Atlas Corp., the world's largest independent owner and operator of containerships, sees its outside law firms as crucial to its ESG responsibilities
Providing legal advice is now only about one-quarter (27%) of what corporate legal officers (CLOs) do, according to the 2023 survey of CLOs by the Association of Corporate Counsel (ACC). In fact, at least 20% of CLOs also oversee one or more of the following functions: compliance, privacy, ethics, risk, government affairs, environmental, social & governance (ESG) initiatives, and cybersecurity responses, according to the ACC.
One critical function of the corporate law department that spans all of these areas is the legal function’s central role in ensuring organizational compliance and robust corporate governance. And an increasing focus on proper corporate governance — a key pillar of the G in ESG — suggests that corporate law departments’ role in enterprise ESG strategies within their companies will increase.
Andrew E. Derksen, General Counsel and Board Secretary at Atlas Corp. — the largest independent containership owner and operator in the world — can attest to this. Derksen joined Atlas in 2022 and is based at the corporate executive offices in Hong Kong and spends significant time at the company’s operating offices in Vancouver. He came to the company with two decades of international management and functional experience in the oil and gas, automobile manufacturing, and renewable energy industries, following his time as a corporate lawyer at Faskens in Toronto and Herbert Smith Freehills in Paris.
Supporting Atlas’ ESG strategy
With physical operations in Hong Kong, Mumbai, and Vancouver and more than 140 existing containerships and 45 vessels under construction (with a total fleet value in excess of $10 billion), Atlas moves containers for the world’s largest liner brands across all oceans. Atlas contracts with its customers on long-term charter-party agreements (with contracts of often 10 years or longer), giving the company a long-term view on its strategy, financial performance, and operations.
With its vessels continually operating in all four hemispheres and with dozens of different ports of call as part of regular vessel loops, it is of central importance to Atlas to remain strong in its ESG commitments in order to retain social license to operate — and more specifically, in order to not only comply, but to lead the industry as an ESG-focused vessel operator and owner. Derksen indicates that Atlas prides itself on staying ahead of its competitors in terms of its ESG strategy, technology, and innovation.
For example, Derksen says that Atlas designs its vessels using cutting-edge naval architecture and technology, leveraging the most advanced paints on the body of vessels to reduce the company’s fuel consumption. What paint is used on vessels matters because certain types move through the water easier, reducing friction and using less fuel in the process, he explains.
Further, the company is designing and providing low carbon emission dual -fuel propulsion systems on its vessels. Increasingly, the company is deploying methanol, dual-fuel LNG engines (those that use natural gas is stored in liquid state), and in the future, will potentially use ammonia and other non- or low-carbon emitting vessels. In addition, Atlas offers technical solutions (such as methanol retrofits) and guidance to its customers to help them convert their carbon-based fuel systems into methanol fuel systems to help the shipping industry as a whole reduce its carbon footprint.
Role of the in-house legal team
The in-house team under Derksen’s leadership plays a major role in Atlas’ ESG strategy, supporting the company’s technical and operating leadership and executing on the company’s corporate and public obligations. The executive leadership team decides on strategic priorities and makes the commitments for individual ESG issues and for regulatory obligations, which are set by the company’s primary regulator, the International Maritime Organization, as well as the various port state authorities, international agencies, and other stakeholders with whom Atlas works. The legal and compliance function helps to execute these priorities, ensuring proper corporate governance around the environmental and social goals.
In a sense, the legal team acts as a guardian over the company’s ESG activities, making sure that regulatory discipline is strong. “We are informed by the different stakeholders. One of my jobs as GC is to survey forces and factors shaping the larger environment within which we operate, to discern the trends impacting the company over the short-, medium- and long-terms, and to help lead and set a path for the company,” Derksen explains. “Practically, that means knowing what is coming from the regulators and customers to support our commitment to being a best-in-class provider and that means staying ahead of the curve as a brand differentiator from our competition.”
The legal and compliance departments work closely with internal stakeholders and the community, for example, to make sure that Atlas’ procurement processes are best practice. “We carry out audits on clauses and within crew-manning agreements (as many of our crew come from the Philippines or India), apply best-in-class standards in regard to issues such as anti-corruption and Modern Human Slavery compliance,” says Derksen. “It is critical that crew get fair treatment during the hiring process, that their rights are upheld and conditions are fair, and that we implement processes and procedures to minimize the risk that workers are taken advantage of, even prior to their being hired by Atlas, such as by local brokers and agents.”
Collaboration plays a vital role
Outside law firms are important partners to the legal function as it supports Atlas in its quest to maintain a competitive edge with its responsible business strategy and compliance. Derksen describes on how he relies on law firms to assist in areas such as:
- advising on Securities and Exchange Commission reporting and the accounting and auditing rules as a public company listed on the New York Stock Exchange;
- ensuring the in-house legal team is meeting all of its reporting requirements for international regulations and for the jurisdictions in which Atlas operates; and
- supporting the auditing of governance and operational practices around specific ESG issues, such as the Foreign Corrupt Practices Act in the United States and the Modern Slavery Act in the United Kingdom.
While we often hear from US law firms that ESG is not a money-maker, outside of the US, it does generate work from companies such as Atlas. Indeed, ESG strategies could be a growth area for law firms if they choose to pursue it.
Perhaps by adopting a key pillar from Atlas’ strategy to take a long-term view is necessary when it comes to ESG as a money-maker, law firms may be able to demonstrate greater purpose to the Earth and humanity, while highlighting great client service.
“Our role [in company’s ESG strategy] is not just compliance,” Dersen says. “It is to lead and help us to act as a responsible community member.”