The Poseidon Principles 2023 Annual Disclosure Report sets a new standard for climate reporting

Amidst a pivotal year for the maritime industry, marked by the International Maritime Organization’s (IMO) revised greenhouse gas emissions strategy, the Poseidon Principles have emerged as a driving force for change. These principles, which provide a framework for financial institutions to integrate climate considerations into lending decisions, represent 80% of the global ship finance portfolio. This initiative has not only inspired transparency initiatives in other sectors like steel, aluminium and soon aviation but has set an example of how financial institutions can play a positive role in accelerating climate action, through transparency.  

The 2023 annual report marks the fourth time Poseidon Principles’ signatories have reported their climate alignment. In September, just a few weeks after the adoption by the IMO of its revised greenhouse gas GHG strategy, all of the signatories in the initiative, representing 13 countries, unanimously chose to align the Poseidon Principles methodology with the new IMO ambition, including the goal of achieving net zero emissions by or around 2050. This decision also accounts for emission reduction milestones in 2030 and 2040, employing a comprehensive lifecycle well-to-wake approach and broadening coverage to include a more extensive range of GHG.¹

“As its first-ever assessment of climate alignment against multiple decarbonisation trajectories aligned with the revised IMO ambition but also showing progress against the initial IMO ambition, the 2023 annual report illustrates how the Poseidon Principles aim to remain at the forefront of the latest global evidence and developments, especially at the IMO, even in the absence of all practical tools like the final IMO emission factors guidelines,” said Michael Parker, Poseidon Principles Chair and Chairman of Global Shipping, Logistics and Offshore, Citi. “By committing to net-zero emissions by 2050 and establishing emission reduction checkpoints to report against, the Poseidon Principles are not just meeting regulatory standards; we are setting the bar higher for responsible and environmentally conscious ship finance.”  

Despite the challenges faced by the shipping industry in 2023, such as severe port congestion, personnel shortages, inflation, and geopolitical tensions, the Poseidon Principles’ growing influence on shipping’s decarbonisation is evident. The reporting results against the IMO’s initial GHG Strategy ambition of a 50% CO2 reduction by 2050 shows a considerable improvement, with an average score above the trajectory +2%², a notable advancement from last year’s +9.7%.  

“The reporting percentage of +95.4% stands as a testament to the strong endorsement from shipowners and clients, indicating a growing trend in which industry stakeholders recognise and value the advantages associated with a more transparent and collaborative approach,” said Paul Taylor, Poseidon Principles Vice Chair and Global Head of Maritime Industries, Société Générale. “While Poseidon Principles signatories acknowledge significant challenges ahead, especially with the new IMO ambition to achieve net-zero by 2050, there is a collective sense of urgency, momentum and recognition of the task at hand.” 

The publication of the Poseidon Principles 2023 annual disclosure report, featuring the transparent disclosure of the climate footprint within the ship finance portfolios, signals that the shipping finance sector is leading the way in guiding the maritime industry toward a more sustainable future.  

The 2023 Annual Disclosure Report was produced by the Global Maritime Forum, which performs secretariat services for the Poseidon Principles, with expert support provided by UMAS. The upcoming year will see the Poseidon Principles fine-tune trajectories and methodologies, building on the lessons learned from the current report and outcome of MEPC 81.  

The Poseidon Principles 2023 Annual Disclosure Report is available for download here

[1]  Regarding the 1.5ºC goal, the IMO’s revised strategy, though more ambitious than expected, lacks complete alignment with the Paris Agreement. Despite this, analysis of MEPC 80 reveals that GHG reduction levels in the new Poseidon Principles trajectories closely mirror the 1.5ºC shipping pathway. Due to this similarity, the Poseidon Principles prioritised integrating the IMO revised strategy, delaying an additional trajectory for a 1.5°C future in this reporting cycle. While the trajectories in this report don’t directly align with the 1.5ºC goal, incorporating those representing the 2023 IMO GHG Strategy is a significant move towards Paris Agreement alignment. 

[2]The 2% figure signifies that Signatories’ portfolios, on average, exceed the IMO’s 2018 ambition. A positive score above the trajectory denotes misalignment, indicating emissions surpass the IMO goal. Conversely, a negative or 0 score below the line signifies alignment, with emissions falling below the IMO ambition.  

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About the Poseidon Principles 

The Poseidon Principles for Financial Institutions is a framework for measuring and reporting the alignment of financial institutions’ shipping portfolios with climate goals. Recognising financial institutions’ role in promoting responsible environmental stewardship throughout the maritime value chain, the Poseidon Principles’ framework are in line with climate goals set by the UN maritime agency, the International Maritime Organization (IMO). The IMO’s initial GHG strategy prescribed that international shipping must reduce its total annual emissions by at least 50% of 2008 levels by 2050, whilst pursuing efforts towards phasing them out as soon as possible in this century. The IMO revised GHG strategy adopted during MEPC 80 in July 2023 sets a new ambition to reach net-zero GHG emissions from international shipping by or around, i.e. close to, 2050. Three major changes from the current Poseidon Principles methodology are required in order to align its ambition to the IMO Revised Strategy which are (i) decarbonisation target in 2050, (ii) interim targets and (iii) the consideration of lifecycle emissions of fuels including further GHG species.  

The Poseidon Principles is one of three initiatives based on the same four Principles and developed with the Global Maritime Forum. Together the Poseidon Principles for Marine Insurance and the Sea Cargo Charter, they share a common objective: fostering transparency on emissions reporting with the aim of contributing to reducing carbon emissions. 

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