The Poseidon Principles is a global framework for responsible ship finance which aims to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with climate targets set by the International Maritime Organization (IMO), a specialised agency of the United Nations responsible for regulating shipping, presented as a trajectory with annual emission values until 2050. The selected IMO ambition is to reduce total annual greenhouse gas (GHG) emissions by at least 50 per cent by 2050 based on 2008 levels.
The result from SEB’s first year of the Poseidon Principles shows that the climate alignment score for the bank’s shipping portfolio for full year 2020 was 2.5 per cent above target, which is slightly out of alignment with the trajectory. If excluding the Cruise segment, which was an outlier in 2020 due to Covid-19 related layup of vessels, the score would have been 3.8 per cent below target, implying that the bank’s portfolio is aligned with the Poseidon Principle trajectory.
Banks calculate their alignment scores by dividing the emissions generated by the distance ships have travelled. For maintenance purposes, cruise ships still used fuel and caused emissions in 2020 but they didn’t record any distance travelled.
“We are pleased with the response from our shipping clients in collection of Poseidon Principles data, achieving 98 per cent reporting rate in our first year of reporting. The climate alignment score came out close to what we expected, and the results will be helpful in the process of aligning the bank’s decision processes, and thereby our lending portfolio, with the shipping industry’s transition towards a low carbon future,” says Hans Christian Kjelsrud, Global Head of Shipping Finance in SEB.
“The data from the Poseidon Principles reporting process will enable us to gain additional insight into our shipping portfolio and contribute to a fact-based dialogue with our customers regarding emission reductions”, says Hans Christian Kjelsrud. “When evaluating new transactions, the Poseidon Principles data will be part of our decision material to ensure portfolio alignment with the relevant trajectories”.