A global framework for
responsible ship financeVersion 5.1
June 2024

Poseidon Principles
Amaliegade 33 B, 3rd floor
1256 Copenhagen K
Denmark
www.poseidonprinciples.org
info@poseidonprinciples.org© Poseidon Principles

Poseidon Principles

Poseidon Principles
We are proud to continue our commitment to improving the role of maritime finance inaddressing global environmental issues. The Poseidon Principles are a framework forassessing and disclosing the climate alignment of ship finance portfolios. They create a
global baseline to support and work towards the greater goals for our society and the goal
to align our portfolios to be environmentally responsible.
We know these steps are important for us to lead industry-wide change. As such, thePrinciples were developed in recognition of our role as financial institutions in promoting
responsible environmental stewardship throughout the maritime value chain.
The Principles are consistent with the policies and ambitions of the International Maritime
Organization (“IMO”), including its ambition for greenhouse gas (“GHG”) emissions topeak as soon as possible and to reduce shipping’s total annual GHG emissions to net
zero by or around 2050 compared to 2008. In September 2023, signatories unanimously
decided to align methodology with this ambitious outcome during MEPC 80. It is with pride
that we take note of our own role, as the Poseidon Principles called for concrete leadershipfrom the IMO in June 2023 to clarify ambitions for a 1.5°C future to enable cross sector
engagement.
The Poseidon Principles are applicable to lenders, relevant lessors, and financial guarantors
including export credit agencies. They apply globally, to all credit products secured byvessel mortgages, finance leases secured by title over vessel, or unmortgaged ECA loans
tied to a vessel and where a vessel or vessels fall under the purview of the IMO.
Currently, climate alignment is the only factor considered by the Poseidon Principles.
However, we recognise that they are intended to evolve over time and agree to contributeto a review process to ensure that the Poseidon Principles are practical and effective, andthat further adverse impacts are identified for inclusion in due course. While the Poseidon
Principles establish a global baseline, we recognise that some signatories may wish to go
beyond this individually, and nothing in the Poseidon Principles prevents that.
The Poseidon Principles are ground-breaking in both the spheres of shipping andsustainable finance. They will not only serve our institutions to improve decision-making at
a strategic level but will also shape a better future for the shipping industry and our society.
As signatories, we commit to implementing the Poseidon Principles in our internal policies,
procedures, and standards, and to work in partnership with our clientsand partners on an ongoing basis to implement the Poseidon Principles.
What began with 11 signatories in 2019 is now over 30 strong with increased membership
anticipated, a testament to the growing impact of our collective commitment and theimportance of transparency in propelling the maritime industry towards decarbonisation.
We invite you to join us.
February 2024

Michael Parker
Chair, Poseidon Principles
Chairman, Global Shipping, Logistics and Offshore, Citi

Paul Taylor
Vice Chair, Poseidon Principles
Global Head of Maritime Industries, Société Générale
1

Poseidon Principles

Preamble
The maritime sector has provided efficient economic services that have played a keyrole in enabling the growth of global trade and global economic development. However,this has not been without some adverse consequences unique to the maritime sector.
The continued success of the maritime sector is intrinsically linked to the well-being andprosperity of the society we serve. Therefore, all industry participants must play a role inaddressing adverse impacts.
As financial institutions, we recognise that our role in the industry affords us opportunities
to promote responsible environmental stewardship throughout the maritime value chain.
Thus, we have established the Poseidon Principles, which serve as a framework for creating
common, global baselines that are consistent with and supportive of climate goals. This will
enable us to better align our portfolios with responsible environmental impacts.
The Poseidon Principles are consistent with the policies and ambitions of the IMO,
including its 2023 Revised Strategy on Reduction of GHG Emissions from Ships (2023
IMO GHG Strategy), which calls for the emissions from international shipping to drop to
net-zero around 2050 compared to 2008 levels with interim targets in 2030 and 2040
on a well-to-wake basis. They are also intended to support other initiatives, such as the
Principles for Responsible Banking, Carbon Disclosure Project (“CDP”), Energy Transitions
Commission, Task Force on Climate-Related Financial Disclosures (“TCFD”) and the manyothers that are developing to address adverse factors.
As signatories, we commit to implementing the Poseidon Principles in our internal policies,
procedures, and standards. We will work in partnership with our clients and partners on an
ongoing basis to implement the Poseidon Principles. We welcome the establishment of
global baselines through the Poseidon Principles and acknowledge that some signatories
may choose to go beyond them. This offers significant benefits to us as signatories, to theglobal maritime industry, and to society as a whole.
We understand that the Poseidon Principles are intended to evolve over time andagree to contribute to a review process when we as signatories decide to undertake it. This
process will ensure that the Poseidon Principles are practical and effective and are linked toand support the development IMO’s measures for GHG reduction.

2

Poseidon Principles

Scope
The Poseidon Principles are applicable to relevant lenders, lessors, and financial
guarantors, including export credit agencies (ECA). Signatories must apply the Poseidon
Principles to all business activities:

1.

that are credit products (including bilateral loans, syndicated loans, club deals,
and guarantees) secured by vessel mortgages or finance leases secured by title
over vessel or unmortgaged ECA loans tied to a vessel; and2. where a vessel or vessels fall under the purview of the International Maritime

Organization (IMO) (e.g. vessels 5,000 gross tonnage and above which have an
established Poseidon Principles trajectory whereby the emissions intensity can bemeasured with IMO Data Collection System (DCS) data).

The scope of financial products will be reviewed and may be expanded by signatories on atimeline that is at their discretion.
Climate alignment is currently the only environmental factor considered by the Poseidon
Principles. This scope will be reviewed and may be expanded by signatories on a timelinethat is at their discretion.

3

Poseidon Principles

Principle 1

Assessment
We will annually assess climate alignment
in line with the Technical Guidance for all
business activities.

Our commitment:
Signatories will measure the emissions intensity of theirshipping portfolios on an annual basis and assess theirclimate alignment relative to established decarbonisation
trajectories. This assessment is based on a robust
industry-appropriate methodology outlined in theTechnical Guidance. The requirement to assess climatealignment takes effect the calendar year after a financial
institution becomes a signatory.

4

Poseidon Principles

Principle 2

Accountability
We recognise the important role thatclassification societies and other IMO
Recognized Organizations (“RO”)1 play inproviding unbiased information to the industry
and the mandatory regulation established by
the IMO for the data collection and reportingof fuel consumption from ships, (the IMO Data
Collection System - “IMO DCS”). We will relyon such entities and mandatory regulations as
explicitly identified in the Technical Guidance
for the provision of information used to assess
and report on climate alignment.

Our commitment:
For each step in the assessment of climate alignment,
signatories will rely exclusively on the data types, data
sources, and service providers identified in the Technical
Guidance.

1
A RO is an authorised organisation that performs statutory requirements on behalf of theflag state of a vessel. While normally a Classification Society, in case of the IMO DCS, independent
verifiers have been authorised by some flag states.
5Poseidon Principles

Principle 3

Enforcement
We will require that ongoing compliance with
the Poseidon Principles is made contractual in
our new business activities using standardisedcovenant clauses. We will contribute to the
update and addition of standardised clauses
through the annual review process.

Our commitment:
Signatories will agree to work with clients and partners togather the necessary information to calculate emissions
intensity and assess climate alignment.

6

Poseidon Principles

Principle 4

Transparency
We will publicly acknowledge that we are asignatory of the Poseidon Principles and wewill publish the results of the portfolio climatealignment score of our business activities
on an annual basis in line with the Technical
Guidance.

Our commitment:
1.

Upon becoming a signatory, the financial
institution will publicly acknowledge that it is asignatory of the Poseidon Principles.

2. On an annual basis, each signatory will report

the overall climate alignment of its shipping
portfolio and supporting information, as per the
Accountability requirements, to the Secretariat
no later than 15 November. This requirementtakes effect for each signatory in the calendar
year after the calendar year in which it became asignatory.

3. On an annual basis, each signatory will publish theoverall climate alignment of its shipping portfolio
in relevant institutional reports on a timeline thatis appropriate for that signatory. This requirementtakes effect for each signatory in the calendar
year after the calendar year in which it became asignatory.

7

Poseidon Principles

8

Poseidon Principles

Technical guidance
Introduction
10
2.1

Assessment
12

Accountability
and enforcement

Selecting the right metric for measuring climate 		alignment

16

2.2

Calculating vessel emissions intensity

18

2.3

Assessing climate alignment

19

2.4

Decarbonisation trajectory

21

2.5

Aggregating alignment for product and portfolios

21

3.1

Accountability

25

3.2

Enforcement

26

3.3

Requirements at each information flow step

27

3.3.1
3.3.2
		
3.3.3
3.3.4

24

Transparency

Step 1: Sourcing vessel IMO DCS data
Step 2: Calculating vessel emissions intensity andclimate alignmentStep 3: Calculating climate alignment of portfolio
Step 4: Disclosure

28
30
32
34

3.4

Standard covenant clause

36

4.1

Information flow 

39

5.1

Standard Declaration

43

5.2

Signatory Application

44

5.3

Self-Assessment

44

5.4

Timeline45

5.5

Governance

45

38

How to becomea signatory
42

AppendicesAcknowledgements

47

64
9

1. Introduction

Poseidon Principles

1

Introduction
The purpose of the Technical Guidance is to clearly state the requirements andexpectations for each Principle: Assessment, Accountability, Enforcement, andTransparency.
The Poseidon Principles are a framework for assessing the climate alignment of ship
finance portfolios. They are supported by a robust and industry-appropriate climatealignment methodology and carefully considered accountability and enforcement
requirements that support practical and robust data collection and analysis
practices. The Poseidon Principles also establish transparency requirements for
signatories.
These requirements are stated in the boxes at the top of each section of
the guidance to follow, followed by a more detailed overview of what theserequirements entail. A general timeline of the requirements for signatories is in
Figure 1.

Once data becomes
available through IMO
DCS, signatories willcollect data from RO or
shipowners

Report climatealignment scoreand supporting
documentation

Portfolio climatealignment scores
published on
Poseidonprinciples.org
Signatory publishes climatealignment in relevant
institutional reports

Calculation of portfolio climate alignment
May
June

by Nov. 15

by Dec. 31

Starting the second calendar year
after becoming a signatory

Figure 1.
Timeline for signatories of the Poseidon Principles101. Introduction

Poseidon Principles

The Poseidon Principles are consistent with the policies and ambitions of the IMO,
including its Strategy on Reduction of GHG Emissions from Ships (2023 IMO GHG
Strategy), which calls for emissions from international shipping to drop to net-zeroaround 2050 compared to 2008 levels with interim targets in 2030 and 2040 on awell-to-wake basis2. Furthermore, the emissions boundary now includes the impact
of non-CO2 GHG species namely methane (CH4) and nitrous oxide (N2O).3
It is recognised that some signatories may choose to both fulfill their obligations
under the Poseidon Principles as well as go beyond those obligations. Somesignatories may choose to do this through assessing their portfolios relative
to the Paris Agreement’s well-below 2°C objectives, which require a steeper
decarbonisation trajectory.
It is recommended that, where possible, these additional efforts rely on theassessment, accountability, enforcement, and transparency practices establishedby the Poseidon Principles to ensure that these further efforts are robust in theirdemonstration of industry leadership.

2
Well-to-wake emissions are a combination of tank-to-wake (upstream) and well-totank (operation) emissions. This accounts for both the emissions from upstream activities andoperation of a vessel, or the “full lifecycle”.
3
IMO MEPC. (2023). 2023 Strategy on reduction of GHG emissions from ships
MEPC.377(80).

