Major shipping banks to launch the Poseidon Principles in line with IMO’s Greenhouse Gas strategy
Eleven major shipping banks, supported by a number of industry strategic partners including Lloyd’s Register (LR), will launch the Poseidon Principles – a pioneering set of principles that will integrate climate considerations into lending decisions in line with IMO’s Greenhouse Gas (GHG) strategy.
Poseidon Principles will give owners and operators more opportunity and freedom to explore different technologies and projects to decarbonise, knowing there will be financial incentives to support their success. As a global framework, the Principles will establish a common baseline to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with adopted climate goals.
The 11 founding signatories represent a bank loan portfolio of approximately $100 bn and around 20% of global ship finance.
The Principles, which will promote responsible environmental stewardship and socially responsible behaviour throughout the maritime value chain, have been established in collaboration with leading industry players including A.P.Møller Mærsk, Cargill, Euronav and Lloyd’s Register – the only classification society to have worked on the framework. They have been developed with support from the Global Maritime Forum (GMF), Rocky Mountain Institute and University College London Energy Institute.
The Poseidon Principles are applicable to lenders, relevant lessors, and financial guarantors including export credit agencies and will be implemented in internal policies, procedures and standards and applied in all credit products secured by vessels that fall under the purview of the IMO. They will also aim to support other initiatives developed to address climate, environment, and social risks, such as the Principles for Responsible Banking, Energy Transitions Commission, and the Task Force of Climate-Related Financial Disclosures.
Founding Signatories include Citi, Société Générale, DNB, ABN Amro, Credit Agricole CIB, Danish Ship Finance, Danske Bank, DVB, ING and Nordea.
To meet the IMO’s initial GHG 2050 strategy, which prescribes that the maritime industry must reduce the total annual GHG emissions by at least 50% of 2008 levels by 2050, zero-emission vessels (ZEVs) need to be in place by 2030. In January 2019, LR, a strategic partner of the Global Maritime Forum, launched its ‘Zero-Emission Vessels Transition Pathways’ study which outlines what is needed to enable the transition, both at the ship and supply infrastructure level.
Accompanied by previous LR and UMAS studies, including Low Carbon Pathways 2050 (in conjunction with Shipping in Changing Climates) and Zero-Emission Vessels 2030, LR is uniquely positioned to provide expertise to the Signatories of the Poseidon Principles, ensuring that lending decisions protect and help those who are planning to finance, design or build a ship in the 2020s and who will need to consider how their ships can switch to non-fossil fuel later in its operational life.
Alastair Marsh, Lloyd’s Register CEO, said: “Zero-emission vessels must enter the fleet by 2030 at the latest if the maritime industry is to successfully meet the IMO ambitions of at least 50% reduction in greenhouse gases by 2050. The 2020s will be a critical decade for not only piloting and prototyping new fuel types and energy sources but also building future fuel supply chains. The introduction of the Poseidon Principles demonstrates that ship finance is determined to support shipping’s decarbonisation challenge across the maritime value chain and also support other factors such as the energy transition. As a strategic member of the GMF, Lloyd’s Register is committed to working with all the Poseidon Principles partners to support the evolution of this landmark initiative.”
Michael Parker, Global Industry Head of Shipping & Logistics at Citi and Chair of the Poseidon Principles drafting committee, said: “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.”
Søren Toft, Chief Operating Officer and Executive Vice President of 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 ten years to develop the new marine fuels, propulsion technologies and infrastructures that will be required. The Poseidon Principles will help us catalyse this transition.”