Poseidon Principles banks could tackle ship scrapping next

The Poseidon Principles could be expanded to cover ship demolition, the leader of the decarbonisation-focused banking initiative says.

Chairman Michael Parker told the SHIPPINGInsight conference in Stamford, Connecticut that the “logical next step” would be to include scrapping once an International Maritime Organization treaty enters force.

“We’re guided by and not following the IMO. But the scrapping issue is one which, when it becomes a global regulation, enables a global group of banks to register,” he said.

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The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships enters force two years after ratification by at least 15 states with at least 40% of the global fleet, in addition to recycling volume over 10 years that is 3% of those states’ total fleet.

With the addition of Sao Tome & Principe in August, 19 states have ratified — but they make up only 29.3% of the global fleet, according to the IMO.

Backed by the Global Maritime Forum, the Poseidon Principles is made up of 30 banks that have agreed to benchmark their portfolios against decarbonisation targets.

TradeWinds reported in September that the initiative agreed with its counterpart Poseidon Principles for Marine Insurance to increase their ambition by benchmarking against a trajectory aiming for net zero carbon emissions by 2050, as well as a path that is aligned with keeping global warming at no more than 1.5C.

At the time of that announcement, Parker said more evolution was possible, noting that it could extend to shipping companies’ corporate finance instead of just loans for ships.

At SHIPPINGInsight, he also said biodiversity could be another future evolution as it becomes a larger issue for the industry.

“Getting banks to agree on something like that is potentially very difficult,” he said.

“But what we will be doing, I think, is looking for guidance from those who are experts, so that we can then judge what would be a fair, objective way of measuring the impact in some way.”

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But Parker had been asked by SHIPPINGInsight chief evolution officer Carleen Walker whether the Poseidon Principles could one day include the “S” in environmental, social and governance factors, or ESG.

He mentioned no factors typically considered social, such as diversity and inclusion.

Parker said that question had been raised when the Poseidon Principles were founded, but the group decided to focus on data points that required no assumptions, namely the emissions of a financed ship and the IMO’s trajectory.