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Originally founded in 1972, Carnival Corporation & plc is the world’s largest leisure travel company.
M&G is fully supportive of the UK Stewardship Code. Principle 3 states that Institutional investors should monitor their investee companies. This will include, inter alia, engaging in specific discussions with companies on material topics, including environmental factors. Carnival was one such example of M&G operating a pro-active approach.
Industry: Leisure and travel
Headquarters: Miami, USA
Originally founded in 1972, Carnival Corporation & plc is today the world’s largest leisure travel company. The company has more than 100 ships sailing under 10 brands. They carry more than 11 million passengers a year and employ over 120,000 people.
In December 2016, Carnival, this dual-listed and FTSE 100 cruise company, was fined $40m for environmental pollution, relating to an incident dating back to 2013. We initiated a conference call with the Chief Executive and the Chief Maritime Officer to discuss this incident and its cultural implications. We followed this up with a meeting with the Chairman of their Health, Environment, Safety and Security (Board of Directors Committee), which is fully backed and endorsed by the Chief Executive. Two important developments include the fact that all the Brand Chief Executives now attend the Committee and the “one ship management programme” was delivering significant and consistent benefits across the fleet. We were reassured that such incidents do not represent a systemic culture issue for the company.
We subsequently accepted Carnival’s offer to visit their Centre for Simulator Marine Training (CSMART) located in Almere, Holland. This state-of-the-art facility, which opened recently at a cost of €75 million, provides ongoing crew and development training, with a cost in excess of $13million per annum, covering the company’s 6,500 Deck and Engineering and Environmental Officers. This is achieved by the use of sophisticated bridge and engine simulators, combined with full mock-up training rooms (including high voltage training and pollution prevention training, both of which are key risks for the company). This impressive facility has been purpose built and designed by Carnival and, we understand, is unique within the industry.
This visit reinforced our view that health, safety and the environment are key issues for them and the company remains committed to continual improvements. We consequently remain fully supportive of the company and the board as long-term investors in the business.
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