11Poseidon Principles

2

Assessment
PRINCIPLE

We will annually assess climate alignment
in line with the Technical Guidance for all
business activities.
REQUIREMENTS

Signatories will measure the emissions intensity of theirshipping portfolios on an annual basis and assess theirclimate alignment relative to established decarbonisation
trajectories. This assessment is based on a robust industryappropriate methodology outlined in the Technical
Guidance. The requirement to assess climate alignment
takes effect the calendar year after a financial institution
becomes a signatory.

12Assessment

Poseidon Principles

This section provides step-by-step guidance for measuring the climate alignmentof financial institutions’ shipping portfolios. The guidance is framed in the context ofthe existing IMO environmental regulations and climate agreements. It is informed byrecommendations made by the CDP and the TCFD.
Shipping’s governing body, the IMO, approved a revised GHG Strategy (the 2023 IMO
GHG Strategy) in July 2023 to reduce GHG emissions generated by international
shipping activity to net-zero by or around 2050, which represents a significant shift
in climate ambition for a sector that currently accounts for 2%–3%4 of global GHG
emissions. This strategy sets out the following absolute reduction levels of ambition:1.

to reduce the total annual GHG emissions from international shipping by
at least 20%, striving for 30%, by 2030, compared to 2008

2. to reduce the total annual GHG emissions from international shipping by
at least 70%, striving for 80%, by 2040, compared to 2008.

3. GHG emissions from international shipping to peak as soon as possible
and to reach net-zero GHG emissions by or around, i.e. close to 2050

4. carbon intensity of international shipping to decline to reduce CO2

emissions per transport work, as an average across international shipping,by at least 40% by 2030, compared to 2008

Additionally, the 2023 IMO GHG Strategy specifies that any activity related toemission reduction and climate alignment in shipping will need to consider well-towake emissions as well as all the relevant GHG species as specified by the IMO:“The levels of ambition and indicative checkpoints should take into account the wellto-wake GHG emissions of marine fuels as addressed in the Guidelines on lifecycle
emissions intensity of marine fuels (LCA guidelines)5 developed by the Organization
with the overall objective of reducing GHG emissions within the boundaries of theenergy system of international shipping and preventing a shift of emissions to othersectors.”

4
Faber, J., Hanayama, S., Zhang, S., Pereda, P., Comer, B., Hauerhof, E., Schim van der
Loeff, W., Smith, T., Zhang, Y., Kosaka, H., Adachi, M., Bonello, J. M., Galbraith, C., Gong, Z., Hirata,
K., Hummels, D., Kleijn, A., Lee, D. S., Liu, Y., … Xing, H. (2020). Fourth Greenhouse Gas Study
2020. International Maritime Organization.
5
The Committee adopted Resolution MEPC.376(80) containing the Marine Fuel life Cycle
GHG Guidelines (LCA Guidelines) and agreed on a work program for further enhancement of theguidelines on specific areas via the existing correspondence group.
13

Assessment

extraction &cultivation

Poseidon Principles

production &processing

storage &transport

fuel combustion
on board a vessel

bunkeringof fuels

WELL-TO-TANK EMISSIONSTANK-TO-WAKE EMISSIONS

upstream activities

operational emissions

WELL-TO-WAKE EMISSIONS
combination of tank-to-wake and well-to-tank

Figure 2.
Visual representation of the differences between tank-towake, well-to-tank, and well-to-wake emissions

Tank-to-wake, well-to-tank, and well-to-wake emissions:
What is the difference?
Tank-to-wake emissions: from fuel combustion on board a vessel,
or “operational emissions”.
Well-to-tank emissions: from upstream activities including extraction,cultivation, production, processing, storage, transport, bunkeringof fuels.
Well-to-wake emissions: a combination of tank-to-wake and well-totank. This accounts for both the emissions from upstream activities andoperation of a vessel, or the “full lifecycle”.

14Assessment

Poseidon Principles

1,600

GHG Budget (Mt)

1,400
1,200
1,000
800
600
400
200
0
2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Year

Business as usual - lower bound

IMO - 2023 GHG Strategy - 'minimum'

Business as usual - upper bound

IMO - 2023 GHG Strategy - ‘striving’

Figure 3.
Global fleet’s CO2e targets and trajectories defined by the2023 IMO GHG Strategy (million metric tonnes of wellto-wake CO2e)

The IMO absolute targets can be converted into an emission intensity target. Figure
4 shows intensity trajectories consistent with the 2023 IMO GHG Strategy comparedto the pathway drawn using the IMO legacy intensity target.

Emissions Intensity (gCO2e/tnm)

25

40% by 2030
20

15

10

5

0
2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

IMO - 2023 GHG Strategy - 'minimum'

Business as usual - lower bound

IMO - 2023 GHG Strategy - ‘striving’Business as usual - upper bound

IMO - 2023 GHG Strategy - 2030
emissions intensity reduction target
Figure 4.
Global fleet’s emission intensity targets and trajectories
defined by the 2023 IMO GHG Strategy (grams of wellto-wake CO2e per metric tonne-nautical mile [gCO2e/
tnm])

15

Assessment

Poseidon Principles

The IMO intensity target is misaligned with the absolute reduction targets being
significantly less ambitious as it was not updated to match the absolute target andthe wording of the 2023 IMO GHG Strategy does not state that meeting the intensity
target ensures compliance with the IMO absolute target. For these reasons, thePoseidon Principles will be linked to the IMO absolute target.
The Poseidon Principles fully supports the increased level of ambition set up by the
new IMO GHG Strategy and therefore includes global decarbonisation trajectories
that are aligned with the outcome of the 80th Marine Environment Protection
Committee (MEPC 80). In order to take into account for this change, the Poseidon
Principles now comprises of two trajectories for reporting:•2023 IMO GHG Strategy - ‘minimum’: defined by the ‘minimum’
requirement of the revised strategy with a 20% reduction in 2030, a 70%
reduction in 2040 (compared to 2008 emissions) leading to net-zero by
2050.

•

2023 IMO GHG Strategy - ‘striving’: defined by the higher level ofambition set in the revised strategy with a 30% reduction in 2030, a 80%
reduction in 2040 (compared to 2008 emissions) leading to net-zero by2050.

2.1 Selecting the right metricfor measuring climate alignment
Both absolute and intensity-level measurements of GHG emissions are useful for
meeting the IMO levels of ambition, and both measurements are recommended byother initiatives like the CDP (Carbon Disclosure Project) and the Science Based
Targets Initiative. Absolute emissions are important as they represent the total
emissions figure that will ultimately need to be reduced to mitigate climate change.
However, an absolute emissions measure is not well-suited to the management
or comparison of emissions/decarbonisation at the level of individual vessels or agroup of vessels because vessels have different production units and need to becompared on a like-for-like basis. For this reason, a relative intensity-level metric isused in the Poseidon Principles.
Due to the changes in the 2023 IMO GHG Strategy, emissions intensity now has torepresent the total GHG emissions (well-to-wake) to satisfy a supply of transport
work (grams of well-to-wake CO2e per metric tonne-nautical mile [gCO2e/tnm]),meaning considering a full lifecycle approach. Emissions intensity is typicallyquantified for multiple voyages over a period of time (e.g., a year). To provide themost accurate representation of a vessel’s climate impact, the emissions intensity of avessel should be measured from its performance in real operating conditions insteadof using a design specification metric (e.g., the Energy Efficiency Design Index).
The selection of this single metric is guided by an ambition that the Poseidon
Principles use an emissions intensity metric which produces the closest measureof the vessel’s true emissions intensity, while ensuring consistency with the policies
and regulations of the as IMO as well as of the IMO DCS regulation and associatedguidelines.

16

Assessment

Poseidon Principles

Currently, the IMO DCS defines the data that the IMO has mandated for shipowners
to collect and report per calendar year. The IMO DCS is an amendment to MARPOL
Annex VI which entered into force in March 2018. The IMO DCS specifies the data to
be collected and reported for each calendar year for vessels 5,000 GT and above,
not solely engaged in voyages within waters subject to the sovereignty or jurisdictionof the State the flag of which the ship is entitled to fly6, which includes the:1.

amount of fuel consumption for each type of fuel in metric tonnes

2. distance travelled
3. hours underway
4. technical characteristics of the ship including DWT at maximum summer
draught

Figure 5 shows the implementation schedule for the IMO DCS. The first datacollection period was for the calendar year 1. Prior to reporting to the IMO, the data
must be checked to be in accordance with the regulation by the relevant flag stateor any organisation duly recognized by it (an RO). A Statement of Compliance(“SoC”) will be issued by the relevant flag state or RO no later than 5 months fromthe beginning of the following calendar year (e.g., for the calendar year 2023, it
would be issued by the end of May 2024) provided the data is in accordance with theregulation.
The reported data is transferred to the IMO Ship Fuel Oil Database no later than one
month after issuing the relevant SoC. As of March 2021, a Verification Letter issued
by a RO may be accepted in lieu of a SoC, where such a Verification Letter expressly
states the vessel’s identification, reporting period relating to the IMO DCS, and is
duly signed. The data reported to the IMO is anonymised and confidential, andtherefore it cannot be accessed from the IMO by signatories.

5. First report submitted
to flag States
1. Entry intoforce
2. Preparation
Monitoring plans

7. Verified datatransferred to IMO
database

4. First monitoring
period

May

2018
March

3. Approval of plansby flag States

March

June

6. Statementof Compliance

Figure 5.
The IMO DCS implementation schedule

However, because the regulation requires that all shipowners annually collect andreport parameters relevant to the calculation of carbon intensity, the administrative
burden placed on shipowners is minimised and simplifies the application of the
Poseidon Principles.

6

IMO MEPC RESOLUTION MEPC.278(70).
17Assessment

Poseidon Principles

The IMO DCS enables the calculation of a carbon intensity metric known as theAnnual Efficiency Ratio (“AER”)7, using the parameters of fuel consumption,
distance travelled, and deadweight at maximum summer draught (“DWT”). AER isreported in unit grams of CO2 per metric tonne-mile (gCO2/dwt-nm):

AER=∑ iC i∑ idwtD i
Equation 1

where Ci is the carbon emissions for voyage i computed using the fuel consumption
and carbon factor of each type of fuel, dwt is the deadweight at maximum summer
draught of the vessel, and Di is the distance travelled on voyage i. The AER is
computed for all voyages performed over a calendar year.
This metric is calculated using the total possible annual transport work performed
by a ship, obtained from its total distance travelled and DWT (in metric tonne units).
It is recognised that AER is less accurate at estimating a vessel’s carbon intensity
than some other metrics (e.g., Energy Efficiency Operational Indicator [“EEOI”])
because the actual cargo carried by a ship is often less than its maximum capacityand many ships (e.g., tankers and bulkers) operate with ballast voyages where forseveral voyages a year they have no cargo.
Currently, data collection on the mass of cargo carried on individual voyages is
not globally collected through the IMO DCS or available globally from publicly
accessible data sources to enable the calculation of EEOI. Should the IMO amend
the DCS regulation to include data on mass of cargo carried, or this data becomes
available elsewhere at appropriate coverage and accuracy, the metric used to
calculate climate alignment under the Poseidon Principles may be adapted toreflect this.

