Posted on: 17 December 2020
In a first-of-a-kind climate finance report, 15 Signatories of the Poseidon Principles disclose the climate alignment score of their ship finance portfolios. The Poseidon Principles Annual Disclosure Report 2020 shows that 3 banks’ ship finance portfolios are aligned with UN decarbonization targets while 12 banks’ portfolios are not. The climate assessment offers banks new insight into their lending decisions and provides opportunity to work with their shipping clients to meet society’s goals.
International ship finance confirms its leadership role in global climate finance. Announced in June 2019, the Poseidon Principles became the first sector-specific climate alignment agreement for financial institutions. Today, Signatories deliver on their commitment and publish the Poseidon Principles Annual Disclosure Report 2020 – the first sector-specific climate alignment report of its kind.
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 UN maritime agency, 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, whilst 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. 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,“ says Michael Parker, Chairman, Global Shipping, Logistics and Offshore, Citi, and Chair of the Poseidon Principles Association.
Climate assessment will inform future decision-making
The Poseidon Principles Annual Disclosure Report 2020 includes climate alignment reporting from 15 financial institutions, most of which became Signatories in 2019, including ABN Amro, Amsterdam Trade Bank, BNP Paribas, Bpifrance Assurance Export, CIC, Citi, Credit Agricole Corporate and Investment Bank, Danish Ship Finance, Danske Bank, DNB, Eksportkreditt Norge, ING, Nordea, Sparbanken Vest, and Societe Generale. Financial institutions that joined the Poseidon Principles in 2020 are not required to report before 2021. The assessment by each Signatory includes emissions data collected from clients and the portfolio information from 2019, compared to a decarbonization trajectory for the same year. It shows that 3 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. 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”, says Paul Taylor, Global Head of Shipping and Offshore, Societe Generale, and Vice Chair of the Poseidon Principles Association.
20 financial institutions have joined the Poseidon Principles. Together, they represent over US$150 billion in loans to international shipping – more than a third of the global shipping finance portfolio. The Principles were developed by global shipping banks – Citi, Societe Generale, and DNB – in collaboration with leading industry players – A.P. Møller Mærsk, Cargill, Euronav, Gram Car Carriers, Lloyd’s Register, and Watson Farley & Williams – with expert support provided by the Global Maritime Forum, Rocky Mountain Institute, University College London Energy Institute, and UMAS. All banks and export credit agencies that finance vessels under the purview of the IMO are invited to join the Principles.
