Banking giants commit to align maritime shipping investments with climate goals
A group of 11 big-name banks have pledged to align their investments in the shipping sector with the International Maritime Organisation's (IMO) goal of halving emissions by 2050, against a 2008 baseline.
The banks all have significant holdings in the global shipping industry, with their joint shipping finance portfolio topping $100bn and accounting for 20% of all global ship finance. They are Citi, Societe Generale, DNB, ABN Amro, Amsterdam Trade Bank, Credit Agricole CIB, Danish Ship Finance, Danske Bank, DVB, ING and Nordea.
Under the new rules, which are called “the Poseidon Principles”, the banks will be required, as a first step, to disclose whether their shipping portfolios are currently aligned with the IMO’s vision for 2050. This disclosure will be made through a new, in-depth methodology developed by academics.
The banks will need to make this disclosure every year and asses whether its findings mean they should divest from certain holdings, or work more closely with them to champion the low-carbon transition.
Additionally, the banks are committed to a further and more wide-reaching set of principles around accountability, enforcement and transparency, which are applicable to lenders, shipping finance leasers and guarantors – including national export credit agencies.
"As banks, we recognize that our role in the shipping industry enables us to promote responsible environmental stewardship throughout the global maritime value chain," Citi’s global industry head of shipping and logistics Michael Parker said.
"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."
The international shipping industry is currently responsible for about 2.5% of global CO2 emission, according to a report by the European Parliament.
All at sea
Before setting its 2050 goal, the IMO, in 2016, approved a roadmap through to 2023 on the global adoption of an emissions reduction strategy. Since then, more than 170 countries have reached an agreement to reduce CO2 emissions from their respective maritime sectors by at least 50%, against a 2008 baseline.
However, these targets are not legally binding. Moreover, international shipping is currently exempt, along with aviation, from the Paris Agreement.
In the UK, Prime Minister Theresa May last week confirmed that international shipping will be covered by the Government’s newly unveiled ambition of achieving a net-zero economy by 2050. This will result in a strengthening of its current commitment to the IMO’s 2050 target and will be bolstered by a sector deal for maritime shipping under the Industrial Strategy.