2.2 Calculating vessel emissions intensity
Following the adoption of the 2023 IMO GHG Strategy, the emissions boundary forreporting against the IMO’s level of ambition has changed from a tank-to-wake CO2
to a well-to-wake CO2e perspective. It is expected that the IMO DCS regulation will
be updated to align with the 2023 IMO GHG Strategy in due course to reflect thischange in data collection required.
In September 2023, the Poseidon Principles decided to pro-actively change its
reporting methodology to include well-to-wake CO2e emissions by providing a
set of emission factors that can be applied to the existing IMO DCS data and AER
calculation:

AER=∑ iCe i∑ idwtD i
Equation 2

7
IMO MEPC RESOLUTION MEPC.352(78) recommended the use of cgDIST as a metricfor cruise, ferry ro-pax, ferry pax-only and vehicle carriers which is the same formula as AER,
except gross tonnage is used in place of deadweight in the denominator of Equation 1
18

Assessment

Poseidon Principles

In Equation 2, well-to-wake emission factors replace the carbon factors used
to calculate Ci in Equation 1. Cei is the carbon equivalent emissions for voyage
i, meaning the units of measurement are gCO2e/DWTnm and gCO2e/GTnm
respectively.
References to AER/cgDIST in the Poseidon Principles refer to a well-to-wakecarbon equivalent emissions intensity metric rather than a tank-to-wake carbon
intensity metric as defined by existing regulation. Complete details can be found in
Appendix 3.
Vessel emissions intensity can be calculated using data provided by the shipowneras collected in the IMO DCS. This data has already been independently checked toensure compliance in accordance with the IMO DCS but requires the shipowner toprovide consent for the data as submitted to the relevant flag state to be sharedwith the signatory. The Poseidon Principles require that all signatories use thismethod for calculating emissions intensity.
There may be circumstances where it is not possible to gain access to the data
as reported under the IMO DCS from shipowners. Section 3.3.4 outlines how thisshould be addressed.

2.3 Assessing climate alignment
For the purposes of the Poseidon Principles, climate alignment is defined as thedegree to which a vessel, product, or portfolio’s emissions intensity is in line witha decarbonisation trajectory that meets the 2023 IMO GHG Strategy ambition of
reducing total annual well-to-wake GHG emissions to net-zero by 2050 on 2008
levels including interim indicative checkpoints in 2030 and 2040.
A decarbonisation trajectory is a representation of how many grams of CO2e asingle ship can emit to move one metric tonne of goods one nautical mile on a wellto-wake basis (gCO2e/tnm) over a time horizon (as shown in Figure 3 and Figure 4).
The decarbonisation trajectory relies on two assumptions:•projections of transport demand for different shipping sectors out to2050, including those available in the Fourth IMO GHG Study;•

the total CO2e shipping emissions permitted to be in-line with the 2023
IMO GHG Strategy

While the trajectory is drawn and updated with the latest available research and willbe aligned to or equal to the IMO’s projections, there are uncertainties within thembecause of the two assumptions noted above.
To assess climate alignment of a single vessel, the vessel’s annual emissions
intensity is compared with the decarbonisation trajectory for its respective ship
type and size category. To assess climate alignment at the product and portfolio
level, the vessel emissions intensities in each product and the portfolio are
aggregated. Section 2.5 discusses the method that is used.

19

Assessment

Poseidon Principles

20

15

Δi

10

5

0
2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Year

Figure 6.
Assessing alignment at the vessel level

In Figure 6, each dot represents the annual emissions intensity of a vessel. The blue
curve represents the decarbonisation trajectory. The green dots are aligned, andthe red dots are misaligned.
Climate alignment at the vessel level is the percentage difference between avessel’s emissions intensity and the decarbonisation trajectory at the same point intime. It is expressed as a (+/-) %. In mathematical terms, alignment at time t is:

Δ i= (

x i-r srs(

Emissions Intensity (gCO2e/tnm)

25

100

Equation 3

where xi is the emissions intensity of vessel i and rs is the required emissions
intensity for the ship type and size class for time period t multiplied by 100 toconvert into percentage terms. A positive alignment score means a vessel ismisaligned (above the decarbonisation trajectory), whereas a negative or zeroscore means a vessel is aligned (on or below the decarbonisation trajectory).

20

Assessment

Poseidon Principles

2.4 Decarbonisation trajectory
A global decarbonisation trajectory is produced by the Secretariat of the Poseidon
Principles based on agreed and clearly-stated assumptions. These will be produced
for each ship type and size class and in a format that allows for simple weighting
aggregation. This is to ensure that once the emissions intensity of vessels isunderstood, it is simple and practical to understand climate alignment. This also
ensures that numbers are comparable between signatories.
Appendix 3 describes the method used for establishing the target emissions
intensity for a given ship type and size class in a given year. This is carried out by
calculating a decarbonisation-consistent emissions intensity trajectory up to 2050.
The method is derived from IMO Secretariat commissioned data sources, mainly
the Fourth IMO GHG Study. Assumptions for formulating the trajectory are also
taken from the 2023 IMO GHG Strategy, including the use of interim targets and a2008 baseline.

2.5 Aggregating alignment for productand portfolios
In order to calculate portfolio climate alignment, one must first calculate the climatealignment of each vessel within the portfolio. Then, the climate alignment of theportfolio can be calculated.

Steps for calculating climate alignment of theportfolio:
1.

For each vessel in a relevant financial product, compare the annual
emissions intensity of that vessel with the required decarbonisation
value8. The alignment delta at time t is given by Equation 3.

2. Compute the weighted average of the vessel alignment deltas using thedebt outstanding9 of each vessel in the portfolio. Equation 4 below is thecomputation for the portfolio alignment delta, ∆p:

Δ p=

∑ wΔ
i

i=1

i

Equation 4

where wi is the vessel’s debt outstanding as a share of the total debt outstandingand ∆i is the vessel alignment, from Equation 3.

8
The required decarbonisation value is the maximum emissions intensity that a
vessel can achieve and still be aligned with the decarbonisation trajectory. It is taken from thedecarbonisation trajectory that corresponds to the specific vessel’s type and size9
See specific guidance for calculations below, which gives a thorough explanationof this term.
21

Assessment

Poseidon Principles

Specific guidance for calculations:•

When lenders are aggregating alignment scores to the portfolio level,
the weighted average should be computed using the outstanding loan
amount on 31 December of the year for which climate alignment ismeasured.

•

The AER calculation for a vessel shall be based on a full calendar year asprovided in IMO MEPC RESOLUTION MEPC.278(70) (i.e., 01 January
until 31 December). However, where a shipowner was the owner of (orresponsible for) a vessel for only part of a calendar year, and where IMO
DCS data is therefore not furnished for the full year, the AER calculation
may be based on a period shorter than a calendar year. However, therequirement for provision of a SoC and/or a Verification Letter for an
applicable reporting period (including a period shortened as above) shallremain unaffected.

•

When lessors are aggregating alignment scores to the portfolio level,
the weighted average should be computed using outstanding capital
payments under the lease on 31 December of the year for which climatealignment is measured.

•

When guarantors are aggregating alignment scores to the portfolio level,
the weighted average should be computed using amount outstanding
under guarantee on 31 December of the year for which climate alignmentis measured.

•

When calculating the climate alignment of products with guarantees,
the Poseidon Principles do not attempt to avoid double counting. For
example, if an ECA guarantees a loan, it should base climate alignment
calculations on the portion of that loan that it covers. The lender should
disregard the guarantee and base climate alignment calculations on theoutstanding loan amount on 31 December of the year. In their disclosuresof their portfolio climate alignment, signatories are welcome to recognisethat there may be some double counting in the case of guarantees.

•

Where there may be multiple lenders involved in one transaction, suchas
in a syndicated loan, an individual signatory should base climate alignment
calculations on only its portion of that loan.

•

When calculating the climate alignment of unsecured ECA products, theloan is always established to finance a specific commercial contract, andin the case of shipping, the loan agreement is linked to an identified ship.
The signatory should therefore include these vessels within the scopeof the Poseidon Principles, and use this information to calculate productclimate alignment.

•

In the case of a bilateral facility which has been structured to include
a loan amount notionally allocated to a particular vessel, that vessel’soutstanding debt, for the purposes of a signatory applying the AER
calculation from Equation 4, can be the loan amount allocated that is
consistent with the commercial intent in the original loan agreement.

22

Assessment

Poseidon Principles

Example:Calculating alignment at the vessel and portfolio level
In this example, a signatory starts measuring its climate alignment in 2023. Table
1 illustrates a simple example of a portfolio with two products and shows thealignment deltas for each vessel within each product in the portfolio. The portfolioalignment delta shown in Table 2 is calculated using a weighted average according
to Equation 4. Weighting is applied according to the debt outstanding designatedto each vessel. The portfolio is not climate aligned because it is on average 14%
above the emissions intensity required for decarbonisation.

FinancialYear
Product

IMO

ActualvalueEmissions
Intensity(gCO2e/tnm)

2023 IMO GHG
Strategy - ‘minimum’2023 IMO GHG
Strategy - ‘striving’

Requiredemissions
intensity(gCO2e/tnm)

Alignment
Delta

Requiredemissions
intensity(gCO2e/
tnm)

Debt
Debt
Outstanding
Outstanding(Share of
Alignment (million $)Portfolio)
delta

1

2023 ######

6.72

4.30

56.28%

4.10

63.90%

150

19%

1

2023 ######

29.06

38.60

-24.72%37.20-21.88%

150

19%

2

2023 ######

6.04

4.70

28.51%

4.60

31.30%

100

13%

2

2023 ######

10.04

8.50

18.12%

8.20

22.44%

400

50%

Table 1.
Vessel alignment

Financial Product

Capital Exposure (million$)

Portfolio

8002023 IMO GHG Strategy - 2023 IMO GHG Strategy ‘striving‘minimum’- climate alignment delta - climate alignment delta

18%

22%

Table 2.
Portfolio alignment

23

Poseidon Principles

3

Accountability
and enforcement
This section provides the requirements and technical guidance for both theaccountability and enforcement principles for the sake of clarity and simplicity. In
implementation, both principles are closely related.
The accountability and enforcement principles are intended to ensure that theassessment and disclosure of portfolio climate alignment under the Poseidon
Principles is practical, fair, and accurate. The intent of this approach is to ensure thedevelopment of trust in the Poseidon Principles and amongst signatories.
The Poseidon Principles use emissions intensity as the metric to measure climatealignment. The Poseidon Principles use the same information provided to the IMO
DCS, which is mandatory for all ships of 5,000 gross tonnage and above engaged
on international trade. Because of this, the Poseidon Principles rely specifically on
AER as the emissions intensity metric10.
The Technical Guidance for the accountability and enforcement principles lays out
the four steps in the Poseidon Principles’ information flow process. At each step,
the assessment and enforcement requirements are clearly identified.

10

The rationale for this decision is fully discussed in Section 2.1
24

3. Accountability and enforcement

Poseidon Principles

3.1 Accountability

PRINCIPLE

We recognise the important role thatclassification societies and other IMO
Recognised Organizations (“RO”) play inproviding unbiased information to the industry
and the mandatory regulation established by
the IMO for the data collection and reportingof fuel consumption from ships, (the IMO Data
Collection System - “IMO DCS”). We will relyon such entities and mandatory regulations as
explicitly identified in the Technical Guidance
for the provision of information used to assess
and report on climate alignment.

REQUIREMENTS

For each step in the assessment of climate alignment,
signatories will rely exclusively on the data types, data
sources, and service providers identified in the Technical
Guidance.

25

3. Accountability and enforcement

Poseidon Principles

3.2 Enforcement
PRINCIPLE

We will require that ongoing compliance with
the Poseidon Principles is made contractual in
our new business activities using standardisedcovenant clauses. We will contribute to the
update and addition of standardised clauses
through the annual review process.
REQUIREMENTS

Signatories will agree to work with clients and partners togather the necessary information to calculate emissions
intensity and assess climate alignment.

