Poseidon Principles’ 2023 Annual Report highlights a pivotal moment as signatories, for the fourth consecutive year, reveal their climate alignment efforts. The report, crafted by the Global Maritime Forum in collaboration with UMAS, underscores the shipping industry’s commitment to decarbonization.
The upcoming year will see the Poseidon Principles fine-tune trajectories and methodologies, building on the lessons learned from the current report and outcome of MEPC 81.
According to the report, in September, just a few weeks after the adoption by the IMO of its revised greenhouse gas GHG strategy, all of the signatories in the initiative, representing 13 countries, unanimously chose to align the Poseidon Principles methodology with the new IMO ambition, including the goal of achieving net zero emissions by or around 2050. This decision also accounts for emission reduction milestones in 2030 and 2040, employing a comprehensive lifecycle well-to-wake approach and broadening coverage to include a more extensive range of GHG.
Despite the challenges faced by the shipping industry in 2023, such as severe port congestion, personnel shortages, inflation, and geopolitical tensions, the Poseidon Principles’ growing influence on shipping’s decarbonisation is evident. The reporting results against the IMO’s initial GHG Strategy ambition of a 50% CO2 reduction by 2050 shows a considerable improvement, with an average score above the trajectory +2%², a notable advancement from last year’s +9.7%.
The reporting percentage of +95.4% stands as a testament to the strong endorsement from shipowners and clients, indicating a growing trend in which industry stakeholders recognise and value the advantages associated with a more transparent and collaborative approach.
..said Paul Taylor, Poseidon Principles Vice Chair and Global Head of Maritime Industries, Société Générale.
The role of transparent finance in decarbonisation
Finance plays a critical role in the decarbonisation of the shipping sector because of its ability to incentivise and support tangible climate activities. This includes
the alignment of shipping finance towards GHG reduction strategies through transparency as done with the Poseidon Principles. Transparent climate reporting allows for benchmarking climate impact which can then be used to make informed business decisions. Additionally, financial institutions can build the appetite for lenders to supply sustainability-linked loans, increase the capital available for infrastructure and research, and a play an important role in equally distributing these funds around the globe.
Climate alignment and decarbonisation trajectories
Poseidon Principles signatories commit to reporting the climate alignment of their shipping portfolios each year through a climate alignment score. The climate
alignment score is made up of individual scores for each vessel in a signatory’s shipping portfolio.
Climate alignment measures the difference, as a percentage, between a vessel’s actual emissions and its respective decarbonisation trajectory. When all
vessel scores within a portfolio are averaged together, the overall score represents how aligned the entire portfolio is to the decarbonisation trajectory.
Figure 5 shows a stylised depiction of a decarbonisation trajectory (blue line) and annual emissions intensity of a vessel. Green dots represent vessels that are
aligned, or below the decarbonisation trajectory. Red dots represent vessels that are misaligned, or above the decarbonisation trajectory.
