12 December 2024 – The global shipping finance portfolio is making notable strides toward aligning with the decarbonisation goals set by the International Maritime Organization (IMO), aiming for net-zero emissions by 2050. The latest findings, released in The Poseidon Principles’ fifth Annual Disclosure Report, reflect continued growth in climate transparency, showing that nearly 80% of global ship finance is moving closer to alignment with the IMO’s ambitious decarbonisation trajectory.
The Poseidon Principles, a global framework designed to help financial institutions assess and disclose the climate alignment of their shipping portfolios, has become a cornerstone for promoting sustainability within the maritime industry. The latest report highlights the progress of 35 major financial institutions across 13 countries, marking significant milestones in transparent climate reporting and industry engagement.
Key Findings from the 2024 Report:
Increased Transparency: On average, 93.3% of portfolio activities from signatories were reported, with emissions data disclosed for at least 70% of portfolios across all signatories. Notably, 28 signatories reported data for 90% or more of their portfolios, and eight institutions reported 100% of their emissions data.
Improved Climate Alignment: The average climate alignment scores for the portfolios showed substantial progress, with better alignment to the IMO’s “minimum” and “striving” decarbonisation pathways compared to the previous year.
Rising Collaboration: Financial institutions are increasingly engaging with their shipping clients, fostering greater collaboration in the effort to achieve net-zero emissions by 2050 in line with the IMO’s 2023 Greenhouse Gas Strategy.
“The Poseidon Principles have set a new standard for transparency in climate reporting within the shipping industry,” said Michael Parker, Poseidon Principles Chair and Chairman of Global Shipping & Logistics at Citi. “While we celebrate the progress made over the past five years, we must remember that we are now just five years closer to the crucial decarbonisation targets for 2030, 2040, and 2050. There is still much work to do, and we must accelerate efforts to ensure that ambition turns into transformative action.”
Real Emissions Data Driving Decision-Making
By incorporating actual emissions data into financial decision-making, the Poseidon Principles framework has empowered signatories to shape financing decisions, promote sustainability-linked lending, and drive investment in green technologies like biofuels and alternative propulsion systems. This increased transparency has also fostered stronger collaboration between financial institutions and shipowners, further reinforcing the collective commitment to decarbonisation.
Challenges Remain Despite Progress
While the report highlights significant progress, it also acknowledges the challenges in aligning fully with the IMO’s ambitious 2050 net-zero goal. Some vessel types continue to face operational complexities that make alignment difficult.
“We have made significant strides in transparency, but aligning with the 2050 net-zero target remains a challenge, particularly for certain vessel types,” said Paul Taylor, Vice Chair of the Poseidon Principles and Global Head of Maritime Industries at Societe Generale. “However, the adoption of well-to-wake emissions reporting, which includes full lifecycle emissions of fuels, provides a strong foundation for addressing these challenges head-on.”
Adoption of Well-to-Wake Emissions Reporting
In 2023, the Poseidon Principles introduced well-to-wake emissions reporting, a comprehensive approach that includes the full lifecycle emissions of fuels used in shipping. This development aligns the framework with the latest climate science and supports the IMO’s updated climate ambition.
A Global Standard for Transparency
Since its launch in 2019, the Poseidon Principles have set the benchmark for climate transparency in shipping finance. The framework’s success has inspired similar initiatives in other industries, such as the Sustainable STEEL Principles for steel financing, the Sustainable Aluminium Finance Framework, and the Pegasus Guidelines for aviation financing.
The Poseidon Principles continue to play a crucial role in enhancing transparency and accountability in climate and environmental impact, risk management, and strategic planning for participating financial institutions and their clients.
A Collective Effort Toward Decarbonisation
As the Poseidon Principles enter their sixth year, the initiative celebrates the power of collective action and the tangible progress made toward decarbonising global shipping. While challenges remain, the continued commitment from signatories, shipping clients, and stakeholders highlights the potential for collaboration and transparency to drive lasting change in the maritime industry.
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