Major Banks Promote Greener Shipping through New Principles

FinanceIllustration; Source: Pixabay under CC0 Creative Commons license

Major shipping banks will for the first time integrate climate considerations into lending decisions to incentivize maritime shipping’s decarbonization.

The Poseidon Principles will be a global framework for assessing and disclosing the climate alignment of financial institutions’ shipping portfolios.

“As banks, we recognize that our role in the shipping industry enables us to promote responsible environmental stewardship throughout the global maritime value chain,” Michael Parker, Global Industry Head of Shipping & Logistics at Citi and Chair of the Poseidon Principles drafting committee, said.

“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,” Paul Taylor, Global Head of Shipping & Offshore at Societe Generale Corporate & Investment Banking and Deputy Chair of the Poseidon Principles drafting committee, added.

The Poseidon Principles are consistent with the policies and ambitions of the Initial GHG Strategy adopted in April 2018 by member states of the International Maritime Organization (IMO). The strategy prescribes that GHG emissions from international shipping must peak as soon as possible and that the industry must reduce the total annual GHG emissions by at least 50% of 2008 levels by 2050, with a strong emphasis on zero emissions.

The Poseidon Principles establish a common baseline to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with adopted climate goals. In this way, they also serve as an important tool to manage critical investment risks.

“Urgent action is needed to advance maritime shipping’s decarbonization. The Poseidon Principles are a groundbreaking achievement that will help ensure shipping remains a foundational component of our global economy,” Jules Kortenhorst, CEO of Rocky Mountain Institute, noted.

Founding Signatories include 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.

The Principles were developed in an effort spearheaded by global shipping banks – Citi, Societe Generale, and DNB – and leading industry players – A.P. Møller Mærsk, Cargill, Euronav, Lloyd’s Register and Watson Farley & Williams.

“Shipping’s decarbonization 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 ten years to develop the new marine fuels, propulsion technologies and infrastructures that will be required. The Poseidon Principles will help us catalyze this transition,” according to Søren Toft, Chief Operating Officer and Executive Vice President of A.P. Møller-Mærsk, the world’s largest container shipping company.

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