Banks to include CO2 emission measures in shipping loan decisions
18 June 2019 | Mitigation
A group of leading banks will for the first time include efforts to cut carbon dioxide emissions in their decision making when providing shipping company loans, executives said on Tuesday.
International shipping accounts for 2.2% of global carbon dioxide (CO2) emissions and the U.N.‘s International Maritime Organization (IMO), has a long-term goal to cut greenhouse gas emissions by 50% from 2008 levels by 2050.
Working with non-profit organisations the Global Maritime Forum, the Rocky Mountain Institute and London University’s UCL Energy Institute, 11 banks have established a framework to measure the carbon intensity of shipping finance portfolios.
The banks involved in the “Poseidon Principles” initiative, which will set a common baseline to assess whether lending portfolios are in line or behind the adopted climate goals set by the IMO, represent around a fifth or $100 billion (£79.7 billion) of the total global shipping finance portfolio.
The results will be published annually in individual sustainability reports and the data will be obtained by banks from borrowers under existing loan agreements.
Although the IMO agreed stricter energy efficiency targets last month for certain types of ships, environmental campaigners are calling for tougher goals.
“Banks have a huge role to play here because there is about $450 billion of senior debt that the world’s shipping banks and Chinese lessors grant to the sector and about 70,000 commercial vessels,” Paul Taylor, global head of shipping & offshore with Societe Generale CIB, said.
Banks will in the longer term be more selective about which ships they include in their lending portfolios, bankers said.