CSL ENVIRONMENTAL REPORT 2011

The CSL Group

Environmental Report 2011

CSL’S COMMITMENT TO OUR ENVIRONMENT Environmental stewardship is a fundamental corporate objective and core value at CSL and is intrinsically linked to the company’s long-term growth. As part of its comprehensive environmental policy, CSL is committed to actively pursuing opportunities to reduce its overall environmental footprint, to implementing strict internal standards, to measuring performance and to establishing targets for improvement. For CSL, continually working to improve its environmental performance and showing leadership in promoting green practices throughout the industry make good business sense and position the company for the future.

As part of its environmental policy, CSL is committed to communicating its environmental initiatives and performance to customers, suppliers and service providers in a transparent manner, and to creating awareness about the business case for all companies involved in the shipping industry to conduct their operations sustainably.

CSL also realizes that its environmental objectives cannot be reached in isolation of industry stakeholders, NGOs, governments and regulators. Partnership building, consultation and effective communications are recognized as essential to promoting sound public policy and industry standards in marine transportation.

Published since 2008, the CSL Environment Report was created to communicate, through the annual reporting and measurement of its environmental performance, CSL’s fundamental commitment to continually reduce the environmental impact of its operations and those of the marine shipping industry.

For more information about our environmental policy visit: www.csl.ca/Environmental_policy.html

Cover photo: The CSL Laurentien, a self-unloading Laker from the Canada Steamship Lines fleet, sails at sunset along the St. Lawrence Seaway.

CSL GROUP ENVIRONMENTAL REPORT 2011

Table of contentS

Letter From The Chair of The CSL Sustainability Committee

3

We Believe in Authentic Change

5

State-Of-The-Art Technology To Drive Environmental Performance On Csl’s New Trillium Class Vessels

6

Reducing Our Air Emissions

8

Reducing Our Impact On Biodiversity

11

Environmental Management, Standards And Milestones

12

Employee Engagement

13

2011 Performance

14

Overview Of 2011 Environmental Footprint

15

2012 Goals

16

The CSL Brisbane, CSL Australia’s most recently converted hybrid self unloader, carries gypsum to Sydney, Australia . The vessel is equipped with fully enclosed transverse conveyors and discharge boom, and the hoppers are fitted with dust suppression equipment. For powder cargoes, grids are fitted in the hoppers to further reduce the risk of dust blowing into the air.

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CSL GROUP ENVIRONMENTAL REPORT 2011

LETTER FROM THE CHAIR OF THE CSL SUSTAINABILITY COMMITTEE Communities around the world expect marine transportation companies, whether local or global, to conduct their operations in a manner that is respectful of the environment. At CSL, we share this expectation and have made it a corporate goal to seek practices and technologies that will enhance our environmental performance. Moreover, we have become a world leader in promoting short sea shipping as a key contributor to economic growth and the reduction of greenhouse gas (GHG) emissions.

David Martin

During 2011, CSL made significant strides in enhancing our environmental performance by investing in fleet renewal and research and development. Construction began on our seven new Trillium Class vessels which, when delivered in 2012-2013, will upgrade the CSL fleet with the most technologically advanced ships on the market. Employing state-of-the-art low-emission power and propulsion sources, the three Panamax vessels and four Lakers are expected to reduce our global fleet’s GHG emissions levels.

While the Trillium Class newbuild project is an important feature of CSL’s long-term environmental strategy, we are also fully committed to improving existing fleet performance. In 2011, CSL undertook a number of measures to improve efficiency by putting in place fuel monitoring and waste heat recovery systems, installing more efficient cooling pumps, and replacing onboard lighting with greener alternatives.

Air quality and climate change remain major concerns for communities worldwide and CSL recognizes the adverse effects marine fuel sulphur and emissions can have on the environment.

While world-wide fuel sulphur levels remain in the 4.5% range, CSL’s 2011 average shipboard fuel sulphur content was less than half the global average. By applying measured operational adjustments, Canada Steamship Lines also has reduced GHG emissions by 23% since 1990 on a tonne per mile basis, and we are exploring new technologies to improve performance. Testing has begun on the cutting-edge Ecospec exhaust gas scrubber – which aims to reduce SOx, NOx and CO2 – to help determine feasibility for CSL fleet-wide application.

