Sumitomo Mitsui Banking Corporation joins the Poseidon Principles

Japanese banking and financial institution Sumitomo Mitsui Banking Corporation has become a signatory of the Poseidon Principles, a regulatory framework for responsible financing of the shipping industry.

The general idea behind the framework is for the signatory banks, as capital providers, to support the objectives of the International Maritime Organization (IMO), the primary issue being climate change.

The core trajectory being followed is the IMO target of cutting the shipping industry’s greenhouse gas (GHG) emissions by 50 percent by 2050 when compared to 2008 levels.

“We are pleased to see that more and more Asian financial institutions are committed to support sustainable ship finance,” Poseidon Principles said announcing the new signatory.

“As a signatory to the Principles, SMBC Group will further enhance its actions towards addressing the risks of climate change, by conducting its business in a manner that contributes both to the growth of its customers and society more broadly,” Sumitomo Mitsui Banking Corporation said. 

The key four principles include:

• assessment of the climate alignment of signatories’ shipping portfolios relative to established decarbonization trajectories
• accountability- committing to using IMO DCS* data and service providers approved by the IMO to calculate their shipping portfolios’ climate alignment
• enforcement mechanism via a standardized covenant clause
• transparency-reporting on the overall climate alignment

Overall, 22 financial institutions have joined the Poseidon Principles, representing over $150 billion in loans to international shipping – more than a third of the global shipping finance portfolio.

The principles were developed by global banks – Citi, Societe Generale, and DNB – in collaboration with A.P. Møller Mærsk, Cargill, Euronav, Gram Car Carriers, Lloyd’s Register, and Watson Farley & Williams – with expert support by the Global Maritime Forum, Rocky Mountain Institute, University College London Energy Institute, and UMAS.

The first disclosure report from the original 15 signatories of the Poseidon Principles released in December 220 shows that the ship finance portfolios of three banks are aligned with the UN decarbonization targets while those of the remaining 12 banks are not.

The portfolio assessment builds on 2019 emissions data from shipping clients compared to a decarbonization trajectory for the same year.