Comments on the Poseidon Principles that have been written today by Reed Smith partner, Susan Riitala.
Susan Riitala, finance lawyer in Reed Smith’s transportation industry group, said: “When the Poseidon Principles for ship finance were originally published in 2019, there were eleven signatories. The group has now grown to 30, and represents over 65% of the world’s shipping debt. Increasingly, then, prospective borrowers should have their ears to the ground when it comes to new developments in this arena.
“The Poseidon Principles Association recently announced its intention to benchmark financing provided by signatories to meet the Paris Agreement’s target of ensuring global warming does not exceed 1.5C above pre-industrial levels by 2100, as well as reaching net-zero carbon by 2050. This is in addition to aligning with the existing IMO aim to reduce greenhouse gas emissions by 50% by 2050 and may be a more ambitious goal than many owners are currently working towards.
“The new benchmarking means that owners looking for funding from signatory lenders will find their green credentials tested against a higher bar. It goes without saying that financiers are key players in the decarbonisation efforts of the shipping industry by encouraging shipowners to employ more sustainable fleets with the promise of available financing for greener fleets.
“While approval from the signatories will be needed to the new pathway, and further changes may come up after the IMO’s review of its greenhouse gas strategy targets, expected in July 2023, this demonstrates a clear increase in the finance sector’s commitment towards more sustainable portfolios.”