Over the course of the year, CSL worked to raise the profile of short sea shipping as the most environmentally sound and least GHG emitting mode of transporting bulk cargo. No one can dispute the fact that a vessel can move a tonne of cargo further, using less fuel and releasing fewer emissions than any other mode of transportation. According to the U.S. Maritime Administration 2011 Report to Congress, trucks, on average, achieve 155 tonne-miles (249 tonne-km) of freight per gallon, rail achieves 413 tonne-miles (665 tonne-km) of freight per gallon, and a tug-and-barge operation achieves 576 tonne-miles (927 tonne-km) of freight per gallon. However, short sea ships such as those in the CSL fleet, can achieve rates in excess of 1,100 tonne-miles (1,770 tonne-km) of freight per gallon, making them seven times more efficient than truck and two-and-a-half times more efficient that rail.

CSL has assumed a leadership role in educating governments and the public on the need to foster the competitive advantage of short sea shipping through public policies that promote greener transport solutions. We also remain committed to continually improving our environmental performance and driving industry change in an open and transparent manner.

In the end, communities, governments and industry stand to gain from sustainable business practices that respect our environment and lead to economic growth. We believe that the economy and the environment are inextricably linked.

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By providing fully enclosed cargo transfer systems, transhipment minimizes noise and dust, and protects against air and water pollution. Transhipment also eliminates the need for deep water dredging. Pictured here is CSL floating offshore transhipment platform (FOTP) Derawan operating in Indonesia.

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CSL GROUP ENVIRONMENTAL REPORT 2011

WE BELieVE IN AUTHENTIC CHANGE Public opinion worldwide regarding corporate sustainability programs is going through a “sea-change” as people grow increasingly wary of ‘greenwashing’. At the same time, public perception and attitudes regarding the marine transportation sector’s relative impact on the environment remains negative. In fact, recent studies show that the public remains largely unaware that, when compared with rail and road, the social and environmental footprint of marine transportation – in particular short sea shipping – is substantially lower in a number of categories including air emissions, accident ratios, noise and nuisance.

Kirk Jones Vice President, Sustainability, Government and Industry Affairs

At CSL, we take our commitment to sustainability and our accountability to the public very seriously. When it comes to greening our operations, our pledge is genuine and transparent, and based on significant and measurable investments in environmentally sound practices and technologies.

Beginning with the owners, CSL’s environmental conscience flows through every level of the organization, to the Board of Directors, executive and management teams, vessel crews and office staff. We aim to ensure that the impact of our business does not undermine the natural environment or the communities in which we live and operate. We also embrace our corporate responsibility to give back to the broader social and ecological fabric that has allowed CSL to grow.

Reporting our environmental performance in a public and transparent manner has become the cornerstone of CSL’s sustainability framework and a critical element of our accountability to the global communities in which we operate. Since 2008, the CSL Environmental Report has presented the company’s annual environmental goals, results, initiatives, projects and community engagement in a transparent manner.

Leading by example, CSL is working to align the marine transport sector with the common objective to reduce the industry’s environmental footprint. While CSL continues to take a proactive approach to environmental reporting and continues to promote the virtues of short sea shipping, the need to educate the public and governments on the environmental performance and socio-economic contribution of marine transportation is clear and vital.

A highlight of recent efforts in this regard is a joint study commissioned by members of the marine shipping industry in partnership with U.S. and Canadian government agencies on the socio-economic impact of the Great Lakes and Saint-Lawrence Seaway System. Among its many findings, the study found that marine commerce in the Great Lakes supports 227,000 jobs and contributes $33.5 billion in revenues, and $4.6 billion to federal, state/provincial and local tax revenues. The study further concluded that short sea shipping is the best choice for environmentally-minded companies to transport goods and commodities.

Other efforts to educate governments and the public on the benefits of marine transport include the launch of Marine Delivers, a Canada-U.S. industry collaboration to promote shipping on the Great Lakes Seaway System. In 2012, CSL, in partnership with the World Wildlife Fund (WWF), will also embark on an “Employee Engagement” strategy to encourage CSL crews and employees to make sustainable decisions and choices at work and in their daily lives.

While CSL continues to enhance its environmental performance through investments in green technologies and practices, we understand that our employees, our communities and our governments are the key constituents who can transform cultures and perceptions. By reaching out and supporting educational efforts and campaigns to raise awareness and promote sustainable practices, our goal is to maintain an active role as a driver of real change and tangible results.

