The Poseidon Principles for Marine Insurance issued its Third Annual Disclosure Report revealing the marine insurance sector’s broader engagement with sustainability and risk considerations in line with the International Maritime Organization’s (IMO) 2050 net-zero emissions ambition.
This year, nine signatories, representing over 25% of the total deadweight of the world fleet within the reporting scope, calculated climate alignment scores using vessel data from 2023.
Signatories of the Poseidon Principles for Marine Insurance have committed to reporting the climate alignment of their H&M portfolios each calendar year.
The results highlight:
- Against the 2023 IMO GHG Strategy – alignment scores ranged from 10.4% to +28%, with a weighted average of +24.8% and a simple average of +20.8%.
- Against the 2023 IMO GHG Strategy – scores ranged from -6.1% to +34%, with a weighted average of +30.8% and a simple average of +26.7%.
This means that, on average, climate alignment scores were +20.8% misaligned with the IMO’s minimum ambition in 2023.
Since June 2024, climate alignment scores can be produced using estimations based on a modelled data pathway track. This approach enhances reporting by efficiently gathering climate data across the entire H&M portfolio, improving efficiency and reducing the administrative burden on both signatories and their clients.
Reporting
This report marks the first time:
- signatories have calculated climate alignment against trajectories in line with the 2023 IMO GHG strategy;
- modelled data has been allowed to be used in meeting disclosure requirements; and
- signatories have been able to report on their entire H&M portfolio.
Marine insurers play a crucial role in supporting the IMO’s global shipping industry’s transition to net zero.
…said Patrizia Kern-Ferretti, Chair, Poseidon Principles for Marine Insurance.
A transformative year for climate reporting
The international shipping industry is vital to global trade, creating millions of jobs and ensuring the efficient movement of goods that sustain economies and communities. However, these activities are not without an impact on climate, as shipping accounts for about 3% of global greenhouse gas (GHG) emissions.
Moreover, the maritime sector is currently undergoing a period of significant change, from the development of new technologies, vessels, and fuels to navigating the changing landscape of regulation, policies, trade patterns, and geopolitics. With these growing complexities and disruptions to normal operations, enhancing the resilience of the global fleet and increasing transparency is even more important.
As part of efforts to ensure sustainable supply chains, the IMO adopted the 2023 IMO Strategy on Reduction of Emissions from Ships (Resolution MEPC.377(80)), which aims for net-zero emissions from international shipping “by or around” 2050. This is a more ambitious goal than the 2018 strategy, which aimed for a 50% reduction in emissions from international shipping by 2050 compared to 2008 levels.
The strategy also expands beyond CO2 emissions to include other greenhouse gas (GHG) species and shifts from considering only operational emissions (tank-to-wake) to full life cycle emissions (well-to-wake CO2e).
While the Paris Agreement’s goal of keeping the rise of global surface temperature well below 2°C and reducing GHG emissions to net zero by mid-century has been agreed upon by 195 member states of the United Nations Framework Convention on Climate Change, emissions from international shipping are not directly covered in this international treaty.
While the IMO’s strategy does not require marine insurers to report the climate impact of their portfolios, the marine insurance industry plays an important role in facilitating decarbonisation across the global shipping sector.
This is crucial given the significant coverage gaps in liability and regulatory frameworks related to new technologies and fuels needed for the net-zero transition.
Understanding the intricacies of the industry’s emissions through transparent climate reporting is important for stakeholders across the shipping industry, including marine insurers, brokers, captives, and P&I clubs.
By setting higher standards and integrating comprehensive emissions data, insurers are actively contributing to a more sustainable shipping sector.
…said Sundeep Khera, Vice Chair, Poseidon Principles for Marine Insurance.
