Signatory to the Poseidon Principles
In March 2020, SuMi TRUST Bank became a signatory to the Poseidon Principles established by financial institutions with the aim of contributing to the shipping industry's commitment to mitigating climate change risk.
The Poseidon Principles
The International Maritime Organization (IMO)*1 has adopted "the Green House Gas ("GHG") Strategy"*2 to comprehensively set the reduction target of GHG emissions from the international shipping industry, the measures to realize it, etc. And the Poseidon Principles were established in June 2019 by eleven major financial institutions in the West which were providing ship finance, as an approach led by private banks for "the GHG Strategy."
Sumitomo Mitsui Trust Bank quantitatively assesses the degree of contribution of our shipping portfolios to the reduction of GHG emissions from the international shipping industry, based on the GHG emission reduction target set by IMO, and discloses the results once a year as the Climate Alignment of Ship Finance Portfolios as a signatory financial institution to the Poseidon Principles.
- *1The International Maritime Organization, IMO: A specialized agency of the United Nations to promote international cooperation concerning maritime issues such as the security of ships and the prevention of marine pollution.
- *2GHG Strategy: The strategy adopted by IMO in April 2018, targeting to achieve zero GHG emissions as early as possible in this century. Specific reduction targets include the reduction of total GHG emissions from 2008 by at least 50% by 2050.
Portfolio climate alignment
In the Poseidon Principles, trajectory values of annual GHG emissions efficiency (GHG emissions per unit of transport) are prescribed for each ship type and size class based on the GHG emissions reduction targets of the IMO’s stated aim (adopted in July 2023) of reducing total annual GHG emissions from international shipping to net zero by around 2050. SuMi TRUST Bank compares the annual GHG emission efficiency (actual value) of each ship which SuMi TRUST Bank extends a loan for and is subject to calculation under the Poseidon Principles with the trajectory value in order to calculate the degree of divergence, which is referred to as the vessel climate alignment. We then calculate portfolio climate alignment as required under the Poseidon Principles as a sum of the weighted average of the vessel climate alignment using the balance of loans outstanding for each ship in the Bank’s ship finance portfolio. The portfolio climate alignment represents the degree of contribution the Bank is making towards the GHG emissions reduction target in its own ship finance portfolio. A negative or zero alignment score means the portfolio is aligned with the decarbonization trajectory of the Poseidon Principles, whereas a positive score means the portfolio is misaligned.
| GHG reduction target level (vs. 2008) | 2020 | 2021 | 2022 | |
|---|---|---|---|---|
Before July 2023 revisions |
50% reduction by 2050 |
(0.8)% |
(0.4)% |
(4.5)% |
After July 2023 revisions |
Target: 30% reduction by 2030 |
- |
- |
+21.2% |
Minimum*: 20% reduction by 2030 |
- |
- |
+16.9% |
|
- *GHG emissions reduction target level that should be met as a minimum, as defined by the Poseidon Principles