Eleven major shipping banks have joined a global framework called the Poseidon Principles to integrate climate considerations into lending decisions in line with IMO’s greenhouse gas (GHG) strategy to slash the industry’s carbon footprint by 50% by 2050. The banks have a combined shipping portfolio worth roughly $100bn that will now prioritise clients investing in greener ships.
The founding signatories are Citi, Societe Generale, DNB, ABN Amro, Amsterdam Trade Bank, Credit Agricole CIB, Danish Ship Finance, Danske Bank, DVB, ING and Nordea, and represent around 20% of the global ship finance portfolio. Additional banks are expected to join in the near future, including Asian banks.
“As banks, we recognise that our role in the shipping industry enables us to promote responsible environmental stewardship throughout the global maritime value chain. The Poseidon Principles will not only serve our institutions to improve decision making at a strategic level but will also shape a better future for the shipping industry and our society,” said Michael Parker, global industry head of shipping and logistics at Citi and chair of the Poseidon Principles drafting committee.
“The Poseidon Principles offer significant benefits to the global shipping industry and society and they allow us as banks to align and de-risk our portfolios in line with shipping’s green transition,” added Paul Taylor, global head of shipping and offshore at Societe Generale Corporate & Investment Banking and deputy chair of the Poseidon Principles drafting committee.
The Poseidon Principles will establish a common baseline to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with adopted climate goals, which also serves as an important tool to manage critical investment risks, and the principles are intended to evolve over time as the IMO adjusts its policies and regulations and when further adverse environmental and social impacts are identified for inclusion.
The Poseidon Principles are applicable to lenders, relevant lessors, and financial guarantors including export credit agencies.
Søren Toft, chief operating officer at A.P. Møller-Mærsk, said: “Shipping’s decarbonisation will require unparalleled innovation. A modern ship is a highly capital-intensive asset with a typical life span of 25-30 years. To deliver on ambitious climate targets, zero-emission vessels will need to enter the fleet by 2030. This leaves us only 10 years to develop the new marine fuels, propulsion technologies and infrastructures that will be required. The Poseidon Principles will help us catalyse this transition.”
Dr Tristan Smith from UCL Energy Institute, who was involved in the writing of these financing guidelines, told Splash today: “This is clear evidence that the signal sent by the IMO in its initial strategy – that the sector’s rapid decarbonisation is inevitable – is working. Whilst others imagine decarbonisation is something they can ignore a bit longer, these banks are taking important steps to manage their forthcoming risks and opportunities.”
Greg Atkinson from Japan’s Eco Marine Power applauded the news, telling Splash: “The linking of shipping finance with environmental standards by a number of global banks will help encourage the building of more energy efficient ships.”
VIDEO: 11 major shipping banks will for the first time integrate climate considerations into lending decisions. Learn why.
— Poseidon Principles (@newshipfinance) June 17, 2019