Launched by the Global Maritime Forum (GMF), an international foundation dedicated to the promotion of sustainable maritime transport in the transport of global trade, the Poseidon Principles (PP) are the result of eleven signatories and founding supporters – Citi, Société Générale, DNB , ABN Amro, Amsterdam Trade Bank, Crédit Agricole CIB, Danish Ship Finance, Danske Bank, DVB, ING and Nordea, supported by GMF, University College London Energy Institute, Rocky Mountain Institute, LR, AP Møller-Maersk, Cargill and Euronav.

Who is involved?

Two of the main bankers leading the initiative run leading lending institutions based in the United States and Norway. Michael Parker is the London-based Global Head of Industries for Citigroup’s Shipping, Logistics and Offshore sectors and Kristin Holth is Executive Vice President, Global Head of Ocean Industries at DNB in ​​Oslo. Both were closely involved in the PP drafting process.

Parker sees the initiative as a key driver in supporting IMO’s ambitions by 2050. a key measure. We will help our clients find a way to ensure that the invested capital is spent on clean and efficient shipping and not, as has been the case in some cases, on a speculative game of assets. “What it does is it shows the direction of movement of the expedition,” said Holth of DNB. “This is the world’s first industry-specific climate alignment finance initiative and will establish a framework for banks to assess and disclose their climate alignment status on a portfolio basis.

“Each of us will need to find a way to introduce a climate alignment component into our lending activities and lending decisions. Our loan portfolios are, of course, all different, comprising different owners, types of vessels and geographic operations. What is important, however, is that the basic information per vessel will be the same for all banks. “

How will the principles of Poseidon work?

In practice, member banks will use quantitative methodologies to assess their existing portfolios and future transactions will be assessed in terms of climate alignment. The United Nations system of data collection, now mandatory for all vessels of 5,000 tons or more, will provide a practical tonnage.

Under the changes to MARPOL, vessel operators’ data on fuels consumed on board, as well as transport work undertaken, must be recorded and recorded with flag states on an annual basis. Made available to financial institutions, this data will enable them to calculate the overall alignment of their portfolio, as well as to identify those lagging behind in the sustainable development process. Holth of DNB sees the introduction of PP as a two-step process. The first step – approval and drafting – is now complete. The implementation of the principles is the second step, and it will take some time.

In practice, said Holth, DNB is already undertaking regular customer reviews to assess shipowner strategies on various criteria, including sustainability, vessel performance initiatives and vessel recycling strategies. But, she said, the bank will now go further, asking its clients how they plan to adapt their business to meet future climate alignment ambitions. “The key element is alignment with IMO and I think things will go a lot faster now,” said Parker from Citi. “And nothing prevents a signer from going further if they wish.”

Why is this so important for shipping?

PPs are an absolutely essential process. LR CEO Alastair Marsh said zero-emission ships must enter the fleet by 2030 at the latest if the shipping industry is to have a chance to meet IMO’s ambition to achieve at least 50% reduction in greenhouse gas emissions by 2050. from 2008 levels. His views are based on Lloyd’s Register’s cutting-edge research on how the IMO’s 2050 ambitions can be achieved.

Katharine Palmer, sustainability manager at LR and one of the authors of the classification society studies, encourages industry to immediately engage and collaborate in discussions of potential pathways to ensure they plan successfully the future.
The entire maritime community playing a role in the construction and operation of ships over the next decade must consider the implications of design choices today to ensure that ships will meet future requirements. The adoption of new technologies, operational optimization and design improvements to increase the productivity of existing ships are all essential to meet the IMO’s intermediate ambition: a 40% reduction in gas emissions at greenhouse effect by 2030 compared to 2008 figures.

The journey of maritime transport towards zero carbon

As with any development in the industry, there are very progressive industry pioneers whose leaders are already investing in the fuels and digital technologies of tomorrow. For the other thousands of maritime players, the journey must now begin, and they must now commit to planning for the future.

Holth of DNB surmised that “we are already seeing a big change that has been happening for at least the last 18 months”. “And the change in approach applies to capital in general, not just regular vanilla debt,” she added.

“The direction of financial markets is changing and banks are already assessing the environmental, social and governance (ESG) criteria of their clients and what they plan to do with their business models and vessels. From a customer’s perspective, he will need to ask himself: what are the best proactive steps we can take to improve the efficiency of our vessels, and what will be the impact on us if we do nothing? Holth added, “We will see how companies deal with the new requirements and maintain an ongoing dialogue. Clearly this is not an overnight affair, but customers who don’t take the environmental challenge seriously will need to think about the consequences. Capital will tend, over time, to those with responsible business.

Parker also believes that the shipping industry, as the main conduit for world trade, should certainly receive more support from governments and regional economic bodies. He highlighted the success of Norway’s NOx Fund, which has proven to be an effective catalyst in the development of a range of environmentally friendly shipping technologies. Governments could develop similar initiatives, Parker said, and global capital markets could introduce new finance products such as shipping-specific green bonds as a financial catalyst for innovative projects that make sense.

Class societies, he suggested, should play a key role in helping investors and lenders decide how and what to finance. The future destination of capital is extremely important and companies are well positioned to identify the most promising new technologies, he said. Accompanied by previous LR and UMAS studies, including Low Carbon Pathways 2050 and Zero-Emission Vessels 2030, LR is uniquely positioned to provide expertise to signatories of the Poseidon Principles, ensuring that lending decisions protect and help those who plan to finance, design or build a ship in the 2020s and who will need to think about how their ships can switch to non-fossil fuels later in its operational life.

Finally, Søren Toft, COO and Executive Vice President of AP Møller-Mærsk, said: “Decarbonizing shipping will require unprecedented innovation. A modern ship is a capital intensive asset with a typical lifespan of 25 to 30 years. To achieve ambitious climate targets, zero-emission ships will have to enter the fleet by 2030. That leaves us only ten years to develop the new marine fuels, propulsion technologies and infrastructure that will be needed. The Poseidon Principles will help us catalyze this transition.