Export Credit Norway is one of several financial institutions which have adhered to the Poseidon Principles, a framework used for measuring the carbon intensity in ship finance portfolios. The initiative to build the framework came after the International Maritime Organization’s (IMO) decision to work towards the UN’s climate targets and reduce the shipping industry’s total emissions by at least 50 per cent by 2050.
International initiative
The Poseidon Principles are developed by leading international shipping banks, including Norwegian DNB, in addition to international industry players and academic institutions. Since its’ launch in June 2019, several leading banks and financial institutions have signed the principles. Export Credit Norway became part of the initiative in December 2019. On December 16. 2020 Poseidon Principles’ first yearly report was published. 15 financial institutions are included in the report. Amongst the 15, three have ship finance portfolios which are aligned with IMO’s initial GHG strategy. One of them is Export Credit Norway. See the report here
– Our experience is that this is an important and useful framework which highlights the challenges related to emissions from the shipping industry. Export Credit Norway is mainly financing new ships built at Norwegian shipyards, or ships built abroad with a lot of Norwegian equipment and technology. The Norwegian maritime industry is very focused on developing the latest green technology, and it is important for us to finance this, said Olav Einar Rygg, head of lending at Export Credit Norway.
Poseidon Principles measures the part of the portfolio that entails financing of vessels 5,000 gross tonnage and above engaged in international trade. The part of Export Credit Norway’s portfolio being measured is therefore dominated by new builds, and mainly hybrid ferries. This is why Export Credit Norway’s part of portfolio measured under the principles is aligned with the IMO trajectory for reaching the 2050-goal. – When Export Credit Norway finances retrofits, this generally entails installations of scrubbers or ballast water treatment systems, making older ships more environmentally friendly. However, these are smaller loans which therefore make up a lesser part of our portfolio, said Rygg.
An important and necessary change of course
– As a public provider of long-term financing it’s important for us to stand side by side with other leading banks and financial institutions in initiatives that secures frameworks and methods to measure the carbon footprint. The Poseidon Principles gives us the opportunity to learn and increase our knowledge, said Otto Søberg, CEO of Export Credit Norway. Export Credit Norway offers long-term financing to international buyers of Norwegian capital goods and services.
– Export Credit Norway’s purpose is to promote Norwegian export in a sustainable and responsible way. The Poseidon Principles do not apply to our entire portfolio, but represent an important first step for us, said Søberg. Export Credit Norway also follows several other international initiatives to ensure sustainability and corporate social responsibility, such as OECDs Common Approaches, The Equator Principles and The Responsible Ship Recycling Standard (RSRS).