Banks should include CO2 emission measures in ship loan decisions

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LONDON (Reuters) – A group of leading banks will for the first time include carbon-reduction efforts in their decision-making when it comes to lending shipping lines, executives said Tuesday.

International shipping accounts for 2.2% of global carbon dioxide (CO2) emissions, and the United Nations International Maritime Organization (IMO) has a long-term goal of reducing greenhouse gas emissions by 50% by 2050 from 2008 levels.

Working with non-profit organizations, the Global Maritime Forum, the Rocky Mountain Institute and the UCL Energy Institute at London University, 11 banks have developed a framework for measuring the carbon intensity of ship finance portfolios.

The banks involved in the Poseidon Principles initiative, which will establish a common basis for judging whether or not loan portfolios are in line with IMO climate targets, represent approximately one-fifth or $ 100 billion (£ 79.7 billion) of the total global ship finance portfolio.

The results are published annually in individual sustainability reports and the data is obtained from the banks from borrowers within the framework of existing loan agreements.

Although the IMO agreed on stricter energy efficiency targets for certain types of ships last month, environmentalists are calling for stricter targets.

“We are helping the shipping industry to enter the 21st century in a responsible manner.

“MAJOR ROLE”

Citigroup, Societe Generale, DNB, ABN Amro, Amsterdam Trade Bank, Credit Agricole CIB, Danish Ship Finance, Danske Bank, DVB, ING and Nordea are involved so far.

“Banks play a big role here because there is about $ 450 billion in senior debt that the world’s shipping banks and Chinese lessors are putting into the sector, and about 70,000 merchant ships,” said Paul Taylor, Global Head of Shipping & Offshore at Societe Generale CIB, called.

In the longer term, banks will be more selective about which ships to add to their loan portfolios, bankers said.

“Will there be companies struggling to get funding because they have less efficient ships, yes it will be a consequence of that – but it is not used to look for these companies and somehow find a way to get them Parker of Citigroup said.

Oivind Haraldsen, global head of shipping at Danske Bank, said more institutions would join efforts to reduce the sector’s carbon footprint.

“We all have to push – we as banks probably have more power than we realize,” he said.

Editing by Alexander Smith

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