Poseidon Principles

From Open Risk Manual

Definition

The Poseidon Principles is a framework developed by the maritime industry towards adopting internal policies, procedures that better align shipping portfolios with responsible environmental impact.

They are supported by an industry-specific climate alignment methodology and accountability and enforcement requirements that support data collection and analysis practices. The Poseidon Principles also establish transparency requirements for Signatories.

The Poseidon Principles are consistent with the IMO’s ambition for GHG emissions from international shipping to peak as soon as possible and to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008

The methodology is informed by recommendations made by the CDP, the TCFD, and the Science Based Targets Initiative.

Scope

The Poseidon Principles are applicable to lenders, relevant lessors, and financial guarantors including export credit agencies. The Poseidon Principles must be applied by Signatories in all Business Activities that are

  • credit products–including bilateral loans, syndicated loans, club deals, and guarantees–secured by vessel mortgages or finance leases secured by title over vessel and
  • where a vessel or vessels fall under the purview of the IMO (i.e., vessels 5,000 gross tonnage and above engaged in international trade).


The scope of financial products will be reviewed and may be expanded by Signatories on a timeline that is at their discretion. Climate alignment is currently the only environmental factor considered by the Poseidon Principles.

Principles

Principle 1 Assessment of climate alignment Signatories will, on an annual basis, measure the carbon intensity and assess climate alignment (carbon intensity relative to established decarbonization trajectories) of their shipping portfolios. This requirement takes effect for each Signatory in the following calendar year after the calendar year in which it became a Signatory.
Principle 2 Accountability We recognize the important role that classification societies and other IMO-Recognized Organizations (“RO”)2 play in providing unbiased information to the industry and the mandatory regulation established by the IMO for the data collection and reporting of fuel oil consumption from ships, (the “IMO DCS”). We will rely on such entities and mandatory regulations as explicitly identified in the Technical Guidance for the provision of information used to assess and report on climate alignment.
Principle 3 Enforcement We will require that ongoing compliance with the Poseidon Principles is made contractual in our new Business Activities using standardized covenant clauses. We will contribute to the update and addition of standardized clauses through the annual review process. Signatories will agree to work with clients and partners to covenant the provision of necessary information to calculate carbon intensity and climate alignment.
Principle 4 Transparency We will publicly acknowledge that we are a Signatory of the Poseidon Principles and we will publish the results of the portfolio climate alignment score of our Business Activities on an annual basis in line with the Technical Guidance.
  • Upon becoming a Signatory, the Signatory will publicly acknowledge that it is a Signatory of the Poseidon Principles.
  • On an annual basis, each Signatory will report the overall climate alignment of its shipping portfolio and supporting information, as per the Accountability requirements, to the Secretariat no later than 30 November. This requirement takes effect for each Signatory in the calendar year after the calendar year in which it became a Signatory.
  • On an annual basis, each Signatory will publish the overall climate alignment of its shipping portfolio in relevant institutional reports on a timeline that is appropriate for that Signatory. This requirement takes effect for each Signatory in the calendar year after the calendar year in which it became a Signatory.

An RO is an authorized organization that performs Statutory requirements on behalf of the flag state of a vessel. While normally a Classification Society, in the case of the IMO DCS, independent verifiers have been authorized by some flag states.