26

3. Accountability and enforcement

Poseidon Principles

3.3 Requirements at each information flow stepThis section is broken into four information flow steps. The intent of this section
is to give appropriate background and clearly demonstrate how information flows
between parties. Specific accountability requirements regarding data types, data
sources, and service providers are stated at each step. The enforcement requirementof using a standardised covenant clause is referenced, but the clause itself isavailable from the Secretariat. The Poseidon Principles’ information flow processrelies on data that shipowners are required to report to be in compliance with the
IMO DCS and accordingly be granted an SoC or Verification Letter by the RO as
discussed in Section 2.1. The IMO DCS requirements are separate to, and pre-date,the Poseidon Principles.
Figure 7 provides an overview of the potential information flow pathways. The
pathways are divided into “preferred pathways” and “allowed pathways” tracks.
Preferred pathways are those that rely on IMO-ROs to maintain data veracity andconfidentiality.
For sake of clarity, once a signatory has chosen either the preferred or allowed
pathways track, it may choose any option available for that step. For example, if asignatory chooses the allowed pathways track, it may choose to use any of the threeavailable options for steps 2 and 3.

Options at each information flow step

Information flow step

Preferred Pathways Track

Allowed Pathways Track

1. Source IMO DCS
data and verification

RO

Shipowner

2. AER calculation& vessel alignment
calculation

RO

3. Portfolio alignment
calculation
4. Disclosure

InternalRO

3rd party

InternalRO

3rd party

InternalRO

3rd party

Internal

Internal

Figure 7.
Information flow pathway tracks

Step 1

Sourcing vessel IMO DCS data

Step 2

Calculating vessel emissions intensity and climate alignment

Step 3Calculating climate alignment of portfolio

Step 4Disclosure27

3. Accountability and enforcement

Poseidon Principles

3.3.1 Step 1: Sourcing vessel IMO DCS data

Information flow step

Options at each information flow step

Preferred Pathways Track
Preferred Pathways Track

Allowed Pathways Track

RO

Shipowner

1. Source IMO DCS
data and an SoC

Figure 8.
Data sourcing

Step 1 requires the sourcing of IMO DCS data and SoC or a Verification Letterfor the calculation of AER. It is permissible to source data from the RO upon theconsent of the shipowner or directly from the shipowner. As Figure 8 indicates,sourcing data from an RO is preferable while sourcing data from the shipowner isallowed.
Figure 9 demonstrates how the Poseidon Principles interact with pre-existing IMO
DCS requirements. Under IMO DCS requirements, the shipowner provides the
specified data to the RO. The RO checks and verifies the data is in accordance with
IMO regulation, issues an SoC or a Verification Letter to the shipowner and thensubmits the data to the IMO Ship Fuel Oil Consumption Database.

IMO DCSIMO DCS
Database

Shipowner
Annual (calendar year)
per ship:- Fuel Consumption(metric tonnes) & type
- Hours underway (hrs)- Distance travelled (nm)- Ship particulars(including DWT at
maximum summer
draught)

Shipowner
submits
to RO

RO issues
SoC orVerification
LetterRecognised
Organisation
Checks andverifies data inaccordance withregulation

Method 1:
Shipowner gives
consent for RO
to share the data
as submitted to
IMO & SoC or
Verification Letter

Method 1:
Signatory to informROs of the ships
IMO numbers forwhich the data isrequired

Signatory to
Poseidon Principles
Method 2:
Shipowner gives data
(as submitted to IMO)
& SoC or Verification
Letter to signatory

Figure 9.
Methods for sourcing vessel IMO DCS data28

3. Accountability and enforcement

Poseidon Principles

Permissible information flow methods:
Method 1 (Preferred Pathways Track): RO(s) provide data and a SoC or a
Verification Letter to signatory. Note that consent for the RO to share IMO DCS
data with the signatory can be given through the standard covenant clause.
Method 2 (Allowed Pathways Track): Shipowner(s) provide data and a SoC or a
Verification Letter to signatory. The signatory requests the shipowner provide thedata as submitted to the IMO DCS and the SoC or Verification Letter. Signatories
are advised to ask shipowners for data “as it was submitted to the IMO” to reducerisk of error.
Special guidance for transactions with multiple lenders:
Where there may be multiple lenders involved in one transaction, such as ina syndicated loan, it remains the responsibility of the signatory to collect theappropriate information from an RO or the shipowner. However, it is both allowed
and encouraged that signatories should work to reduce administrative burden bycollaborating where possible. For example, if multiple signatories are sourcing datafrom a shipowner and or RO, it is in their interest and the interest of the shipowner
or RO to coordinate their data requests.
How to meet the requirements:

1.

IMO DCS data must be sourced from a RO or from the shipowner.

2. IMO DCS data may only be used if it is accompanied by a SoC or a
Verification Letter provided by a RO.

29
29

3. Accountability and enforcement

Poseidon Principles

3.3.2 Step 2: Calculating vessel emissions intensity and climatealignment
Options at Each Information Flow Step
Information flow step

Options at each information flow step

Preferred Pathways Track
Preferred Pathways Track

2. AER calculation& vessel alignment
calculation

RO

Allowed Pathways Track

InternalRO

3rd party

Figure 10.
Vessel alignment calculation

Step 2 requires the calculation of vessels emissions intensity using the IMO DCS
data and the calculation of vessels’ alignment with decarbonisation trajectories.
There are three methods for undertaking these calculations, shown in Figure 11
below. Method 1 is relevant only to the preferred pathways track, while Method 2
and 3 are relevant to the allowed pathways track.
AER is used as the emissions intensity metric and is detailed in Section 2.1. The
IMO DCS data used for calculating AER is also detailed in Section 2.1. Standard
decarbonisation trajectories for each ship type and size class are produced
specifically for the purposes of the Poseidon Principles so that all calculations are
made in the same way.11 These are available through the Poseidon Principles
Secretariat. Figure 11 demonstrates the necessary information, where to source it,
and who can perform calculations.

Preferred Pathways Track
Source datafrom ROIMO DCS data(continues
from step 1)

Source data
from
Secretariat
Standard
decarbonisation
trajectory

Method 1
RO permorms calculations

Allowed Pathways Track
Source datafrom signatory
IMO DCS data
(received fromshipowner)

Method 2
Signatory performs
calculations
internallySource data
from
Secretariat
Standard
decarbonisation
trajectory

Method 3
Signatory
outsources
calculations to RO
or another 3rd party

Figure 11.
Methods for calculating emission intensity and vessel
climate alignment

11
See guidance in Section 2.4 and Appendix 3 for further clarification on the provision of
trajectories.
30

3. Accountability and enforcement

Poseidon Principles

Permissible methods for calculation
Method 1 (Preferred Pathways Track): RO calculates vessel emissions intensity
and climate alignment on behalf of the signatory.

1.

The RO will source the standard decarbonisation trajectories from theSecretariat.

2. The RO calculates vessel emissions intensity and climate alignment onbehalf of the signatory using the verified data from the IMO DCS.

3. The RO provides the signatory with the emissions intensity (AER/cgDIST)of the vessel(s) and the decarbonisation delta for the vessel(s), the IMO
DCS data, and the SoC or Verification Letter.

Method 2 (Allowed Pathways Track): Signatory uses data provided
by shipowner(s) to make vessel emissions intensity and climate alignment
calculations internally.

1.

Using the verified IMO DCS data as submitted to the flag state provided
by the shipowner and the standard decarbonisation trajectory, thesignatory calculates emissions intensity and climate alignment of thevessel(s).

Method 3 (Allowed Pathways Track): After receiving data from shipowners,
signatory outsources emissions intensity and climate alignment calculations to an
RO or another third party.12

1.

After selecting a RO or another third party in accordance withaccountability requirements below, the signatory should send theverified IMO DCS data, an SoC or a Verification Letter, and the standard
decarbonisation trajectories to that party.

2. The RO or other third party calculates vessel emissions intensity andclimate alignment on behalf of the signatory using the verified data fromthe IMO DCS.

3. The RO or other third party provides the signatory with the emissions

intensity (AER/cgDIST) of the vessel(s) and the decarbonisation delta forthe vessel(s).

How to meet the requirements•

Vessel emissions intensity and climate alignment calculations must
rely solely on verified IMO DCS data (i.e., data for which a SoC or a
Verification Letter has been issued) and standard decarbonisation
trajectories provided by the Poseidon Principles Secretariat.

•

Vessel emissions intensity and climate alignment calculations can be
performed by signatories, ROs, or other independent third parties (i.e.,
those that are not ROs).

12
If a third party other than an RO is used, that third party must be regarded as
independent and have no shipbroking or commercial vessel interests.
31

3. Accountability and enforcement

Poseidon Principles

3.3.3 Step 3: Calculating climate alignment of portfolio
Options at Each Information Flow Step

Options at each information flow step

Information flow step

Preferred Pathways Track
3. Portfolio alignment
calculation

Internal

RO

Allowed Pathways Track

3rd party

InternalRO

3rd party

Figure 12.
Portfolio alignment calculation

Step 3 requires the calculation of portfolio climate alignment using the vessel
climate alignment data from step 2 and signatories’ loan book data (i.e., debt
outstanding). There are two methods for undertaking this calculation. Method 1 and
2 are applicable in both the preferred pathways and allowed pathways tracks. This isdue to the sensitivity of loan book data.13

Figure 13 demonstrates which data is necessary and who can perform thecalculations.

Source data from signatory
Vessel climate alignment(from step 2)
Loan book

Method 1
Signatory performs
calculations internally

Method 2
Signatory outsources
calculations to RO
or another 3rd party

Figure 13.
Methods for calculating portfolio climate alignment13

For a full calculation methodology, see Section 2.5 of the Technical Guidance.
32

3. Accountability and enforcement

Poseidon Principles

Permissible calculation methods
Method 1 (Preferred and Allowed Pathways Track): Signatory performs
portfolio climate alignment calculations internally.

1.

Using vessel climate alignment data from step 2, signatory undertakes
climate alignment calculations internally.

Method 2 (Preferred and Allowed Pathways Track): Signatory outsources
portfolio climate alignment calculations to an RO or another independent third
party.

1.

After selecting a RO or another independent third party in accordancewith accountability requirements below, the signatory should send climatealignment and loan book data for all vessels within the scope of the
Poseidon Principles to that party.

2. The RO or other independent third party calculates the signatory’s

portfolio climate alignment using climate alignment and loan book data
for all vessels within the scope of the Poseidon Principles.

3. The RO or other independent third party provides the signatory with its
portfolio climate alignment score.

How to meet the requirements

1.

Vessel emissions intensity and climate alignment calculations must
rely solely on verified IMO DCS data (i.e., data for which a SoC or a
Verification Letter has been issued) and standard decarbonisation
trajectory provided by the Poseidon Principles Secretariat.

2. Portfolio climate alignment calculation can be performed by signatories,
ROs, or other independent third parties (i.e., those that are not ROs).

3. The signatory should provide the following information to the Secretariat
in line with the requirements identified in Section 4: Transparency.

Note: The AER calculation for a vessel shall be based on a full calendar year asprovided in IMO MEPC RESOLUTION MEPC.278(70) (i.e., 01 January until 31
December). However, where a shipowner was the owner of (or responsible for) a
vessel for only part of a calendar year, and where IMO DCS data is therefore notfurnished for the full year, the AER calculation may be based on a period shorter
than a calendar year.
However, the requirement for provision of a SoC and/or a Verification Letter for an
applicable Reporting Period (including a period shortened as above) shall remain
unaffected.

33

3. Accountability and enforcement

Poseidon Principles

3.3.4 Step 4: Disclosure

Options at Each Information Flow Step

Information flow step

4. Disclosure

Options at each information flow step

Preferred Pathways Track
Preferred Pathways Track

Allowed Pathways Track

Internal

Internal

Options at Each Information Flow Step

Figure 14.
Disclosure

Step 4 establishes disclosure requirements that will serve as a quality control
mechanism. The information outlined below will be submitted to the Secretariat
and made available only to signatories with the intent of informing the actions of
the Steering Committee. Information submitted under these requirements will
not be made public. This is intended to establish a quality control mechanism forsignatories while also ensuring that information that may be regarded as sensitive
by some signatories is not publicly disclosed. There is one method, which isapplicable to both the preferred and allowed pathway tracks.

