PRINCIPLE 1

Assessment

Signatories will measure the emissions intensity of their shipping portfolios on an annual basis and assess their climate alignment relative to established decarbonisation trajectories. This assessment is based on a robust industry appropriate methodology outlined in the Technical Guidance. The requirement to assess climate alignment takes effect the calendar year after a financial institution becomes a signatory.

We will annually assess climate alignment in line with the Technical Guidance for all business activities.

Assessing climate alignment
The Poseidon Principles use emission intensity relative to established decarbonisation trajectories to measure climate alignment. Climate alignment is defined as the degree to which a vessel, product, or portfolio’s emission intensity is in line with a decarbonisation trajectory corresponding to the IMO 2023 GHG ambition. To assess climate alignment of a single vessel, the annual emission intensity is compared with the decarbonisation trajectory for its ship type and size.

The Poseidon Principles rely specifically on the Annual Efficiency Ratio (AER) as the emissions intensity metric. The AER uses the parameters of fuel consumption, distance travelled, and deadweight tonnage at summer draught. For vessel types that use gross tonnage to measure their capacity, capacity gross tonne distance (cgDIST) is used to calculate actual emissions intensity, as recommended by IMO MEPC RESOLUTION MEPC.352(78). The cgDIST calculation uses the same formula as AER, but uses gross tonnage instead of deadweight.

The requirement to assess climate alignment takes effect in the calendar year after a financial institution becomes a signatory. In other words, if a financial institution joins in May of a given year, they will not be required to assess climate alignment and disclose information until December of the following year.

What is a decarbonisation trajectory?
A decarbonisation trajectory is a representation of the amount of emissions a single ship can produce to move one tonne of goods one nautical mile over a given time. Standard decarbonisation trajectories are produced by the technical advisory and secretariat of the Poseidon Principles for each ship type and size class, and defined in the Technical Guidance. The decarbonisation trajectories used by the Poseidon Principles represent the 2023 IMO GHG Strategy ambition of reducing total annual GHG emissions to net-zero around 2050 in a well-to-wake CO₂e perspective. It also takes into account the interim checkpoints in 2030 (20% reduction, striving for 30% compared to 2008 levels) and 2040 (70% reduction, striving for 80% compared to 2008 levels).