In light of serious environmental change issues, 11 banks are adding climate impact in their list of standards for lending to players in the shipping sector, says CNBC. This move is intended to significantly decrease the carbon dioxide emissions by the shipping industry.
Freight and shipping contribute at least 2.2% of the world’s CO2 emission, based on reports by the International Maritime Organization (IMO).
This new condition aptly named the ‘Poseidon Principles’ will affect the loan amount for freight firms, as stated in the IMO’s pledge in 2018. According to the declaration, the organization will strive to cut down a minimum of 50% of the CO2 emission levels recorded in 2008. The organization aims to do this by 2050.
The IMO’s commitment also states that this initiative will also cut down on vessels’ individual CO2 discharges by at least 40% compared to the levels recorded in 2008. They hope to achieve this by 2030.
Citigroup global industry head for shipping Michael Parker says that the participating financial firms seek to notify other banks about the detrimental environment implications of excessive CO2 emissions.
Meanwhile, industry experts say that the Poseidon Principles is the first ever “global, sector-specific and self-governing” agreement among banks. With this, the implementation of new standards is an important step toward creating a set of green practices not only in shipping but in the financial sector, as well.
According to Ship Technology, banks that signed the agreement includes Citi, DNB, Danske Bank, Norway’s DVB, ABN Amro, Amsterdam Trade Bank, Credit Agricole CIB, ING Group, Societe Generale, Nordea and Danish Ship Finance. These signatories are slated to implement this new green policy.
These financial institutions constitute at least 20% or around $100 billion of the global portfolio for the shipping sector. More banks are expected to join in the years to come.