Banks steer maritime shipping toward climate goals

borrowing and lending signs with ship
ShutterstockGreenBiz Collage

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Financial leaders are increasingly waking up to how both companies and financial markets will be affected by climate change. And now some of the world's biggest banks are using their heft to nudge maritime shipping toward decarbonization. 

This week 11 major shipping banks — including Citi, Societe Generale, ING and DNB — announced that they've signed onto a new set of guidelines that provide a new climate framework for how they fund shipping vessels. 

The new guidelines, called The Poseidon Principles, were created in collaboration with nonprofit Rocky Mountain Institute, shipping group Global Maritime Forum and shipping companies such as Maersk, Euronav and Cargill. Groups that sign onto the principles pledge to assess the carbon intensity of shipping investments and to incorporate climate goals into the portfolios of shipping vessels that they fund. (The International Maritime Organization, a part of the United Nations, has stated a goal to reduce maritime shipping greenhouse gas emissions by 50 percent below 2008 levels by 2050.)

Why is this interesting? Here are three reasons:

  • Maritime shipping is weird in the overall global climate agenda because it doesn't come under any one country's purview. It was previously left behind (before the IMO's goal), but it's currently responsible for over 2 percent of global greenhouse gas emissions — and that could grow by between 50 percent to 250 percent by 2050. 
  • Shipping vessels are also unique in that most of the capital to finance them is provided by various commercial banks (in addition to family equity). So banks have a major leadership role to play here.
  • These principles could provide a new model for how financiers can collaborate with industry and NGOs to create a voluntary framework for outlier industries. 

Maersk Shipping Containers

The principles are the world's "first global sector-wide and self-governing climate agreement" and "redefine the role of banks in the shipping sector," said RMI senior associate James Mitchell in an interview. Citi's global industry head of shipping and logistics, Michael Parker, also told GreenBiz that the principles put "climate change at the top of the decision-making tree." 

The agreement is also a way to provide more stability for the maritime shipping sector in order to help it introduce more low-carbon technologies, from alternative fuels to batteries to efficiency measures. The chief operating officer of Danish shipping giant Maersk, Søren Toft, had a strong quote in the group's release that conveys the urgency with which company is pushing:

Shipping’s decarbonization will require unparalleled innovation. A modern ship is a highly capital-intensive asset with a typical life span of 25-30 years. To deliver on ambitious climate targets, zero-emission vessels will need to enter the fleet by 2030. This leaves us only 10 years to develop the new marine fuels, propulsion technologies and infrastructures that will be required.

From a corporate perspective, you should care about decarbonizing maritime shipping, because these emissions might be part of your logistics supply chain. Big companies such as IKEA and HP are trying to track these shipping emissions and figuring out creative ways to work with suppliers to reduce them. HP estimates that 3.4 percent of the company's annual greenhouse gas emissions come from shipping computers and printers by air, road, rail and sea (13 percent). 

Leading retailers are collaborating with shippers, across shipping modes, to figure out the best strategies to introduce zero emission technology. As IKEA's head of sustainable mobility, Angela Hultberg, said on a webinar I hosted last week: Collaboration will be key for IKEA to meet its electric last mile delivery goals. "Our service providers are crucial. We're looking for service providers that want to go on this journey with us."

If you're interested in learning more about decarbonizing maritime shipping, I'm organizing a workshop on shipping emissions across modes at our VERGE 19 event Oct. 22-24 in Oakland. If you're an expert sustainable maritime shipping, drop me a line at [email protected]

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