European financiers and lawyers have been debating whether the Poseidon Principles can succeed without Asian support.

But Chinese leasing houses have told TradeWinds that the big obstacle to signing up to the green shipping finance initiative is not institutional conservatism or resist­ance to environmental progress. The hold-up is that nobody has invited them to join.

“I can confirm that,” said an ­executive of Shanghai’s Bank of Communications Financial Leasing (Bocomm Leasing), which is one of the two biggest ship finance lessors, along with Beijing’s ICBC Leasing.

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“We will sign the Poseidon Principles if someone asks more partners to join. Maybe only banks have been asked to join at the first stage, I’m not sure.”

The Poseidon Principles’ website explicitly makes “lenders, ­lessors and financial guarantors ... with shipping portfolios” eligible as signatories.

Asian lenders, including the Export-Import Bank of China, has the world’s largest single-ship lending portfolio Photo: Scanpix

Growing awareness

“We have been invited to join several conferences, but so far I have not been invited to join,” the Bocomm Leasing official said. “But I will join if I am asked.”

Another ship finance executive with experience at several ­Chinese­ leasing houses confirmed that no invitation had been received by companies of whose operations he had knowledge.

“I think my colleagues in the leasing community are aware of the Poseidon Principles,” he said. “In internal discussions and in presentations to our group’s higher leadership, we have mentioned that many ship finance companies are joining. But we have not been invited.”

His invitations to participate in briefings and discussions on the Principles have come not from the European banks involved, but from classification society Lloyd’s Register. It has been an ­enthusiastic backer of the initiative, which has encountered pushback from some other class societies, according to people promoting the Poseidon Principles.

Signatories
  • ABN Amro
  • Amsterdam Trade Bank
  • Citigroup
  • Credit Agricole
  • Danish Ship Finance
  • Danske Bank
  • DNB
  • DVB
  • Export Credit Norway
  • ING
  • Nordea
  • Societe Generale
  • Sparebanken Vest

A spokesman for the Poseidon Principles Association said it is talking to big Chinese lenders to global ship­ping. “More are currently reviewing the Principles internally,” he said. “We are confident that most serious lenders will sign the Poseidon Prin­ciples before the end of the year.”

The initiative, launched last June, aims to harness the power of money to make carbon emissions transparent. Sharing of emissions data and scoring of shipowners by lenders is meant to push owners in the direction of the IMO goal of halving greenhouse gas emissions by 2050. Data sharing will give lenders and shareholders tools for rewarding progress and punishing complacency.

More [major Chinese lenders] are currently reviewing the Principles internally. We are confident that most serious lenders will sign the Poseidon Principles before the end of the year.

Poseidon Principles Association spokesman

Eleven of the sponsors named on the Poseidon Principles website are European banks, with Citigroup and Norway’s export credit agency the other two signatories.

Foreign observers have disputed whether the initiative can fly without the support of Asian ­finance — especially the Chinese lease finance houses, with their ready access to capital and their aggressive approach to portfolio building, and state policy lender Export-Import Bank of China (China Exim Bank), which has the world’s largest single-ship lending portfolio.

Ship finance lawyer Alison Weal of US firm Winston & Strawn said last November that the ­absence of big Asian lenders could be fatal, because it might send shipowners elsewhere to seek capital.

But others doubt that Asian ship finance is likely to become a haven for climate sinners.

Lindsey Keeble of law firm Watson Farley & Williams said in December that after meetings in Shanghai with several leasing house executives, she believed they were genuinely interested in the Poseidon Principles. She ­attributed the fact that none had yet joined to the laborious process of getting the green light from institutional management.

She also said Chinese leasing houses that look to banks, including those in the West, to fund their spending are likely to move more quickly because they rely on the participation of sponsors of the Poseidon Principles.

An official at shipbuilder-owned CSIC Leasing agreed with this assessment.

Lindsey Keeble of Watson Farley & Williams Photo: WFW

“If all the banks are in this programme, the leasing companies will also join, because many of us get most of our money from these banks,” the executive said.

Other ship finance sources ­added that a signature by China Exim Bank would be an important signal to leasing houses.

China Exim Bank shipping deputy general manager Gao Zefeng told TradeWinds last week that his bank has had information meetings with the Poseidon Principles signatories and is studying the proposal.