Source datafrom signatory
Information fromsteps 1, 2, & 3

Method 1
Signatory prepares disclosuresand submits to Secretariat as pertransparency requirements

Figure 15.
Method for disclosure

Method (Preferred and Allowed Pathways Track): signatory prepares
disclosures and submits to Secretariat.

1.

If the signatory is unable to collect data for some portion of its portfolio,
they should calculate the percentage of its eligible shipping portfolio
for which it cannot report. This percentage is calculated against
the percentage of the signatory’s debt in portfolio, relying on themethodology outlined in Section 2.5.

2. The signatory should calculate the percentages of its portfolio for which it

used the Preferred and Allowed Pathway Tracks. When calculating thesepercentages, the signatory should rely on the methodology outlined in
Section 2.5. The signatory should also list the names of providers (i.e., RO
or third party) it used, if any, to complete steps 1, 2, and 3 (i.e., those steps
identified in Sections 3.3. –3.3.3).

3. The specific information required for reporting is evaluated by signatories
each year. For the 2023 Annual Disclosure Report, for example, eachsignatory should provide the following information to the Secretariat:

34

3. Accountability and enforcement

Poseidon Principles•

total climate alignment score against the 2018 IMO GHG Strategy
and either 2023 IMO GHG Strategy ‘minimum’ or ‘striving’•

separate climate alignment scores for passenger and cargo vessels(optional)••

percentage of eligible shipping portfolio reporting•

the names of the service providers used, if any, to complete steps 1, 2,
and 3

percentages of portfolio for which Preferred and Allowed Pathway
Tracks were used

How to meet the requirements
The signatory should provide the information listed above to the Secretariat in linewith transparency requirements identified in Section 4.

Example: Meeting disclosure requirements
In this example, a signatory successfully completes the assessment of its portfolio
climate alignment. In addition to reporting its portfolio climate alignment score to
the Secretariat, it also reports the following information shown in Table 3 below:
the percentage of eligible shipping portfolio reported and not reported (L1 and L2),
the percentage of eligible shipping portfolio for which the preferred and allowed
pathway tracks were used (L3 and L4), and a list the names of providers it used, if
any, to complete steps 1, 2, and 3. Answers to additional questions are also provided
depending on the context of the year, which can either be public or only shared
between signatories and the Secretariat. (i.e. use of emission factors, giving
indication if shuttle tankers are in the portfolio, etc.).
2023 IMO
GHG Strategy- ‘minimum’2023 IMO
GHG Strategy- 'striving'

Total climate alignment score

49.9%

55.2%

Climate alignment score for all cargo vessels(OPTIONAL)

8.1%

11.2%

Climate alignment score for all passenger vessels(OPTIONAL)

73.2%

82.4%

CLIMATE ALIGNMENT SCORE

Reporting vs. non-reporting

Validation(L1)

Proportion of activities reported, against % ofeligible shipping portfolio

95.2%

(L2)

Proportion of activities not reported, against % ofeligible shipping portfolio

4.8%

L1 + L2 = 100%

The following information is disclosed only internally and not made public:
Preferred vs. allowed

Validation(L3)% of eligible shipping portfolio for which
Preferred Pathway Track was used

75%

(L4)

% of eligible shipping portfolio for which Allowed
Pathway Track was used25%

Providers used

Note: The proportion of activities not reported
refers to the % debt in a portfolio that is notreported, rather than the % of ships not reported

L3 + L4 = 100%Company
XY
Table 3.
Example of disclosure requirement submission

35

3. Accountability and enforcement

Poseidon Principles

3.4 Standard covenant clause
Key to supporting the accurate assessment of climate alignment and to creating
an equal burden on all signatories is an enforcement mechanism that ensures thatthe appropriate data and information are provided by shipowners to signatories, theappropriate consents are given for the sharing of data, the data is shared,
and appropriate privacy protections are established. This may include the sharingof data via a shared data platform or the data being provided by shipowners’commercial manager, depending on what is agreed between the shipowners andthe signatories.
To assist in the collection and sharing of data for the Poseidon Principles, there isa standard covenant clause. There is also a form of letter to be sent by signatories
to shipowners to request the data. The proforma clause and supporting definitions
together with the form of letter are available from the Secretariat.
How to meet the requirements
In all new business activities that are finalised after a financial institution becomesa signatory to the Poseidon Principles, the signatory will use its best efforts toinclude definitions and covenant wording set out in the covenant clause in relevant
documentation, amended where necessary, to reflect the signatory’s proposed
method of data collection.

36

Poseidon Principles

Poseidon Principles

4

Transparency
This section states the requirements for the transparency
principle and provides the expectations and intent of eachrequirement. It also provides an outline of the timeline
for the participation in and compliance with the Poseidon
Principles.

PRINCIPLE

We will publicly acknowledge that we are asignatory of the Poseidon Principles and wewill publish the results of the portfolio climatealignment score of our business activities
on an annual basis in line with the Technical
Guidance.
REQUIREMENTS

1.

Upon becoming a signatory, the financial
institution will publicly acknowledge that it is asignatory of the Poseidon Principles.

2. On an annual basis, each signatory will report

the overall climate alignment of its shipping
portfolio and supporting information, as per the
Accountability requirements, to the Secretariat
no later than 15 November. This requirement takes
effect for each signatory in the calendar year after
the calendar year in which it became a signatory.

3. On an annual basis, each signatory will publish theoverall climate alignment of its shipping portfolio
in relevant institutional reports on a timeline thatis appropriate for that signatory. This requirementtakes effect for each signatory in the calendar
year after the calendar year in which it became asignatory.

38

4. Transparency

Poseidon Principles

4.1 Information flow
Requirement 1
Upon becoming a signatory, the financial
institution will publicly acknowledge that it is asignatory of the Poseidon Principles.

Requirement 2

Signatory

On an annual basis, each signatory will report
the overall climate alignment of its shipping
portfolio and supporting information as per the
Accountability requirements to the Secretariat
no later than 15 November. This requirementtakes affect the calendar year after a financial
institution becomes a signatory.

Publication by Poseidon
Principles Secretariat
The Secretariat will collect reported
submissions from all eligible
signatories. By 31 December
annually, the Secretariat will publish
all climate alignment scores atwww.poseidonprinciples.org

Requirement 3
On an annual basis, each signatory will publish theoverall climate alignment of its shipping portfolio
in relevant institutional reports on a timeline thatis appropriate for that signatory.

Figure 16.
Information flow for transparency
requirements

Figure 16 demonstrates the information flow for each transparency requirement.
Below, expectations and intent of each transparency requirement are further
clarified.
How to meet the requirements

1.

The expectations of transparency requirement 1 are that a signatory
should make it publicly known that it is a signatory to the Poseidon
Principles in a manner that is suitable for its organisation. The intent of
this requirement is to increase awareness of the Poseidon Principles andto ensure it is clear which organisations are signatories without creating
any significant burden to them.

2. The expectations of transparency requirement 2 are that a signatory

should report all required information to the Poseidon Principles
Secretariat (climate alignment of portfolio and supporting information
as per accountability requirements) in a timely manner in accordancewith the assessment, accountability and enforcement, and transparency
principles. The intent of this requirement is to ensure that accurate
information can be published by the Poseidon Principles Secretariat in atimely manner. The required reporting timeline is intended to create as
little burden as possible to signatories.

3. The expectations of transparency requirement 3 are that a signatory

should identify relevant institutional reports and ensure that the climatealignment of its shipping portfolio is included in them. Due to different
institutional timelines, no specific expectations have been set for whenreports including portfolio climate alignment scores should be published.
The intent of this requirement is not to specify precisely where thisinformation should be published, but instead to ensure awareness of the
Poseidon Principles.

39

4. Transparency

Poseidon Principles

Example: Transparency
In this example, a lender becomes a signatory of the Poseidon
Principles in November 2023.
Requirement 1: Lender issues a press release announcing that it is a
Poseidon Principles signatory in November 2023.
Requirement 2: Prior to 15 November 2024, the signatory submits
its portfolio climate alignment scores (for 2023) and supporting
information as per the accountability requirements. The signatory has
a score of +4% indicating that it is +4% above the decarbonisation
trajectory.
Requirement 3: The signatory includes its portfolio climate alignmentscores in its annual sustainability report in line with their internal
timeline.
Publication by the Poseidon Principles Secretariat: All eligible
signatories’ 2023 climate alignment scores will be published online prior
to 31 December 2024.

4. Transparency

Poseidon Principles

41

Poseidon Principles

5

How to becomea signatory
The following outlines
the process for financial
institutions to become
signatories and highlights thenecessary documents.
This document is intended
to be a how-to guide for theadministrative aspects ofimplementing the Principles
by prospective signatories.

42

4. How to become a Signatory

Poseidon Principles

Institutions wishing to become a signatory of the Poseidon Principles must adhere
to the following process:1.

Using the Standard Declaration and signatory Application provided by
the Secretariat, a financial institution wishing to become a signatory mustcomplete and send both documents to the Secretariat.

2. The financial institution must complete and submit the Poseidon

Principles Self-Assessment to the Secretariat within five months ofbecoming a signatory.

All onboarding documents are available from the Secretariat.

Step 1
Submit Standard
Declaration, Signatory
Application, andMembership Agreement

Step 2
Prepare and submit thePoseidon Principles
Self-Assessment within
five months of becoming
a signatory

5.1 Standard Declaration

The Standard Declaration is the formal commitment required of financial institutions
to become a signatory. Step one of the process, the Declaration, announces theintent of the financial institution to follow all binding requirements of the Principles.
This means that the institution is prepared to take the necessary steps to comply
with all four Poseidon Principles, and have this commitment and will make thiscommitment and related reporting public.

43

4. How to become a Signatory

Poseidon Principles

5.2 Signatory Application
Along with the Standard Declaration, the financial institution wishing to become asignatory must also complete the Signatory Application document. This document
outlines who is responsible for contact, reporting, invoicing, and other necessaryfunctions to implement and maintain the Poseidon Principles within the financial
institution.

5.3 Self-Assessment
Each new signatory has five months to complete the Self-Assessment and return itto the Poseidon Principles Secretariat after joining. The purpose of this is to ensurethat each signatory has made appropriate arrangements to fulfill its obligations
under the Poseidon Principles and identified any challenges to doing so. The SelfAssessment is as brief as possible to reduce the administrative burden, while still
addressing the core responsibilities of signatories to the Poseidon Principles.
The questions focus on ensuring that signatories are aware of timelines andobligations under the Poseidon Principles, have engaged internal stakeholders,have engaged clients, and have a plan for engaging the necessary service providers
to complete their climate alignment assessment.

44

4. How to become a Signatory

Poseidon Principles

5.4 Timeline

Financial institution
becomes a signatory
after having formal
declaration andapplication accepted

Publicacknowledgementof signatory status

SubmitSelf-Assessment

5 months

Figure 17.
Timeline for signatories of the Poseidon Principles

The Poseidon Principles aim to be easily implementable and achievable for eachsignatory. To these ends, the timeline for implementation in Figure 17 assists the
Self-Assessment so that signatories know when there are important deadlines foralignment and reporting to comply with the Principles.

5.5 Governance
Information regarding the creation of the Poseidon Principles Association, theselection of the Steering Committee, and the role of the Secretariat can be foundin the Governance Rules of the Association. These are available at https://www.
poseidonprinciples.org/finance/about/governance/.