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STATE-OF-THE-ART TECHNOLOGY TO DRIVE ENVIRONMENTAL PERFORMANCE ON CSL’S NEW TRILLIUM CLASS VESSELS In early 2011, construction began on CSL’s new Trillium Class vessels at the Chengxi Shipyard in Jiangyin, China. Throughout 2012-13, four new self-unloading Lakers will be delivered to Canada Steamship Lines and CSL International will welcome three Panamax-size specialty self-unloading vessels. The latter three vessels will join the CSLI Pool along with two other ships of the same class and design being constructed by Klaveness under CSL supervision.

Inspired by the three petals of its namesake flower, the Trillium Class represents the three tenets of CSL’s sustainability philosophy as well as the three areas in which the new vessels will excel: fuel efficiency, operational performance and environmental sustainability.

CSL recognizes that investing in sustainable technologies makes good business sense not only because it reduces the environmental impact of operations, but because it significantly improves operational and energy efficiency. The Trillium Class is a reflection of CSL’s corporate philosophy whereby the protection of the environment is inseparable from the long-term growth and viability of the company.

Featuring the most advanced technology available in the industry today, the Trillium Class vessels have been built to respond to the evolving business needs of customers with the most environmentally-friendly solutions. In line with CSL’s global approach to environmental sustainability, both the Trillium Laker and Panamax vessels, though of different sizes, will be equipped with the same latest-generation technology. From reductions in NOX, SOX and other air emissions, to fuel efficiency and waste and pollution management, CSL’s new ships will meet or exceed compliance to current and anticipated environmental regulations.

Beginning with the hull, the Trillium custom design enhances fuel efficiency and manoeuvrability by featuring an innovative cylindrical type bow and an aft end configuration with stern and rudder bulbs, and large propeller diameter. A new high quality hull coating increases speed and power by removing any attached fouling with TBT-free antifouling biocides, thus preventing marine growth with no negative impact on the environment.

Trillium ships feature IMO Tier II main engines, more powerful than any comparable vessel engine and specifically conceived to increase fuel efficiency and control NOx and particulate matter emissions.

The innovative use of variable-frequency drives ( VFD) on the new vessels enhances thruster speed and power control, and reduces pollution risk by eliminating the need for hydraulic oil in the thruster propellers. The VFD also better adapts the ship to long passages in restricted waters by keeping the machinery off, (less idling time) but always within seconds of being available. Utilizing “just enough” power to control any process, including thruster, ventilation, A heavy lift barge crane lifts a mid-ship modular section of a Trillium Class Laker.

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CSL GROUP ENVIRONMENTAL REPORT 2011

ballasting and cooling instead of running at full speed, the use of VFD means fewer generators have to be on line to start machinery, which results in reductions in fuel consumption.

The introduction of Power Take-Off (PTO) generation from the main engine is also more efficient and economical as it reduces the running hours and fuel consumption of auxiliary engines.

The Trillium design features a comprehensive fuel management system that allows for the real-time monitoring of fuel oil consumption for optimum operating ranges. The system also evaluates other performance influencing factors including hull fouling, propeller roughness, and the functioning of currents and the main engine.

The new VFD-driven self-unloader (SUL) system allows for soft starting and has the ability to precisely adjust unloading rates to meet customer demands. Dust suppression is also significantly enhanced on the Trillium class vessels through feeder gates, boom dust enclosures, dust collectors and a foam spray dust suppression system.

Extensive oil pollution prevention measures have been put in place including the installation of a centrifuge-type Oily Water Separator (OWS) to obtain highly efficient oily water treatment.

The OWS is fitted with a “white box” recorder to track the timing and location of treatment and discharging.

Stern tube oil has also been replaced by a waterbased lubricant on the Trillium Class ships, thus eliminating the risk of stern tube oil pollution.

Recycling CSL’s last steamship The last steamship of CSL’s fleet has retired. The Halifax was built in 1962 and converted to a self-unloader in 1980.

She joined the CSL fleet in 1988 and provided stalwart service in the iron ore, coal, grain and stone trade.

The Halifax was prepared for decommissioning under CSL’s Ship Recycling Policy, a strict set of guidelines ensuring that ships that have reached the end of their useful lives are recycled in a safe and environmentally-friendly manner. When the Halifax was towed to Turkey, the only recycling country to have ratified the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of ships, she carried with her a CSL Green Passport, a document that represents an inventory of materials present in the ship that may be hazardous to health and to the environment.

