After the release of the Poseidon Principles and increased pressure from governments, banks should now consider climate impact when making lending decisions. For this, there are now new tools on the market to help financial institutions measure the carbon footprint of the vessels in their supply chain.
2021 witnessed numerous international agreements to reduce greenhouse gas (GHG) emissions throughout the maritime space. This included the IMO introducing measures such as the Carbon Intensity Indicator (CII) and Energy Efficiency Existing Ship Index (EEXI), which are short term solutions for decarbonising shipping that will become mandatory in January 2023.
Additionally, a group of banks that represent a combined portfolio of over $185 Billion - nearly 50% of the global ship finance portfolio - have come together as signatories of the Poseidon Principles. These Principles represent a self-governing climate alignment agreement amongst financial institutions.
The framework includes four principles that are used as guidance for the participating banks to ensure that the vessels they finance are reducing their GHG emissions to net-zero or at least by 50% by 2050.
By incorporating such principles, financial institutions can align their ship finance portfolios with responsible environmental behaviour and incentivise international Environmental, Social, Governance (ESG) standards and shipping decarbonisation.
The Poseidon Principles include:
Are you equipped with the right tools to measure the carbon emissions of your ship finance portfolio?
Pole Star’s vessel screening, monitoring, and compliance solution, PurpleTRAC, enables users to easily assess a vessel’s carbon output. By incorporating CarbonChain’s best-in-class GHG calculations, the solution ranks a vessel’s emission intensity within a peer group of similar ships, enabling users to report on the climate impact of a journey and provide the data required to meet their net-zero transition.