Published this week, The Poseidon Principles’ fifth Annual Disclosure Report has revealed the notable strides global shipping finance has made towards alignment with the International Maritime Organization’s (IMO) ambitious 2023 Greenhouse Gas Strategy targets.
Launched in 2019, The Poseidon Principles provide a global framework for financial institutions to assess and disclose the alignment of their shipping portfolios with IMO 2050 net-zero emissions targets. The initiative represents approximately 80% of the global shipping finance portfolio, encompassing 35 major financial institutions, including Société Générale, DNB, and Citigroup, and across 14 countries.
The latest Annual Disclosure Report of the Poseidon Principles Association shows that signatories reported an average of 93.3% of their portfolio activity. All signatories reported ship emissions data from at least 70% of their portfolio and 28 institutions achieved a reporting rate of 90% or higher, with eight reaching a 100% reporting rate.
The report identified “notable improvements” on 2023’s performance, with the average climate alignment score of signatory institutions increasing by 7% on last year. This signals clear year-on-year progress towards the IMO’s minimum and striving decarbonisation trajectories.
Despite movement in the right direction, the average portfolio remains above 25% above the IMO’s decarbonisation trajectories, with the worst performing portfolios being 70% above targeted emissions reductions.
The report identifies increased levels of collaboration between financial institutions and shipping clients as a pivotal factor in industry alignment with the IMO’s decarbonisation targets. Signatory institutions are able to use climate alignment scores to shape financing decisions, guide sustainability-linked lending and support investments in green shipping technology.
“Alignment with 2050 net-zero goals remains a challenge, particularly for certain vessel types facing operational complexities,” acknowledged Paul Taylor, Vice Chair of the Poseidon Principles and Global Head of Maritime Industries at Societe Generale. The adoption of well-to-wake emissions reporting in 2023, which encompasses the full life-cycle emissions of fuels, provides a stronger foundation for addressing these complexities.
Michael Parker, Chair of the Poseidon Principles and Chairman of Global Shipping & Logistics at Citi, emphasized the need to accelerate efforts: “This milestone shows how far we have come in five years, but also serves as a reminder that we are now five years closer to critical decarbonization targets for 2030, 2040, and 2050. We must accelerate efforts, addressing key areas of misalignment and ensuring collective ambition turns into transformative action.”