Bankers have warned shipowners that their future in the industry will be a short one unless they get to grips with the greening of shipping.
The TradeWinds Digital Forum brought together banks, owners and advisors for a discussion on the future of environmental, social and governance (ESG) issues on Tuesday.
There was agreement that the eco "train" is not going to stop now that it has pulled out of the station.
Paul Taylor, global head of shipping and offshore at French lender Societe Generale, told the forum that banks now have a "great say" in what vessels are sailing on the oceans.
Taylor was a prime mover in the development of global lenders' green financing guidelines encapsulated in the Poseidon Principles.
He said the impact of this scheme is still to be seen, with the first period of reporting coming due over the next month or two.
"What I'm already seeing is that we're already looking at the carbon efficiency of existing ships," Taylor said. "This will increase going forward."
ESG is not 'hype'
He dismissed the notion that ESG and green financing is "hype".
"It's definitely not hype," Taylor said. "Anyone who decides it's not their problem is going to have a very short future in the industry."
Taylor said the level of feedback on the Poseidon Principles has been "very, very positive".
"So far, I haven't had any form of pushback from owners in terms of what we're trying to do and the role of banks," he said. "This is now an unstoppable force."
Joachim Nahem, a partner at ESG advisor The Governance Group, said the game-changing element of the shift from corporate social responsibility (CSR) to ESG has been that the latter now has financial consequences.
"You could argue before that CSR was more about reputation, altruism, doing good," Nahem said. "Now it has a bottom line. Access to capital depends on performance and transparency."
Jan Ole Huseby, DNB's global head of ocean industries, told the forum that the Norwegian bank is already seeing a change in lending practices across various sources of capital.
"There is still a long way to go to get this implemented," he said. "We have definitely very exciting times ahead."
GasLog chief operating officer Paolo Enoizi told the forum that ESG is a "good metamorphosis from CSR".
"Shipping has been a very compliant industry," he said. "These new dynamics are really shaping companies. They have to ask themselves, where is the value for me?"
Andy Dacy, global head of JP Morgan's transportation group, agreed that ESG is not hype.
The bigger the better?
"It is here and it is not going away," he said.
Dacy argued that after a very challenging 10-year period for shipping, banks have had to reassess which clients they are focusing on, with larger companies receiving more attention.
"Larger entities are far more transparent, they are embracing ESG, and there is a synergy between banks and companies focusing on ESG," he said.
"You're going to have this situation where perhaps capital is flowing in a particular direction, in my opinion towards larger companies, or at least they'll have access to cheap capital."
