A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE HOW DID THE - PowerPoint PPT Presentation

N O V E M B E R 2 0 1 9 A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE

HOW DID THE POSEIDON PRINCIPLES COME TO BE? Financial Initiatives Shipping sector commitments Poseidon Principles A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 2

PRINCIPLE 1 – ASSESSMENT OF CLIMATE ALIGNMENT https://www.poseidonprinciples.org/#home A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 3

PRINCIPLE 2 – ACCOUNTABILITY https://www.poseidonprinciples.org/#home A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 4

PRINCIPLE 3 – ENFORCEMENT https://www.poseidonprinciples.org/#home A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 5

PRINCIPLE 4 – TRANSPARENCY https://www.poseidonprinciples.org/#home A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 6

IMPACT ON SHIPPING COMPANIES Generally positive feedback from majority of shipowners “ The [Owner] shall, upon the request of [any Lender] and at the cost of the [Owner], on or before [31st July] in each calendar year, supply or procure the supply to [the Facility Agent] [such Lender] of all AER data to be shared with banks information necessary in order for [any Lender] to comply with its via new loan covenant obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Bank data requirement aligned with IMO Regulation 22A of Annex VI and any Statement of Compliance , in each case relating to the [Vessel] for the preceding calendar year [provided always that [no Lender] shall publicly disclose such More communication with financiers information with the identity of the [Vessel] without the prior written re operational efficiency of vessels consent of the [Owner]/[.For the avoidance of doubt, such information shall be [“Confidential Information”][“Information”] for the [ • ] [ • ] purposes of [Clause (Confidential Information)][Section Greater liquidity available (Treatment of Certain Information; Confidentiality)]] but the [Owner] for new eco-friendly vessels acknowledges that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Less liquidity available for older less [relevant] [Lender’s] portfolio climate alignment ” efficient vessels seeking refinancing A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 7

EXAMPLE OF DISCLOSURE REQUIREMENT SUBMISSION A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 8

CALCULATING THE CLIMATE ALIGNMENT OF VESSELS Alignment requires: • Individual vessel’s annual carbon intensity (gCO2/tnm) calculated from IMO DCS data • Decarbonization Trajectory provided by secretariat Key: • Alignment delta ( ∆ 𝒋 ) The % difference between a vessel's carbon intensity and the decarbonization trajectory at the same point in time: expressed as a (+/-) %. A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 9

IMPACT ON FINANCIERS Bring climate alignment into our credit decisions Create alignment with our clients re operational efficiency of vessels Encourages greater transparency and accountability re our activity Enhanced risk management via measurement of portfolio More closely partner our clients in new projects Be a leader and bring innovative solutions to our clients A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 10

NEXT STEPS Lobby Asian banks, export credit agencies and lessors Government intervention to incentivize new investment Create a market standard Extend Scope to other Social Factors A benchmark for other industries A GLOBAL FRAMEWORK FOR RESPONSIBLE SHIP FINANCE │ NOVEMBER 2019 │ 11