On June 18, 2019, a group of major ship finance banks1 announced the launch of the “Poseidon Principles,” a framework for global responsible shipping finance. These principles (Principles) follow the adoption by the International Maritime Organization (IMO), a United Nations organization, earlier this year of a goal to reduce the total GHG emissions attributable to global shipping by at least 50 percent by 2050 over 2008 levels.

The Principles are a framework for assessing and disclosing the climate alignment of ship finance portfolios. The Principles aim to be voluntary, practical to implement, verifiable, fact-based and effective. Signatories commit to implementing the Principles in their internal policies, procedures and standards.

The Four Principles

  • Assessment of climate alignment
    Signatories will, on an annual basis, measure the carbon intensity (carbon intensity relative to established decarbonization trajectories) and assess climate alignment of their shipping portfolios. This requirement takes effect for each signatory in the calendar year following the calendar year in which it became a signatory.

  • Accountability
    For each step in the assessment of climate alignment, signatories will rely exclusively on the data types, data sources and service providers identified in the technical guidance.

  • Enforcement
    Signatories will agree to work with clients and partners to covenant the provision of necessary information to calculate carbon intensity and climate alignment.

  • Transparency
    • Upon becoming a signatory, the signatory will publicly acknowledge that it is a signatory of the Poseidon Principles.
    • Annually, each signatory will report the overall climate alignment of its shipping portfolio and supporting information, as per the accountability requirements, to the secretariat no later than November 30. This requirement takes effect for each signatory in the calendar year after the calendar year in which it became a signatory.
    • Annually, each signatory will publish the overall climate alignment of its shipping portfolio in relevant institutional reports on a timeline that is appropriate for that signatory. This requirement takes effect for each signatory in the calendar year after the calendar year in which it became a signatory.

The Principles includes related technical guidance, the purpose of which is to clearly state the requirements and expectations for each of these Principles.

Scope

Climate alignment is currently the only environmental factor considered by the Principles. However, this scope will be reviewed and may be expanded by signatories on a timeline that is at their discretion.

Applicability

The Principles are applicable to lenders, relevant lessors, and financial guarantors, including export credit agencies. The Principles must be applied by signatories in all business activities 1) that are credit products—including bilateral loans, syndicated loans, club deals and guarantees—secured by vessel mortgages or finance leases secured by title over vessel and 2) where a vessel or vessels fall under the purview of the IMO Data Collection System (DCS) (i.e., vessels with 5,000 gross tonnage and above used for trade and making international voyages). This would include offshore vessels that meet that criteria.

1 Representing an aggregate bank loan portfolio to global shipping of over $100 billion and approximately 20 percent of all shipping finance. If global shipping were a country, it would equal Germany for GHG emissions.

Related Capabilities

Practices –
Industries –