Assessment of climate alignment
Under the Poseidon Principles for Marine Insurance, Signatories will calculate the climate alignment of their hull and machinery portfolio relative to established decarbonization trajectories.
We will annually assess climate alignment in line with the Technical Guidance for all business activities.
Signatories will, on an annual basis, measure the carbon intensity and assess climate alignment (carbon intensity relative to established decarbonization trajectories) of their hull and machinery portfolios. This requirement takes effect for each Signatory in the following calendar year after the calendar year in which it became a Signatory.
Affiliate members will support Signatories by sharing knowledge about the Assessment principle and climate alignment methodology with relevant stakeholders, in line with the Technical Guidance.
Assessing climate alignment
The Poseidon Principles for Marine Insurance use carbon intensity relative to established decarbonization trajectories to measure climate alignment.
Climate alignment is defined as the degree to which a vessel, policy, or portfolio’s carbon intensity is in line with a decarbonization trajectories. That meet the IMO ambition of reducing total annual GHG emissions by at least 50% by 2050 based on 2008 levels, or a 100% reduction target to support the Paris Agreement.
The Poseidon Principles for Marine Insurance rely specifically on the Annual Efficiency Ratio (AER) as the carbon intensity metric due to the availability of existing data from the IMO and for consistency with the Poseidon Principles methodology. The AER uses the parameters of fuel consumption, distance travelled, and deadweight tonnage at summer draught.
To assess climate alignment of a single vessel, the vessel’s annual carbon intensity is compared with the decarbonization trajectory for its ship type and size class. The climate alignment of a product and or portfolio is a weighted average of the vessel carbon intensities in each product or portfolio.
What is a decarbonization trajectory?
A decarbonization trajectory is a representation of how many grams of CO2 a single ship can emit to move one tonne of goods one nautical mile (gCO2 /tnm) over a time horizon. For the Poseidon Principles for Marine Insurance, there are two trajectories: one for 50% CO2 reduction, and the second for 100% CO2 reduction. A trajectory in line with net-zero commitments by 2050, including those established by NZIA, will be introduced once available (e.g. from the Science Based Targets initiative).
Standard decarbonization trajectories are produced by the Secretariat of the Poseidon Principles for Marine Insurance for each ship type and size class.