The vessel was pre-cleaned in Montreal and Lloyd’s Register certified the Green Passport in accordance with IMO guidelines on Ship Recycling. The selected shipyard is ISO 9001, ISO 14001 and OHSAS 18001 certified. It provided CSL with a ship recycling plan ensuring that hazardous waste would be properly removed and disposed, and workers would receive the appropriate training.

All available scrubbers and ballast water treatment systems are currently being studied and analysed for suitability of installation on the Trillium Class vessels. Space has been reserved on the ships and additional generator power put in place to accommodate the installation of the new scrubber and ballast water treatment systems.

Other innovative features of the Trillium Class vessel include energy efficient LED lighting, low velocity high and low water intake for ballast, the use of safer onboard refrigerant and grey and black waste water management.

Self-unloaders are already considered environmentally efficient ships. With the introduction of the Trillium Class, CSL will be taking the technology several steps further, benefitting our customers, our industry and most of all, our environment and our communities.

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REDUCING OUR AIR EMISSIONS Air quality and the effects of air emissions are growing concerns for communities around the world and the biggest environmental challenges facing the maritime industry today. CSL is committed to taking action on climate change through the investment in new emission control technologies and by creating efficiencies in such areas as fuel consumption, cooling, lighting and waste heat recovery.

Exploring the reduction of pollutants with Ecospec

In 2011, CSL signed a contract with Ecospec Marine Technology to install the CSNOx technology onboard the Spruceglen. Once certification of the system’s performance is completed, CSL will become the world’s first CSNOx freshwater environment project.

Ecospec CSNOx is the only technology that aims to effectively reduce harmful pollutants like Sulphur Dioxide (SO2), Nitrogen Oxide (NOX) and Carbon Dioxide (CO2) from vessels in a single system. This feature sets it apart from existing conventional scrubbers that increase CO2 emissions due to chemical reactions in the scrubbing process and the fact that they do not have the capability to offset CO2 emissions due to the additional energy used.

For more information, visit: www.ecospec.com.

Gaining efficiencies through ENERGY AUDITS

CSL is committed to operating cleaner and more efficient vessels. In order to target and correct lost efficiencies, CSL has conducted comprehensive energy audits on five Great Lakes vessels and one CSL International vessel.

Energy audits are used to obtain a clear understanding of how much energy is being consumed on-board our ships. Once energy consumption levels are identified, energy efficiency measures can be implemented to reduce energy demand, thereby reducing fuel consumption and air emissions.

An audit consists of testing the electrical consumption on all vessel circuits such as water pumps, lighting and hotel. Once an audit is complete, large power consumers are identified and can be addressed. Based on the audit results, the following energy saving measures were implemented: up-grading older style fluorescent lighting to more efficient modern lighting, installation of more efficient cooling pumps, installation of waste heat recovery systems and many others.

Measuring and managing our FUEL use

One of the biggest issues related to air emissions is the fact that many shipping companies don’t fully appreciate the way fuel is consumed. Seeking to better measure and manage our fuel use, CSL has begun installing fuel monitoring systems on vessels in both the CSL International and Canada Steamship Lines fleets. The systems will help guide the crews to maximize fuel efficiency and reduce stack emissions.

In total, 12 CSL vessels have been fitted with fuel monitoring systems, including seven on the Great Lakes and five on the ocean fleets. The system delivers real time data on engine fuel usage. The innovative tool allows crew members to make informed decisions to alter operational parameters, such as RPM changes, and measure resulting fuel consumption benefits.

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CSL GROUP ENVIRONMENTAL REPORT 2011

The system allows shipboard users to make immediate improvements to environmental performance by “fine tuning” the engine to use less fuel. By managing fuel consumption, the system allows the crew to identify, track, and positively affect shipboard fuel usage, thereby improving fuel THE BENEFITS OF SHORT SEA SHIPPING efficiency and reducing air emissions. reducing our footprint and costs through LIGHTING UPGRADES

As part of its greenhouse gas reduction efforts, CSL has replaced lighting in the accommodations and machinery spaces onboard several ships with more efficient lighting options. This initiative has resulted in brighter light and cheaper energy bills.

The Efficient Lights Project consists of changing the existing magnetic T-12 fluorescent units (tubes, ballast, sockets) with new T-8 electronic systems, and incandescent light bulbs with fluocompact bulbs. The return on investment is expected to be 35 percent savings on the fluorescent tubes and 80 percent on the light bulbs, with greater luminosity in each case (electricity generation costs onboard ships are typically three times higher than ashore).