45

Poseidon Principles

Appendices

AppendixDefinitions and abbreviations

48

Appendix

Selecting a carbon intensity metric50

AppendixDefinition of the decarbonisation
trajectory and vessel continuous
baselines

52

Appendix

Revisions to the Poseidon
Principles trajectories

63

47

AppendicesPoseidon Principles

Appendix 1

Definitions and abbreviations
AER means the Annual Efficiency Ratio, an emission intensity metric calculated in accordance with Equation
2 as set out in Section 2.1.
Business activity is defined as any credit product—including bilateral loans, syndicated loans, club deals,
and guarantees—that is secured by vessel mortgage(s) or finance lease secured by title over vessel(s)and where that vessel, or unmortgaged ECA loans tied to a vessel, which have an established Poseidon
Principles trajectory whereby the emissions intensity can be measured with IMO DCS data14. This scope
may be amended or expanded by signatories in the future as per the annual review process.
CDP is the Carbon Disclosure Project, a not-for-profit charity that runs a global disclosure system forinvestors, companies, cities, states and regions to manage their environmental impacts.
Climate alignment is the degree to which a vessel, product, or portfolio’s emission intensity is in line witha decarbonisation trajectory that meets the 2023 IMO GHG Strategy ambition of reducing total annual
well-to-wake GHG emissions to net-zero around 2050. This should also take into account the interim
checkpoints in 2030 (20% reduction, striving for 30% on 2008 levels) and 2040 (70% reduction, striving
for 80% on 2008 levels).
Continuous baseline: in order to avoid bias against vessels based on their position within a vessel category
due to their size which could make alignment more challenging, continuous baselines are introduced in the
Poseidon Principles. This implies that the required emissions intensity is directly related to the size of thevelles through a power law relationship similar to what is currently in place for the Energy Efficiency Design
Index (EEDI). Thus, each vessel type has an annual continuous baseline that defines required emission
intensity which are defined in Appendix 3.
Decarbonisation trajectory is produced by the Secretariat based on agreed and clearly-statedassumptions.The current decarbonisation trajectory used by the Poseidon Principles defines the rateof reduction of emissions intensity required to be aligned with the 2023 IMO GHG Strategy absoluteemission reduction ambition. The method used for establishing the decarbonisation trajectories up to
2050 is derived from emission and transport work data from the Fourth IMO GHG Study.
DWT is at maximum summer draught, a measure of how much weight a ship is designed to carry.
ECA is an Export Credit Agency.
EEOI is the Energy Efficiency Operational Indicator, developed by the IMO in order to allow shipowners tomeasure the fuel efficiency of a ship in operation.
Emissions intensity is the representation of the total well-to-wake emissions generated to satisfy a supplyof transport work (grams of CO2e per metric tonne-nautical mile [gCO2e / tnm]). The Poseidon Principles
use the AER metric for this calculation adapted to include upstream emissions as well as the impact of
methane (CH4) and nitrous oxide (N2O).
GHG means Greenhouse Gas.

14
Where a vessel or vessels fall under the purview of the IMO and is required to submit data to the IMO DCS, i.e., vessels 5000
GT and above, not solely engaged in voyages within waters subject to the sovereignty or jurisdiction of the State the flag of which theship is entitled to fly (MARPOL Annex VI, Chapter 4, Reg. 19). Signatories are to use the ship type classification as submitted to the
IMO DCS. For clarification of classification of ship types or individual ships, please refer to:(1) StatCode5 Ship Type Coding System document, and(2) IMO GISIS(3) If still in doubt, please contact the Secretariat
48

AppendicesPoseidon Principles

IMO is the International Maritime Organization, a specialised agency of the United Nations, and the global
standard-setting authority for the safety, security and environmental performance of international
shipping.
IMO DCS is the IMO’s MARPOL Annex VI Data Collection System for Fuel Consumption.
LCA stands for IMO’s Lifecycle Assessment model. This method refers to the assessment of GHG emissions
from the fuel production to the end-use by a ship (well-to-wake); it results from the combination of awell-to-tank part (from primary production to carriage of the fuel in a ship’s tank, also known as upstream
emissions) and a tank-to-wake (or tank-to propeller) part (from the ship’s fuel tank to the exhaust, also
known as downstream emissions).
MARPOL (The International Convention for the Prevention of Pollution from Ships) is the main international
convention covering prevention of pollution of the marine environment by ships from operational or
accidental causes. The MARPOL Convention was adopted on 2 November 1973 at IMO.
MEPC stands for IMO’s Marine Environment Protection Committee.
RO (Recognized Organization) is an authorised organisation that performs statutory requirementson behalf of a vessel’s flag state. While normally a Classification Society, in the case of the IMO DCS,
independent verifiers have been authorised by some flag states.
Signatory is a financial institution or ECA that has sent a formal declaration to the Poseidon Principles
Secretariat, has had that declaration accepted, and has had that declaration announced.
SoC is a Statement of Compliance issued by a flag state or an RO to the owner of a relevant vessel
confirming its compliance with the IMO DCS.
Tank-to-wake emissions are from fuel combustion on board a vessel, or “operational emissions”.
TCFD is the Task Force on Climate-related Financial Disclosure, a task force set up to develop
recommendations for voluntary climate-related financial disclosures that provide useful information tolenders, insurers, and investors.
TEU means Twenty-foot Equivalent Unit, a unit of cargo capacity often used to describe the capacity ofcontainer ships.
TNM refers to metric tonne-nautical mile.
Voyage includes the time spent in port for vessels sailing in international waters, as outlined by the IMO DCS
requirements.
Verification Letter issued by a Recognized Organization may be accepted in lieu of an SoC, where such a
Verification Letter expressly states the vessel’s identification, reporting period relating to the IMO DCS,
and is duly signed.
Well-to-wake emissions are a combination of tank-to-wake and well-to-tank emissions. This accounts forboth the emissions from upstream activities and operation of a vessel, or the “full lifecycle”.
Well-to-tank emissions are from upstream activities including extraction, cultivation, production,
processing, storage, transport, bunkering of fuels.

A note on the versions of the Poseidon Principles
The “2023 Poseidon Principles” or “Version 5.0” refers to the version which uses the IMO
4th GHG Study trajectories and 2023 IMO GHG Strategy adopted during MEPC80.

49

AppendicesPoseidon Principles

Appendix 2

Selecting a carbon intensity metric
There are a number of different carbon intensity metrics that have been proposed
both in IMO discussions and in the private sector, but no single metric on
operational carbon intensity has been mandated by the IMO or used to define thecarbon intensity goal in IMO strategies. There are only suggestions made in theguidelines.
Carbon intensity measures considered for the Poseidon Principles are the Energy
Efficiency Operational Indicator (EEOI) and the Annual Efficiency Ratio (AER)
which are two measures developed by, or being proposed to, the IMO. The following
provides a summary of their differences:

1.

The Energy Efficiency Operational Indicator (EEOI)

a. This requires information including the CO2 emissions, the distances
sailed whilst doing transport work, and the amount of cargo (orpassengers or gross tonnage) carried.

b. The EEOI produces the closest measure of the vessel’s true carbon
intensity.

2. Annual Efficiency Ratio (AER)a. AER is similar in form to EEOI but uses an approximation of cargo

carried by utilizing the vessel’s designed deadweight (or Twenty-footEquivalent Unit (TEU) or passenger or gross tonnage) capacity inplace of actual cargo carried and assumes the vessel is continuously
carrying cargo.

b. Because ships are not always fully utilised in terms of capacity andmany ships (e.g., tankers and bulkers) operate with ballast voyages
where for several voyages a year they have no cargo, this method
typically underestimates carbon intensity.

Different metrics place different requirements on the data that is needed in theircalculation. To ensure consistency in application of the Principles and ensure anapples-to-apples comparison between the calculations can be made by signatories,
it is important that all signatories apply the same single metric.

Measure

Pros

EEOI

• True measure of transport work

• Requires additional data to be• Only fuel consumption and• Not a true measure of transport

AER

includeddistance sailed need to bemeasured• Aligned with IMO

Conscollected (cargo) that is notcollected through the IMO DCS

work. Assumes all vessels are
sailing continuously loaded on
all voyages

Table 4.
Comparison of EEOI vs. AER

50

AppendicesPoseidon Principles

Both the EEOI and AER have not been updated yet to be aligned with the 2023
IMO GHG Strategy since they are still based on operational CO2 emissions only. It
is expected that the MEPC will update the regulations concerning these metrics
accordingly. Similarly, at MEPC 81, member states and organisations have been
invited to submit proposals for amendments to the DCS regulation which may
include the reporting of cargo transported and distance sailed laden which would
allow for annual EEOI to be compiled using DCS data. The advisory will be assessing
the developments at the IMO and considering the implications on the Poseidon
Principles.

51

AppendicesPoseidon Principles

Appendix 3

Definition of the decarbonisation trajectoryand vessel continuous baselines
Estimating the emissions intensity improvement
required across all ship types
The overall (all ship type and size categories included as international shipping)
improvement required in emissions intensity is calculated from:1.

a projection of the foreseeable growth in transport work across all shiptypes between baseline (2018) and the target year (2050);

2. the target CO2e emissions defined by the 2023 IMO GHG Strategy
absolute emission reduction ambition.

The projection of foreseeable growth is taken from the Fourth IMO GHG Study
scenario RCP 2.6 SSP2. This scenario is selected because it is most aligned withdecarbonisation in the wider economy, and most closely represents the rate of GDP
and trade growth that has been observed in recent years. For each scenario, theFourth IMO GHG Study employed two models for projecting transport work for
non-energy products15. A logistics model which analyses the relationship between
global transport work and its drivers using historical data to project transport work;and a gravity model, which presumes that transport work is a function of per capita
GDP and population of the trading countries and uses econometric techniques toestimate the elasticity of transport work with respect to its drivers.
The results show that for most scenarios, including RCP 2.6 SSP2, the logistics
model approach results in higher transport work projections than the gravity model
approach. The logistics model approach was chosen as it represents an upperbound on the transport work projection and therefore is more conservative, allowinginternational shipping to meet its decarbonisation targets if transport work is higher
than forecasted under the gravity model but within the upper bound set by thetransport work assumed in the logistics model. This is consistent with the current
Poseidon Principles methodology as well as the Poseidon Principles for Marine
Insurance, Sea Cargo Charter and Science Based Targets Initiative.
The target CO2e emissions is defined by the 2023 IMO GHG Strategy which has a
net-zero target around 2050. Additionally, indicative check points for at least 20%
striving for 30% reductions in 2030 on 2008 levels as well as at least 70% reduction
striving for 80% reduction in 2040 on 2008 levels.
The Revised Strategy is anchored to the same 2008 global emissions inventory
that was estimated in the Third IMO GHG Study. This value of 921 Mt of operational
tank-to-wake CO2 is translated to a lifecycle CO2e value by using:•

A weighted average well-to-wake emission factor based on the fuel mix in2008 from Lloyd’s Register and UMAS.16

15
For a description of the full methodology employed to project transport work including
energy products, see page 218 of the Fourth IMO GHG Study.
16
Lloyd’s Register, & UMAS. (2019). Fuel production cost estimates and assumptions. The
weighted average tank-to-wake CO2 to well-to-wake CO2e emission factor used is 1.157.
52

AppendicesPoseidon Principles•

100-year global warming potential values aligned to IPCC Assessment
Report 5 as used in the Fourth IMO GHG Study17.

