A total of 30 financial institutions actively engage in the Poseidon Principles, which were first introduced in 2019 with 11 founding Signatories and encompass now more than 70% of the worldwide ship finance market. There are three Signatories who joined the Principles after December 2021 and are exempt from reporting this year. The third Poseidon Principles Annual Disclosure Report 2022, which was just released, contains emissions data from more than twenty worldwide banks' ship finance portfolios. The report illustrates the difficult roadmap toward emissions reduction. The COVID-19 intends to have an impact on the data.
The International Maritime Organization ("IMO") declared the adoption of an initial strategy in June 2018 with the goal of reducing the sector's overall greenhouse gas emissions ("GHG") by at least 50% by the year 2050 (compared to 2008). Seven banks, out of the 28 financial institutions that have reported their emissions data this year (up from 23 the year before), support the IMO goal.
"The reporting of this year is more detailed and comprehensive than ever before, and it is heartening to see that more institutions are supporting the programme. The Signatories' willingness to be even more open regarding the composition of the carbon impact in their portfolios has impressed me. In the critical milestones for shipping decarbonization that lie ahead, being transparent is the only way we can bring about change and better assist clients” says Michael Parker, Chairman, Global Shipping, Logistics and Offshore, Citi, as well as Chair of the Poseidon Principles.
“We are on a multi-year road, with the help of this statistics, we can track our progress and use insight to make sound judgement. In the marine sector, particularly ship financing, lowering GHG emissions has become a top priority. The average lifespan of a ship is over 20 years. Even with banks favoring low-carbon projects, it will take time for this trend to be reflected in our portfolios”, he argues.
Forthcoming integration/cohesion
By September 2022, the signatories of the Poseidon Principles consented to align the framework with the Paris Agreement's goal of keeping global temperature rise to 1.5 degrees above pre-industrial levels by 2100. Once a Paris-aligned trajectory or trajectories are found and formally accepted by the Signatories, the banks will evaluate their alignment with respect to climate change against this goal. These trajectory(s) have not yet received approval.