The project was chosen because it reduces CO2 and costs. On a typical ship, each 100kW of power produces an average of 518 kg CO2 equivalent per season. By changing a single incandescent 100W light bulb with a 13W fluocompact light, GHG is reduced by 450 kg CO2-equivalent or $120 of fuel in a season.

Maximizing WASTE HEAT RECOVERY

Utilizing fuel to its full potential is not only about lowering fuel consumption of the diesel engine, but equally about ensuring maximum waste heat recovery. In an effort to utilize this energy, CSL installed a waste heat recovery system onboard the Assiniboine in October 2011. This system captures heat from the main and auxiliary engines jacket water cooling system and transfers it to ship heat consumers such as fuel oil heating, domestic water heating, accommodation heating and standby generator heating. The installation of the waste heat recovery system will reduce CSL’s CO2 emissions by 350 tonnes annually.

The Short Sea Shipping Coalition was founded by CSL in 2011 to promote the environmental benefits of short sea shipping over other forms of transportation. The coalition is comprised of industry leaders who depend on short sea shipping as well as short sea providers and non-government agencies. The coalition was created to advance tough performance-based air emission standards for smaller and efficient vessels in the short sea trade. The Coalition sponsored an air dispersion study that scientifically supported a performance-based 50 mile North American emission control area for smaller/lower horsepower ships.

Short sea shipping is an important component of the global strategy to improve air quality by reducing landbased congestion and subsequent air pollution from less efficient trucks and rail carriers. On the Great Lakes alone, short sea shipping contributes to: ·· $34.6 billion in economic activity; ·· 227,000 U.S. and Canadian jobs; and ·· $4.7 billion in taxes (Canada and U.S. Federal/States).

When one considers the inherent environmental value combined with economic benefits, it is easy to understand why the U.S. Department of Transportation sponsored the Marine Highway Program to better leverage the benefits of short sea shipping.

Marine Transportation Is Almost 7X More Efficient Than Truck (Miles)

1132 424 178 CSL and Short Sea Shipping Featured on Business Documentary Series The environmental benefits of short sea shipping and CSL’s role as an industry leader in promoting greener business practices are featured in a segment of the business documentary series “Profiles with Terry Bradshaw.”

The segment can viewed on CSL’s Website at www.csl.ca.

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On a global scale, many marine species have drastically declined in numbers.

The Right Whale of the North Atlantic is among the most threatened marine vertebrates. The two leading causes of right whale deaths by humans are collisions with ships and entanglement in fishing gear.

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CSL GROUP ENVIRONMENTAL REPORT 2011

REDUCING OUR IMPACT ON BIODIVERSITY CSL recognizes that marine transportation has the potential to impact natural ecosystems.

Accordingly, species and habitat stewardship is an essential element in CSL’s operational priorities and every effort is made to avoid or mitigate potential impacts. By implementing measures to reduce its own impact and by forming partnerships to support and study species and habitat conservation, CSL is working to preserve existing biodiversity.

Addressing BALLAST WATER Challenges

Ballast water is water that is pumped on and off a ship to maintain the vessel’s stability. When ballast water is loaded, small marine animals may be drawn into ballast tanks. These organisms often survive in the tanks and may be discharged in other regions, some of which may not be their native habitats. Due to the lack of natural predators, these “invasive” species may flourish in their new habitats, sometimes displacing or killing native organisms.

CSL views ballast water as two separate challenges – organism introduction and organism transfer – and therefore espouses two separate solutions to protect natural ecosystems.

Addressing the “introduction” issue, CSL enrolled in the U.S. Coast Guard’s voluntary Shipboard Technology Evaluation Program (STEP). STEP will enable CSL to install and test prototype ballast water treatment systems onboard vessels.

invasive species — a worldwide concern Combating invasive species introduction is a worldwide concern and a priority of the International Maritime Organization (IMO), which directs ships to manage ballast water through exchange in open sea and treatment technologies. These requirements have been implemented in North America and ships engaged in open sea or coastal trade need to exchange their ballast water off-shore in deep sea or flush their residual ballast water before entering the Great Lakes. Ballast water treatment technology systems are now reaching the market, and should provide suitable solutions for ocean going ships to effectively control the risk of introduction and spread of non-indigenous species in the marine environment.

CSL is currently trialling innovative filters technologies to address the risk of transfer of established species in the Great Lakes. Another crucial element to solve this issue is the adoption of science-based, harmonized regulations throughout in North America and in the Great Lakes.