Table 5 presents the emissions budget translation from the Third IMO GHG Studyto the 2023 IMO GHG Strategy minimum and striving numbers. These can thenbe used to build a global emissions budget by using historic data from the Thirdand Fourth IMO GHG Studies (2008 – 2018) and then linking the subsequent
checkpoints linearly.
2008

2018

2030

2040

2050

Total transport demand (billion metric tonne nautical
miles)

46,003

59,23081,804

100,616

119,429

Total CO2e emissions (million metric tonnes) - 2023
IMO GHG Strategy - ‘minimum’

1,066

1,062

852

320

0

Total CO2e emissions (million metric tonnes) - 2023
IMO GHG Strategy - ‘striving’

1,066

1,062

746

213

0

Estimated aggregate emissions intensity (gCO2e/tnm) - 2023 IMO GHG Strategy - ‘minimum’

23.2

17.9

10.4

3.2

0

Estimated aggregate emissions intensity (gCO2e/tnm) - 2023 IMO GHG Strategy - ‘striving’

23.2

17.9

9.1

2.1

0

Table 5.
Transport demand, CO2e emissions and emissions intensity
for international shipping

Figure 18 plots the intensity values in Table 5 and a linear trend line connecting
them. There are many different assumptions that could be applied to specify theshape of the curve that defines the rate of emissions intensity reduction between
2018 and 2050. The chosen trajectory represents a gradual and consistent rateof improvement on average across the fleet; the assumption applied here is for aconstant improvement year-on-year, which is described by a straight line between
2018 and 2030, 2030 and 2040, and down to 2050.

emissions intensity (gCO2e/tnm)

25

20

15

10

5

0
2005

2010

2015

2020

2025

2023 IMO GHG Strategy - 'minimum'

2030

2035

2040

2045

2050

Year

2023 IMO GHG Strategy - ‘striving’
Figure 18.
Global fleet’s emission intensity targets and trajectories
defined by the 2023 IMO GHG Strategy (grams of well-towake CO2e per metric tonne-nautical mile [gCO2e/tnm]

17
100 year global warming potential values used are 28 for methane (CH4) and 265 fornitrous oxide (N2O).
53

AppendicesPoseidon Principles

As it stands, the trajectories do not account for projected efficiency or alternativefuel technology uptake by the industry and are not designed to forecast any
changes in operating profile. The linear nature of the trajectories provides a method
to overcome uncertainty introduced by projections relating to technology uptake oroperational variation.

Calculating the target emissions intensity, corrected
to AER, in a given year as a function of the ship typeand size classIndexed emissions intensity (2018 = 1)

The rate of reduction required per year is relative to the last historical data point(2018). The trajectory is shown relative to 2018 global cargo emissions intensity(indexed to 2018 emissions intensity) in Figure 18.

1,2
1,0
0,8
0,6
0,4
0,2
0,0
2005

2020

2025

2030

2023 IMO GHG Strategy - 'minimum'

2035

2040

2045

2050

Year

2023 IMO GHG Strategy - ‘striving’

Figure 19.
Global fleet’s emission intensity targets and trajectories
defined by the 2023 IMO Strategy indexed to 2018 (gramsof well-to-wake CO2e per tonne-nautical mile [gCO2e/tnm])

While the trajectory is presented for the time period 2018 to 2050, it is consistent
with the 2008 baseline year as specified in the 2023 IMO GHG Strategy objectives
as the end point is determined by a net-zero target in 2050 relative to the baseline.
The index currently chosen for the Poseidon Principles is AER for cargo-carrying
ships which use deadweight to measure their capacity and cgDIST18 for ships
measured in gross tonnage. The latter category includes Cruise, Ferry Ro-Pax,
Ferry- pax only and Vehicle carriers.

18
cgDIST is CO2e/GT*nm, the same formula as AER, except gross tonnage is used in placeof deadweight in the denominator of Equation 1.
54

AppendicesPoseidon Principles

Estimating vessel specific required emissions
intensity
As of September 2023, the Poseidon Principles introduced continuous baselines
to define the required emissions intensity for vessels. This approach mitigates theimpact of discrete size categorisation alignment especially for vessels at the edgesof existing vessel categories. Continuous baselines are widely used for maritime
benchmarking such as by the IMO MEPC Energy Efficiency Design Index (EEDI)
and the more recent Carbon Intensity Index (CII) regulation. A continuous baselineis provided for the required emission intensity values for each ship type covered in
the Poseidon Principles. To obtain a continuous baseline, a curve is fitted through aplot of the median emissions intensity of each vessel size bin vs. the median vessel
size in that bin. This is based on data published in the Fourth IMO GHG Study. The
result is a power law fit with a high coefficient of determination (R2). Figure 20
shows the required emissions intensity values for bulk carrier in 2022. This exercise
is repeated for each year up to 2050 following the global emissions intensity.

Emissions Intensity (gCO2e/DWTnm)

Bulk Carrier
70
Stepped baseline

60

Continuous baseline

50
40
30
20
10
0
0

50,000100,000

150,000 200,000 250,000 300,000 350,000 400,000
Deadweight

Figure 20.
Existing and proposed required emissions intensity baseline
for bulk carriers for 2023 IMO GHG Strategy - ‘minimum´

The required emissions intensity can be expressed by the following expression:
rs=(a.Year3 + b.Year2 + c.Year + d).Sizee
Where rs is the required emissions intensity, Year is the year for which the emissions
intensity is required and Size is the size of the vessel in question in deadweight
tonnage (DWT), gross tonnage (GT), twenty-foot equivalent unit (TEU) or gas
capacity (CBM). The coefficients a, b, c, d and e arising from the fitted curves canbe found in Tables 6 and 7 for the 2023 IMO GHG Strategy ‘minimum’ and ‘striving’
trajectories respectively.

55

AppendicesPoseidon Principles

Vessel Type

a

b

c

d

e

Bulk Carrier

0.197595423250-1204.327471788270

2446554.0444015000-1656558770.1848900-0.621795966623

Chemical Tanker

0.719693754608-4386.472852934740

8910984.0557482200-6033616474.6929000-0.708011940066

Liquefied Gas Tanker

0.037285112425-227.249621692543

461650.5843008320-312583049.5894910-0.377221064754

Oil Tanker

0.858517723093-5232.593255117730

10629851.5070882000-7197459537.0680600-0.710709096846

Container

0.016054286568-97.849525238254

198778.2869047620-134592536.4894060-0.428275282772

General Cargo

0.037085016081-226.030051324493

459173.0647836910-310905524.1353460-0.434668687862

Cruise3.206029981674-19527.747843604500

39643674.7181239000-26824520313.4957000-0.781305544785

Ferry-RoPax

0.315387766928-1925.339436894950

3917621.4796394100-2656989966.5743600-0.533655729715

Vehicle1.520834751963-9270.152120771570

18833665.8280715000-12753381456.1464000-0.798598669375

Ro-Ro

1.565977660197-9544.502020165620

19389360.9223752000-13128512716.7907000-0.736571176805

Ferry-pax Only

0.277957869738-1697.201315164290

3454151.3882631900-2343163509.8926600-0.555741051860

Refrigerated Bulk

0.997370849218-6078.891370661100

12349079.9776283000-8361547045.1048900-0.689615587971

Other Liquids Tankers

40306988.50759790-245667702047.08100

499066345409893.00-337917215965332000.00-3.193817789625

Table 6.
Coefficients for determination of required emissions
intensity for vessel types under the 2023 IMO GHG Strategy- ‘minimum’ trajectory

Vessel Type

a

b

c

d

e

Bulk Carrier

0.171970561295-1046.38418984716

2122087.93600504-1434398489.01475-0.621795966623

Chemical Tanker

0.626361364577-3811.20247609171

7729194.37684557-5224451139.53197-0.708011940066

Liquefied Gas Tanker

0.032449849324-197.446638774031

400425.708083681-270662690.689048-0.377221064754

Oil Tanker

0.747182157837-4546.35718466663

9220102.73851721-6232211781.75456-0.710709096846

Container

0.013972310831-85.016906607075

172415.976481538-116542397.678723-0.428275282772

General Cargo

0.032275702171-196.387010739776

398276.761367967-269210137.34774-0.434668687862

Cruise2.698572736652-16403.274662460600

33231711.0973088000-22438785635.3910000-0.781305544785

Ferry-RoPax

0.299790013418-1828.068866193960

3715517.6371577800-2517080044.4892600-0.533655729715

Vehicle1.329468988249-8090.412206719010

16409651.013701600-11093368004.1986000-0.798598669375

Ro-Ro

1.362896228927-8292.774388875990

16817911.296247500-11367854339.3143000-0.736571176805

Ferry-pax Only

0.267762422622-1633.171139559730

3320217.8514407200-2249851500.9710700-0.555741051860

Refrigerated Bulk

0.868028327473-5281.666300124340

10711324.240416300-7240184087.1516600-0.689615587971-213449253130.82800

432879328083481.00-292599304483860000.00000 -3.193817789625

Other Liquids Tankers 35079838.00324480

Table 7.
Coefficients for determination of required emissions
intensity for vessel types under the 2023 IMO GHG Strategy- ‘striving’ trajectory56AppendicesPoseidon Principles

Example: Calculating emissions intensity
Considering a typical 80,000 DWT Panama bulk carrier, the required emissions
intensity in 2023 can be compiled as follows:
For 2023 IMO GHG Strategy - ‘minimum’ trajectory
a: 0.197595423250

Year: 2023

b: -1,204.327471788270

Size: 80,000

c: 2,446,554.0444015000
d: -1,656,558,770.1848900
e: -0.621795966623

rs = ((0.197595423250 * 20233) + (-1,204.327471788270 * 20232) +(2,446,554.0444015000 * 2023) -1,656,558,770.1848900) *(80,000-0.621795966623) = 3.80 gCO2e/tnm
For 2023 IMO GHG Strategy - ‘striving’ trajectory
a: 0.171970561295

Year = 2023

b: -1,046.384189847160

Size = 80,000

c: 2,122,087.9360050400
d: -1,434,398,489.0147500
e: -0.621795966623

rs = ((0.171970561295 * 20233) + (-1,046.384189847160 * 20232) +(2,122,087.9360050400 * 2023) -1,434,398,489.0147500) *(80,000-0.621795966623) = 3.63 gCO2e/tnm

Emission factors for well-to-wake CO2e reporting
based on IMO DCS data
The departure from the current tank-to-wake methodology requires the use ofemission factors that cover the impact of the whole lifecycle of the fuel as well as
the relevant GHG species (CO2, CH4, N2O). The discussion around fuel lifecycle
analysis is a rapidly shifting landscape with several developments impacting any
decision-making upcoming from various different entities.
The most pertinent for the purposes of the maritime industry is the lifecycle
assessment guidance (MEPC 80/7/4). Although currently not finalised, but beinga widely accepted framework for defining emission factors that will become thestandard for the industry.

57

AppendicesPoseidon Principles

A final draft of this document was adopted at MEPC 80 which only has a partial
set of emission factors for the most common fossil fuels. Once this is published, it
may still not be a definitive answer to emission factor definition as further changes
will need to be undertaken to existing MEPC resolutions including changes in DCS.
The intention of the advisory and Technical Committee is to evaluate the IMO LCA
guidance when published and assess the applicability to the Poseidon Principles
methodology with the understanding that this is likely to become the most widelyused framework in the marine industry.
Following extensive advice from the Smart Freight Centre (SFC)19, the Poseidon
Principles Technical Committee has evaluated several options for establishinga set of default values for reporting that captured the latest available science,
provided transparency, captured upstream emissions and the impact of onboard
technologies. Several national and supranational entities have published emission
factors to cater for their internal regulatory framework and emissions accounting
all of which have advantages and disadvantages with no clear gold standard. The
main sources consulted were the provisional IMO LCA Guidelines, material fromthe European Commission outlining reporting under Fit for 55 regulation, ecoinvent
database, as well as the GREET framework used in the USA.
With this information at hand and keeping the logic that transparency will be key
to ensure legitimacy and credibility for any pragmatic way forward, the TechnicalCommittee agreed on the following cascading order of emission factor priority
when coming up with a default set of values:

1.

Emission factors for conventional liquid fuels available in MEPC 80/7/4
should be used;

2. All other emission factors should be taken from the Fuel EU/ecoinvent;
3. Any other emission factors should be taken from the GREET database.
The following sections will present the emission factors to be used under one of two
scenarios. In the case that signatories only have basic DCS data, they are to use thedefault values presented below. If signatories have more granular data about fuels
used and machinery on board (specifically for LNG vessels), more specific emission
factors presented in subsequently should be used.

