The Poseidon Principles group of banks has improved its emissions-reduction scores in 2023, but uncertainty remains over net zero targets and reporting methodology.
The lenders, which are committed to measuring and reporting the carbon intensity of their loan portfolios, now number 34.
They account for 80% of the global ship finance portfolio.
The group called 2023 a “pivotal year” and said its alliance was a “driving force for change”.
The fourth annual report, released just after the COP28 gathering in Dubai concluded, showed the portfolio average score was 2% above the trajectory needed to meet the International Maritime Organization’s initial goal of a 50% cut in greenhouse gas emissions by 2050.
This was a significant improvement from 9.7% above last year.
The results show that 11 portfolios out of 30 reporting were aligned with the target, or more than one-third, up from a quarter last year.
Scores ranged from 13.5% below the trajectory to 18.5% above.
Six cargo vessel portfolios were aligned, representing 40% of reported data, up from four portfolios or 31% in 2022.
Dutch founder member ABN Amro was 7% above, higher than last year.
The bank said this was partly due to disruptions faced by the shipping sector in the wake of the Russia-Ukraine conflict, and the continued higher magnitude of maritime trading activity after the peak of the Covid-19 pandemic.
BNP Paribas was 3.6% above, Citi 2.5% above and DNB 1.4% above, whereas Credit Suisse came in 4.6% below.
Writing in the report, Michael Parker and Paul Taylor, the initiative’s chair and vice chair, said: “Looking forward, we recognise the essential step of understanding portfolio climate alignment in providing support to clients in their decarbonisation journey.
“2024 will see us continue to fine-tune trajectories and methodology, building on both the lessons learned from the process of this report and accounting for the impact of the evolving IMO decision-making regarding implementation of the revised strategy after MEPC 80.”
Well-to-wake question
Emissions reporting is now switching from tank-to-wake this year to the more onerous well-to-wake measure.
Credit Industriel et Commercial was 4% below this time but said the new well-to-wake methodology would have meant it was 22.7% over for 2023.
The lender said this “will potentially open internal discussions on [the] targeted class of asset to be financed in the future”.
Norway’s Sparebanken Vest was the best performer with 13.5% above and Finnvera in Finland at 13.2% above.
In September, the banks agreed to a significant revision to the reporting framework to move shipping portfolios closer in line with targets in the Paris Agreement on climate change.
The move also aligns with ambitious new IMO decarbonisation goals.
The banks will now aim for net zero emissions in their portfolios in or around 2050, but there was no detail on how this would be achieved.
In the annual report, the group said this would involve tackling existing challenges and uncertainties.
“In the absence of complete official protocols from the IMO, the signatories, advisory and secretariat have worked tirelessly to update procedures to follow the revised strategy and its provisional implications within a remarkably tight timeline,” the report said.