On the Great Lakes, “organism transfer” is the more prominent issue. Of the approximately 180 invasive species present on the Great Lakes, only 30 are not already spread commonly throughout the lakes. In cooperation with the Ballast Water Collaborative, CSL undertook a risk-based approach with regard to established invasive species present in the Great Lakes.

Currently, CSL is working on an initiative to prevent the transfer of the approximately 30 “uncommon” species, and will be testing mechanical filters during the 2012 season on the Great Lakes in cooperation with scientists from Fisheries and Oceans Canada.

Supporting the WWF RIGHT WHALE RECOVERY PROJECT

Building on the success of the CSL-supported WWF-Bay of Fundy project, which resulted in a 80% reduction in the risk of ship strikes with whales, CSL held preliminary discussions with WWF/Memorial University on a proposed research project to better understand the major threats to whale populations in the Grand Banks of Newfoundland. The study will look at how the reproductive capacity of these whales is affected by a variety of climate change scenarios.

Key goals of the modelling study are to identify “High Conservation Value” areas for whales on the Grand Banks and strengthen whale recovery plans listed under the Species at Risk Act.

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ENVIRONMENTAL MANAGEMENT, standards and Milestones On July 13, 2011 Canada Steamship Lines, along with V.Ships Canada, earned the prestigious ISO 14001:2004 certification from Lloyds Register. The ISO 14001 is a voluntary internationally recognized standard that acknowledges a company’s commitment to environment stewardship by meeting stringent internal and external environmental standards.

EMS and ISO Certification ISO 14001 helps companies set a clear path towards sustainability. According to the International Organization for Standardization, an environmental management systems (EMS) that meets the requirement of ISO 14001:2004 enables an organization to: ·“identify · and control the environmental impact of its activities, products or services; ·· improve its environmental performance continually; ·· implement a systematic approach to setting environmental objectives and targets, to achieving these and to demonstrating that they have been achieved.”

Achieved through the development and implementation of a comprehensive Environmental Management System (EMS), the ISO certification signifies an important milestone in CSL’s commitment to conducting its operations in a responsible and sustainable manner.

As a framework, the EMS will guide Canada Steamship Lines in setting and achieving its environmental goals and continuously improving its environmental performance across all facets of the company. ISO 14001 adds a matrix of demanding requirements to improve perfor­ mance. As a condition of maintaining the certification, Canada Steamship Lines’ systems and EMS will be regularly audited for compliance.

CSL’s other divisions maintain their own EMS through their ship management company.

GREEN MARINE

Green Marine is a voluntary environmental program initiated by the St. LawrenceGreat Lakes marine industry. Through this program, participants commit to making specific improvements in their environmental performance based on predetermined criteria.

Following external verification testing carried out by Lloyd’s Register Quality Assurance in May 2010, CSL achieved a Level 3, 4 or 5 out of 5 in all of the significant environmental areas of the program. Level 1 indicates compliance with applicable regulations and adherence to Green Marine guiding principles and Level 5 represents excellence and leadership.

For more information: www.green-marine.org Achieving Quality Milestones in transhipment

CSL Asia’s transhipping operation in East Kalimantan, Indonesia achieved an annual cargo rate of over 7 million tons with safety and environment in mind. The transhipment operation was formally recognized with a safety award from Berau Coal for which environmental protection is a criteria.

CSL Asia was also selected as a finalist in Sea Trade’s Asian Awards Program, which measures performance in a variety of ways including in the areas of safety and environmental responsibility.

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CSL GROUP ENVIRONMENTAL REPORT 2011

EMPLOYEE ENGAGEMENT CSL understands that its ability to improve environmental performance throughout its operations depends on the commitment of its employees both onboard and ashore. Through education, skills-building and active participation in and support of community initiatives, CSL is striving to ensure all employees have the skills and knowledge necessary to make environmentally responsible decisions.

LEARNING ABOUT THE CSL-WWF PARTNERSHIP

The value and importance of CSL’s ongoing partnership with the World Wildlife Fund (WWF) in contributing to the protection of species at risk and natural ecosystems was conveyed to Masters and Chiefs at the CSL Winter Fleet Conference by Hadley Archer, Vice President, Partnerships at the WWF. By demonstrating how the CSL-WWF partnership has played a measurable role in minimizing the environmental impacts of shipping, the presentation helped cultivate a greater sense of interest and engagement by crews in the joint initiatives.

