Posted on December 17, 2020
In a first-of-a-kind climate finance report, 15 financial institutions that are signatories to the Poseidon Principles on green shipping finance have disclosed the climate alignment score of their ship finance portfolios.
Announced in June 2019, the Poseidon Principles became the first sector-specific climate alignment agreement for financial institutions.
The Poseidon Principles establish a global framework to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with climate goals set by the International Maritime Organization (IMO). The IMO’s initial GHG strategy prescribes that international shipping must reduce its total annual greenhouse gas emissions by at least 50% of 2008 levels by 2050, while pursuing efforts towards phasing them out as soon as possible in this century.
“This report marks a significant milestone for global ship finance and for climate finance reporting as a whole,“ says Michael Parker, Chairman, Global Shipping, Logistics and Offshore, Citi, and Chair of the Poseidon Principles Association. “I commend my fellow signatories for their pioneering efforts to be transparent and accountable for their role in promoting responsible environmental behavior. I encourage other serious banks and export credit agencies to join us in supporting global seaborne trade in a sustainable manner.”
The Poseidon Principles Annual Disclosure Report 2020 includes climate alignment reporting from 15 financial institutions, most of which became signatories in 2019. Financial institutions that joined the Poseidon Principles in 2020 are not required to report before 2021. The assessment by each signatory include emissions data collected from clients and the portfolio information from 2019, compared to a decarbonization trajectory for the same year.
At his still early stage in application of the Principles, the report shows that three financial institutions’ ship finance portfolios are aligned with the IMO’s initial GHG strategy while 12 banks’ portfolios are not. More importantly, the report includes commentary from financial institutions on key takeaways from their climate assessment, and reflections on how it will inform their business activities and decision-making in the future.
“This first climate assessment reporting provides signatory financial institutions with a unique understanding of our ship finance portfolios’ climate footprint,” says Paul Taylor, Global Head of Shipping and Offshore, Societe Generale, and Vice Chair of the Poseidon Principles Association. “All industry participants must collectively rise to the climate challenge. Banks under the Poseidon Principles will continue to work proactively with their clients and other important stakeholders to shape a better future for international shipping and society.”
The 20 financial institutions that have joined the Poseidon Principles together, represent over US$150 billion in loans to international shipping – more than a third of the global shipping finance portfolio.
- Download the Poseidon Principles Annual Disclosure Report 2020 HERE.