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Banks to include CO2 emission measures in shipping loan decisions

Banks to include CO2 emission measures in shipping loan decisions
FILE PHOTO: The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren/File Photo -
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Chris Helgren(Reuters)
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By Jonathan Saul

LONDON (Reuters) – 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.

“We are helping the shipping industry emerge into the 21st century in a responsible way,” Michael Parker, global head of shipping at Citigroup, told Reuters.

HUGEROLE

Those involved so far are Citigroup, Societe Generale, DNB, ABN Amro, Amsterdam Trade Bank, Credit Agricole CIB, Danish Ship Finance, Danske Bank, DVB, ING and Nordea.

“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.

“Will there be companies that will find it difficult to get finance as they have less efficient ships, yes, it will be a consequence of it – but it’s not going to be used to look for those companies and somehow find a way of getting them out,” Citigroup’s Parker said.

Oivind Haraldsen, Danske Bank’s global head of shipping, said more institutions would join the efforts to cut the carbon footprint of the sector.

“All of us have to push – we as banks probably have more power than we are aware,” he said.

(Editing by Alexander Smith)

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