Major Banks to Weigh Environmental Impact in New Shipping Loans -- Update
June 17 2019 - 7:38PM
Dow Jones News
By Costas Paris
Eleven banks, including Citibank, France's Société Générale SA
and Norway's DNB ASA, say they will take climate considerations
into account when extending new shipping loans.
The goal is for the ship financing sector to support an industry
target to cut greenhouse gas emissions by half in 2050.
The banks, which have a combined shipping portfolio of around
$100 billion, or about a fourth of the global ship finance market,
have signed onto an industrial framework known as The Poseidon
Principles, which seeks to direct new money for shipping toward
environmentally friendly oceangoing vessels.
"As banks, we recognize that our role in the shipping industry
enables us to promote responsible environmental stewardship
throughout the global maritime value chain," said Michael Parker,
global industry head of shipping and logistics at Citibank, the
consumer division of Citigroup Inc.
Mr. Parker said the banks will look at the type of ship, the
kind of fuel it uses and other criteria which will support a target
by the International Maritime Organization, the global marine
regulator, for ships to pare back their emissions compared with
2008 levels.
"We hope that around 90% of lenders will sign The Poseidon
Principles," Mr. Parker said, adding that Chinese lenders could
join by next year.
Chinese banks control around 25% of all ship finance and more
than half of all shipbuilding capacity, according to shipping and
bank executives.
"We will say yes for those kind of vessels that contribute to
green shipping and no to others that are not needed in the world
fleet. Secondhand ship financing will become more difficult," Mr.
Parker said.
Paul Taylor, global head of shipping and offshore at Société
Générale, said the new loan criteria will help banks "to align and
de-risk portfolios in line with shipping's green transition."
Other founding signatories include Dutch bank ABN Amro, France's
Crédit Agricole, and Denmark's Danske Bank A/S. The principles are
also supported by some of the industry's biggest ocean cargo
movers, including Danish shipping giant A.P. Møller-Mærsk A/S,
agriculture commodities giant Cargill Inc. and Belgium-based tanker
operator Euronav International SA.
The International Maritime Organization has taken the first step
to reduce ship sulfur emissions by more than 80% starting next
January, when cleaner ship fuels will become obligatory.
Experts say cutting carbon dioxide emissions substantially over
the coming years will require that new vessels begin running on
alternative fuel sources like biofuels or hydrogen batteries. Ships
that run on such fuels could take years to develop, according to
industry executives.
Write to Costas Paris at costas.paris@wsj.com
(END) Dow Jones Newswires
June 17, 2019 19:23 ET (23:23 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.