TRAINING AND ENVIRONMENTAL AWARENESS

CSL understands that protecting the environment is often in the hands of employees and crews. As a result, CSL and its fleet management companies – V.Ships and Inco – include environmental awareness and education as part of their onboard training modules. Elements studied include oily water separation, waste management and oil spill containment during emergency situations. On an annual basis, crews are also kept abreast of changes to local or global regulations and other relevant environmental issues.

Reducing the company’s overall footprint is also the objective of green initiatives in place at CSL’s offices worldwide. These include the recycling of paper, batteries, cans and bottles and the reduction of paper and plastics consumption.

COASTAL CLEANUP

The health of our oceans is a serious concern for CSL. In 2011, staff from both the CSLI Beverly office and the Canada Steamship Lines office in Montreal took part in coastal cleanup activities in their respective areas as part of the Ocean Conservancy’s annual global initiative. Aimed at cleaning shorelines around the world, the Ocean Conservancy has carried out this work for the past 25 years. The one-day annual event has become the largest volunteer effort for ocean health. By recording the items found during the cleanup, the Ocean Conservancy is able to get a clearer picture of the state of the world’s waterways and make informed decisions about trash prevention and cleanup strategies for the future.

For more information: www.oceanconservancy.org

CSL employees lend a hand as part of the Ocean Conservancy’s Coastal Cleanup.

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2011 PERFORMANCE Setting goals and measuring performance are tangible components of CSL’s environmental philo­ sophy and key influencers in the company’s decision-making process. Underlying these principles are the concepts of accountability, transparency, alignment with company objectives and continuous improvement. Through an issue-based agenda, CSL aims to drive innovation, gain efficiencies, increase safeguards against human error and ensure the highest environmental and safety standards.

2011 TARGETS

Status

COMMENTS

CANADA STEAMSHIP LINES Reduce CO2 emissions by 1% (in grams per tonne-mile) between 2010 and 2011

Achieved

Decreased by 1%

Maintain the fleet average sulphur content under 1.62%

Achieved

Average sulphur content of 1.33%

Reduce the risk of aquatic invasive species transfer

Achieved

GSI sampling project and filtering system

Replace household chemicals with greener products

Achieved

Alternative products in place

No major oil spill incidents

Achieved

No major oil spill incidents

Reduce sludge production by 4% compared with 2010

Achieved

Decreased by 37%

Recycle the Halifax in accordance with CSL guidelines

Achieved

Halifax recycled in accordance with CSL guidelines

Implement an environmental management system certification based on ISO 14001 standard

Achieved

ISO 14001 certified

Reduce CO2 emissions by 0.5% (in grams per tonne-mile) between 2010 and 2011

Achieved

Decreased by 0.96%

Reduce lube oil by 3%

Achieved

Reduced by 3%

Reduce/eliminate water pollution from stern tube

Achieved

One vessel was fitted with an air seal system and one vessel was fitted with bio oil

Reduce sludge by 1.5% fleetwide

Achieved

15% reduction

Reduce near miss oil spills

Not achieved

11 near-miss events related to minor on-deck hydraulic hose ruptures. Hydraulic hoses were changed on Stadacona, CSL Pacific and CSL Atlantic

Reduce and dispose sludge

Nearly achieved

80% complete. Investigating minimizing water content and recycling sludge onboard

Decrease port state control deficiencies by 20%

Achieved

Two deficiencies occurred

Achieved

2011 data collected

CSL INTERNATIONAL

CSL AUSTRALIA

CSL ASIA Establish footprint

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CSL GROUP ENVIRONMENTAL REPORT 2011

Overview of 2011 Environmental Footprint Every year, CSL reports on environmental data that is tracked and collected on its vessels and offices in an effort to present a comprehensive picture of the company’s overall footprint. The data is used to identify areas for improvement and determine the appropriate solutions and actions. While standardization remains a challenge in some areas, CSL continues to work to improve the consistency of how data is collected, verified and reported throughout all of its divisions.

