Case study
Poseidon Principles: Transparency in the shipping industry
In the absence of mandatory and economy-wide disclosure rules, some industries have created voluntary alternatives, which can have the benefit of international compliance. The Poseidon Principles have been hailed as one of the most successful of such initiatives, concentrating on financial institutions’ shipping portfolios.iGlobal shipping accounts for 3% of all carbon emissions, a percentage which is expected to rise in coming years. Measuring the industry’s progress will be crucial in determining priorities for mitigation.ii
Signatories agree to four principles: 1) Assessment, 2) Accountability, 3) Enforcement, and 4) Transparency. This means that every year, they measure and report their carbon intensity using standardized methodologies that minimize room for bias, a process which is backed by a legally binding contract. Industry stakeholders first assembled to develop the Principles in 2018, and by 2023, 30 banks have become signatories, together representing $200 billion, more than 70% of the global financial assets in shipping. In 2021, a second series of workshops began, with the goal of drafting similar principles for marine insurance, which have since been adopted by 10 signatories from the insurance industry.
Transparency is not a substitute for actual mitigation, and the shipping industry’s decarbonization remains slow. During the latest disclosure cycle, only one in four participating banks were on track to achieve a 50% emissions reduction by 2050, the target set by the United Nations’ International Maritime Organization. Nevertheless, signatories involved are hopeful that better awareness of the industry landscape will be the first step toward turning the tides of its sustainability.
