ICS Ad Hoc briefing meeting (14 May 2021)
During an ad hoc meeting of members on 14 May, members were updated on recent developments on the Poseidon Principles file, and invited to provide feedback on the Principles’ impact and ICS position. It was noted that since the end of April, three additional shipping banks (Finnvera, Standard Chartered and the Development Bank of Japan (DBJ)) have signed up as Signatories to the Principles, bringing the total number of signatories to 27, representing roughly US$185bn worth of shipping finance. It was established that the growing popularity of the Poseidon Principles among shipping banks (and the Principles’ unique position as the first private, sector-specific sustainable finance initiative which impacts maritime) raised the concern that the Principles might be seen as a model from which national sustainable finance regulation might draw inspiration for how to include the maritime sector.
It was therefore agreed that alignment of the Principles’ metrics to IMO standards of emissions assessment should be an industry priority, to ensure standardisation of this private initiative to the agreed global regulatory framework.
While it was established during this meeting that the ICS position on the Poseidon Principles should remain unchanged (that the Secretariat should neither publicly endorse nor oppose the Principles), it was nonetheless agreed that continued engagement with GMF was necessary in order to ensure that industry concerns about the Principles metrics could be raised with the Poseidon Principles’ secretariat directly. It was further noted that GMF had previously advised of an ongoing review of the Poseidon Principles metrics, and in this context, the Secretariat planned to meet with representatives of GMF the following week.
ICS Follow up Meeting with Global Maritime Forum (GMF) (18 May 2021)
On 18 May ICS met once again with representatives from GMF, to discuss the ongoing review of the metrics used to assess individual ships’ carbon intensity. Important outcomes from this meeting are highlighted below.
Divergent metrics: Poseidon Principles vs Sea Cargo Charter
ICS once again raised the concern reported by members that the Poseidon Principles and the Sea Cargo Charter use different metrics (AER and EEOI respectively), and that the operational efficiency measures which operators might take to comply with these metrics vary. The Secretariat highlighted that despite this discrepancy, an individual vessel may in certain cases receive ship finance from a signatory to the Poseidon Principles and charter their vessel to a signatory of the Sea Cargo Charter, and therefore need to make operational efficiency decisions in order to comply both with an AER and an EEOI simultaneously. GMF were asked for insight on how this potential ‘double-assessment’ had been addressed by the Poseidon Principles and Sea Cargo Charter.
GMF responded that although they were aware of this potential ‘double assessment’, this overlap of reporting standards was not addressed by the Poseidon Principles or Sea Cargo Charter teams when drafting. GMF advised that ultimately, it was the responsibility of the shipowner to enter into direct discussions with their banks and charterers to discuss the impact of this issue. The Secretariat will continue to advocate that a solution to this issue should be considered by the Poseidon Principles and the Sea Cargo Charter, given their advertised alignment as dual initiatives under the same Secretariat.
IMO Alignment-
As previously advised, initially, the Poseidon Principles (in their technical guidance to assessment) had outlined that the metrics to the Principles would only be reviewed every five years. GMF has since explained that due to concerns highlighted by industry and other stakeholders, a review of the metrics is now underway (three years ahead of the proposed timeline). During previous meetings, GMF advised that full alignment with IMO regulation was a priority for the Poseidon Principles.
However, when questioned again on the alignment of the Poseidon Principles to IMO, GMF advised that while the outcomes of MEPC 76 would feed into the Poseidon Principles metrics review, the signatory banks to the Principles would ultimately discuss the strength of this alignment, and reserve the right to interpret the global regulation agreed at IMO.
This is a departure from the previously advised position of GMF, and from the advertised position of the Principles, whose technical guidance document states that the Poseidon Principles are consistent with the policies and ambitions of the IMO. As discussed during the ad hoc meeting, it is essential that the Poseidon Principles fully align to IMO standards of assessment, and advocation of this alignment will be the framework for discussions with GMF moving forward.
Next Steps: Meeting Post-MEPC
As established with members during the ad hoc briefing meeting, engagement with GMF on the Poseidon Principles will continue, to enable industry to raise concerns about the metrics and highlight any potential negative impacts they may have on shipping companies.
Given the recent feedback from GMF that alignment with IMO regulation will be ultimately interpreted by the signatory banks, and as the outcomes from MEPC 76 will have a substantial bearing on the alteration of the Poseidon Principles metrics going forward, the ICS Secretariat will meet with GMF after MEPC 76 is concluded, to renew discussions.