ACTIVITIES AT SEA (VESSELS) CANADA CSL STEAMSHIP LINES INTERNATIONAL

CSL ASIA

CSL AUSTRALIA

Fuel oil

64,751 tonnes

76,170 tonnes

N/A

44,473 tonnes

Diesel

18,147 tonnes

6,388 tonnes

962 tonnes

3,945 tonnes

Lube oil

1,262,771 litres

930,799 litres

8,589 litres

614,366 litres

19.87 g/tonne-mile

14.36 g/tonne-mile

Not tracked

172,891 tonnes*

12.15 g/tonne-mile

8.35 g/tonne-mile

Not tracked

Not tracked

Fuel sulphur

1.33%

2.18%

<1%**

2.26%

HFC

331 kg

521.7 kg

7 kg

Not tracked

Cargo residue

348 m3

491 m3

N/A

422 m3

Garbage

4,930 m3

680 m3

9.5 m3

1,348 m3

Sludge

2,597 m3

864 m3

N/A

1,059 m3

Ballast water transfer

8,986,382 tonnes

Not tracked

N/A

Not tracked

Significant oil spills

None

None

None

None

CANADA CSL STEAMSHIP LINES INTERNATIONAL

CSL ASIA

CSL AUSTRALIA

Electricity (office)

629,769 kWh

187,942 kWh

Not tracked

26,321 kWh

Natural gas

N/A

1,482 therms

N/A

N/A

Paper consumption

15,923 kg

Not tracked

Not tracked

Not tracked

Recycled paper

14,719 kg

1,426 kg

Not tracked

48 kg

ENERGY

AIR CO2e – gross

(includes voyages in ballast)

CO2e – net (does not include voyages in ballast)

WASTE

WATER

ACTIVITIES ON LAND (OFFICES)

ENERGY

PAPER

* Total CO2e value; tonne/mile method not applied ** Only diesel oil used; less than 1% sulfur content N/A = Not Applicable

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2012 GOALS In an effort to continually improve its environmental footprint, CSL defines reduction goals and increasingly stringet targets. These goals are designed to be challenging, ambitious, and realistic. Please note that the baseline year for the targets listed below is 2011.

Goals

Reduce air pollution

Divisions

Targets

Canada steamship Lines

GHG reduction of 1.5% (in grams per tonne-mile)

CSL INTERNATIONAL

GHG reduction of 1% (in grams per tonne-mile)

CSL Australia CSL Europe & CSL Asia

Reduce our impact on biodiversity

Reduction of sulphur content in fuel to an average of 1,35% Reduction of lube oil usage by 3% GHG reduction of 0.5% (in grams per tonne-mile) Reduction of sulphur content in fuel to an average of 2.65% Establish statistical environmental footprint program Determine project seeking to apply measurable air emissions goals in 2013

Canada steamship Lines

Investigate ballast water technologies for Lakers Initiate and participate in research projects to study reproductive capacity of whales in the Grand Banks of Newfoundland.

All divisions

No major oil spill incidents Engine chemicals replacement with greener products

Canada steamship Lines

Better estimate dry cargo residue production and reduce frequency of cleaning Improve marine sanitation device discharge quality by 5%

Reduce marine pollution

CSL INTERNATIONAL

Reduction of dry cargo residue by 5% Reduction/elimination of water pollution potential from stern tube Engine chemicals replacement with greener products

CSL Australia CSL Europe & CSL Asia Canada steamship Lines Reduce waste production

CSL INTERNATIONAL CSL Australia CSL Asia

Management CSL Europe system & CSL Asia

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Better estimate dry cargo residue production and reduce frequency of cleaning Create emergency response plan Increase recycling by 2% Reduction of sludge production by 2% Reduction of plastics onboard fleet by 3% Increase sludge recycling by 2% Reduction of sludge production by 2% Improve waste stream record keeping Establish statistical environmental footprint program Establish environmental committee

CSL GROUP ENVIRONMENTAL REPORT 2011

The CSL Acadian, a self-unloading Panamax operating in the CSL International fleet, sails under the Golden Gate Bridge in San Francisco, California.

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THE CSL GROUP The CSL Group Inc. (“CSL”) of Montreal, Canada is a world-leading provider of marine dry bulk cargo handling and delivery services. Through its major operating divisions, Canada Steamship Lines, CSL International, CSL Australia, CSL Asia and CSL Europe, CSL owns and operates a highly diversified fleet of specialized self-unloading vessels, off-shore transhippers and Handysize bulk carriers, and delivers more than 70 million tonnes of cargo to industrial customers annually. CSL’s history can be traced back to 1845. www.csl.ca

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Printed on Rolland Enviro100 Print, which contains 100% post-consumer fibre, is Environmental Choice and manufactured in Canada by Cascades using biogas energy.