitoring the safe handling of any hazardous materials generated during the recycling process.

40. Company makes disclosures that it has a policy of compliance that if it is the last owner, it should

remove all asbestos and other toxic materials on board at delivery to the facility.

41. Company has disclosed its environmental control procedures at ship recycling facilities.

42. Company makes disclosure that hazardous wastes and other wastes be accompanied by a

movement document from the point at which a transboundary movement commences to the point of

disposal.

43. Company makes disclosure of its policy to co-operate with the importing country of end of life

ships and make available information upon request with a view to promoting the environmentallysound management of hazardous wastes and other wastes, including harmonization of technical

standards and practices for the adequate management of hazardous wastes and other wastes.

44. Company makes disclosure that it will ensure an Environmental Management Plan for the ship

dismantling facility to minimize effects and to safeguard the environment.

45. Company has disclosed its policy to ensure that it will take into account social, technological and

environmental aspect while generation of hazardous wastes and other wastes.

46. Disclosure of policies regarding minimum notification and prior written consent requirement.

47. Company makes disclosure that prior decontamination of wastes on ship dismantling and

minimize the transboundary movement of hazardous waste.

48. Company makes disclosures that the prohibition of disposal of industrial wastes and of radioactive

waste at sea.

49. Company makes disclosures about the prevention of pollution due to hazardous wastes arising

from ship recycling and, if such pollution occurs, to minimize the consequences thereof for human

health and the environment.

50. Company disclosed that the transboundary movement of hazardous wastes and other wastes is

reduced to the minimum.


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51. Company makes disclosures that the proper labelling, packaging, and transport of hazardous

wastes, so at the end of life of vessels the asbestos, PCB waste etc in the vessel must be properly

identified.

52. Company makes disclosure that it ensures the safe and legal dismantlement of ships.

53. Company makes disclosures to ensure that all hazardous materials such as Asbestos, PCBs and

other organic pollutant (Pops) should be removed prior to a ships final voyage.

54. Company makes disclosures about maintaining an inventory of potentially hazardous materials on

board.

55. Company makes disclosures about the design the ships and ships equipment to facilitate recycling

and removal of hazardous materials in pollution free mode.

56. Company makes disclosure that it minimizes the use of potentially hazardous substances to health

and the environment

57. Company makes disclosures that it minimises waste generation during the life cycle of the ship.

58. Company has disclosed its policy to green design or adopt cleaner production or technologies to

prevent hazardous waste generation.

59. Company has disclosed its policy to follow the convention on the prevention of marine pollution

by dumping of waste and other matter into the sea.

60. Company has disclosed its policy not to allow the export of hazardous wastes to developing

countries, which have prohibited by their legislation all imports of hazardous wastes.

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