As this is an evolving topic, the Poseidon Principles will keep evaluating
the changing landscape of fuel lifecycle assessment and update theTechnical Guidance accordingly.

19
The Smart Freight Centre are a leading authority involved actively across supply chain
and logistics emissions accountancy including the Global Logistics Emission Council Framework(GLEC), ISO 14083 and offer advisory to the Sea Cargo Charter.
58

AppendicesPoseidon Principles

Default emission factors for IMO DCS based data:
The DCS resolution does not specify the granularity to which fuels should be
described in reporting and relies on MEPC.308(73) for tank-to-wake emission
factors which are limited to eight generic maritime fossil fuels. This implies thatsignatories may not have access to the required information about fuel consumed
and machinery on board to be able to report the most accurate emissions related totheir activity. To this end, the following emission factors are presented for reportingon a well-to-wake basis in Table 8.

Fuel type

Notes

Emission factor(WtW gCO2e/gfuel)SourceDiesel/Gas oil (MDO/MGO)

ISO 8217 Grades
DMX through DMB

4.01

MEPC.376(80)Light fuel oil (LFO)

ISO 8217 Grades
RMA through RMD

4.06

ecoinvent 3.9.1

Heavy fuel oil (HFO)

ISO 8217 Grades
RME through RMK

3.84

MEPC.376(80)Liquefied petroleum gas(LPG)

Propane4.02

ecoinvent 3.9.1, FuelEU
Maritime

Liquefied petroleum gas(LPG)

Butane4.05

ecoinvent 3.9.1, FuelEU
Maritime

4.53

FuelEU Maritime

Liquefied natural gas(LNG)

MethanolNatural gas
feedstock

1.50

GREET

Ethanol

1st Generation
biogenic

1.29

Ifeu et al., amended

Note: These values were used in the 2023 Annual Disclosure Report and work on this topic is
ongoing.
Table 8.
Default well-to-wake emission factors

Emission factors for granular fuel and machinery data
For the best possible representation of signatories’ portfolio performance, theTechnical Committee worked to provide a comprehensive set of default emission
factors for those that are able to obtain more granular information about fuelsconsumed and propulsion systems on LNG assets. Table 9 provides a more granular
set of emission factors based on input from the Smart Freight Centre which can beused by signatories.

59AppendicesPoseidon Principles

Fuel type

Notes

Emissionfactor (wellto-wakegCO2e/
gfuel)

SourceConventional fossil fuels
HFO

ISO 8217 Grades RME through RMK, >0.5% S

3.76

MEPC.376(80)

HFO (VLSFO)ISO 8217 Grades RME through RMK, >0.1% < S < 0.5% 3.84

MEPC .376(80)

LFO (ULSFO)ISO 8217 Grades RMA through RMD

4.06

ecoinvent 3.9.1

Diesel/Gas oil (MDO/MGO)

ISO 8217 Grades DMX through DMB

4.01

MEPC.376(80)

LNG

Otto (dual fuel medium speed)

4.53

FuelEU Maritime

LNG

Otto (dual fuel slow speed)

4.15

FuelEU Maritime

LNG

Diesel (dual fuel slow speed)

3.75

FuelEU Maritime

LNG

Lean burn spark ignited*

4.40

FuelEU Maritime andMEPC.376(80)

LNG

Steam turbine and boilers*

3.70

FuelEU Maritime andMEPC.376(80)

LPG

Propane4.02

ecoinvent 3.9.1, FuelEU
Maritime

LPG

Butane4.05

ecoinvent 3.9.1, FuelEU
Maritime

MethanolNatural gas feedstock

1.5

GREET

Ethanol E100

1st Generation biogenic

1.29

Ifeu et al., amended

Bio-diesel (FAME)

Waste feedstock mix

1.27

Ifeu et al., amended

HVO

Waste feedstock mix

1.26

Ifeu et al., amended

Bio Methanol

Waste wood

0.21

GREET

Bio MethanolBlack liquor

0.62

GREET

Bio-LNG

Otto (dual fuel medium speed)

2.36

FuelEU Maritime and Ifeu
et al. amended

Bio-LNG

Otto (dual fuel slow speed)

1.95

FuelEU Maritime and Ifeu
et al. amended

Bio-LNG

Diesel (dual fuel slow speed)

1.50

FuelEU Maritime and Ifeu
et al. amended

Bio-LNG

Lean burn spark ignited*

2.21

FuelEU Maritime andIfeu et al. amended andMEPC.376(80)

Bio-LNG

Steam turbine and boilers*

1.44

FuelEU Maritime andIfeu et al. amended andMEPC.376(80)with H2 recycling

0.06

GREET

Biofuels

Synthetic fuels
e-methanol

Note: These values were used in the 2023 Annual Disclosure Report and work on this topic is ongoing.
*denotes methane slip taken from MEPC.376 (80) as not available in FuelEU Maritime when drawing this list.
Table 9.
Granular well-to-wake emission factors
60Appendices
AppendicesPoseidon Principles

Considerations for reporting using granular data
Fuel characteristics
As the 2023 reporting cycle (on 2022 data) is a transitionary reporting year for
the Poseidon Principles with a substantial methodological change, the TechnicalCommittee has decided not to provide guidance on certification verification forfuel characteristics in order to use the granular emission factors. The TechnicalCommittee trusts that signatories will be reporting to their best possible
knowledge.
Machinery information
Given the issues around fugitive methane emissions from vessels, the distinction
between different propulsion plants is important to be factored in given the highglobal warming potential of methane. Not all signatories may have ready accessto the specifications of the vessels in their portfolio therefore the TechnicalCommittee recommends the following sources for the identification of LNG
propulsion type:1.

Documentation held by financing institutions that is related toclassification including shipbuilding contracts, classification documents or
the International Air Pollution Prevention Certificate (IAPP)

2. RO’s acting as service providers who may have access to a vessel
specification database

3. Authoritative industry vessel databases (may require verification due toinconsistency between databases).

If the above information is not enough to determine the engine type, Table 10
may be used to indicate the appropriate emission factor in Table 9 (the one with
granular factors) to be used in reporting for those signatories that cannot identify
the vessel engine type. Table 10 is only an illustrative example and not an
exhaustive list. Once again, signatories are expected to use the best of theirknowledge to report in the correct way. If there is any doubt about the engine
type, the default emission factor should be used.

Classification foremission factor
selection

Alternativereference
Industry reference(examples fromvessel databases)

Engine Type

Typical Makers /ModelsLNG Otto (Dual Fuel
-Medium Speed)

Dual Fuel Diesel
Electric (DFDE)

4-stroke , Low
pressure

CAT , Yanmar, Rolls Royce,
MAN Diesel, Wartsila

LNG Otto (Dual Fuel Slow Speed)

Low pressure Dual Fuel(LPDF)

2-Stroke Dual Fuel
(Low Pressure)2-stroke, Low
pressure

MAN Diesel – ME-GA

LNG Diesel (Dual Fuel
Slow Speed)

High Pressure Dual
Fuel (HPDF)

2-Stroke Dual Fuel(High Pressure)

2-Stroke, High
Pressure

MAN Diesel - ME-GI

LBSI

Low Burn Spark
Ignited

4-stroke, Low
PressureRolls Royce, Bergen, Wartsila

Gas Turbine

Steam propulsion

NA

NA

Steam Turbine

Table 10.
Indicative LNG propulsion types for emission factor choice61

AppendicesPoseidon Principles

Appendix 4

Revisions to the Poseidon Principles
trajectories
Future potential revisions to the Poseidon Principles
Over the timescale that the decarbonisation trajectory is estimated, a number ofthe parameters that are used in their calculation may change.
These include:•

Subsequent IMO GHG studies (released about every five years) andsubsequent studies may update or modify the estimates of the historicalemissions intensity and trends (e.g., if historical estimates are revised
upwards, the emissions intensity objective will steepen).

•With the publication of the IMO lifecycle assessment guidelines, thePoseidon Principles will review its approach to determining fuel lifecycle
GHG emissions with the intention to align with the IMO as much as
possible. This a very dynamic landscape which will be consistently
reviewed by the advisory team to ensure the most robust method
for representing emissions is selected including fuel certification andemission factor verification.

•

It is expected that the IMO DCS regulation will be updated in order
to align with the 2023 GHG Strategy which will be considered when
designing the future of the Poseidon Principles data collection regime.
This is expected to include more data collection around fuel types used
and machinery on board.

•

Transport demand growth may develop differently to the estimate usedhere to calculate the emissions intensity trend consistent with a 2050
absolute objective (e.g., if demand growth exceeds the trend used inthese calculations, the emissions intensity objective will steepen).

•

Demand growth may develop differentially between ship types andincrease the demand for ships with different emissions intensity than the2018 fleet (e.g., if demand modifies the fleet composition to increase theshare of emissions by ships which have higher emissions intensity, theemissions intensity objective will steepen).

•

The IMO may develop exemptions or correction factors in the short-term
measure to take into account the special nature of certain ship types’
operations (e.g., ice-classed ships).

•

The next scheduled IMO discussion around GHG emission reduction isscheduled for 2028.

62

AppendicesPoseidon Principles

While the decarbonisation trajectory and the ship type specific trajectory
values have been calculated using the best available data, there are a number offoreseeable reasons why these values may need to change in the future. For thisreason, it is proposed that decarbonisation trajectory is reviewed at a minimum
every five years, approximately consistent with the periodic release of new analysis(the IMO GHG Studies). Any update to the decarbonisation trajectory should beapplied for future climate alignment, not re-analysis of historical climate alignment.
Note: the Poseidon Principles will fine tune trajectories in 2024, reflecting on one reporting cycle
and post MEPC 81.

63

Acknowledgements

Poseidon Principles

Acknowledgements
The Poseidon Principles were developed in an effort spearheaded by global
shipping banks, leading industry players – ship owners, charterers, and classificationsocieties – as well as the Global Maritime Forum, Rocky Mountain Institute, andUniversity College London Energy Institute and UMAS International.

Current project teamGlobal Maritime Forum
Morgane Graffion, ESG Lead
Rita Hjelm, Project Coordinator
University College London/UMAS
Jean-Marc Bonello, Principal Consultant, UMAS
Akash Kapur, Consultant, UMAS
Haydn Francis, Consultant, UMAS
Rocky Mountain InstituteJames Mitchell, Manager, Head of Impact

Founding project teamGlobal Maritime Forum
Johannah Christensen, Managing Director, Head of Projects & ProgrammesLouise Dobler, Project Manager
Elyse Lawson, Project Assistant
Rocky Mountain InstituteJames Mitchell, Manager, Head of Impact
Patrick Molloy, Associate
University College London/UMAS
Tristan Smith, Reader in Energy and Shipping, University College London
Sophie Parker, Principal Consultant, UMAS

Drafting group
Michael Parker, Global Industry Head, Shipping & Logistics, Citi (Chair)
Paul Taylor, Global Head of Shipping & Offshore, Société Générale Corporate &Investment Banking (Vice Chair)
Kristin Holth, Executive Vice President, Global Head of Ocean Industries, DNB
John Kornerup Bang, Head, Sustainability Strategy and Chief Advisor, Climate
Change, A.P. Møller-Mærsk
George Wells, Global Head of Assets and Structuring, Ocean Transportation, Cargill
Hugo De Stoop, Chief Executive Officer, Euronav
Georg Whist, Chief Executive Officer, Gram Car Carriers64Acknowledgements

Poseidon Principles

Additional support
Katharine Palmer, Global Sustainability Manager, Marine & Offshore, Lloyd’s
Register Chris Craddock, Manager, Technical Advisory & Ship Performance, Lloyd’s
Register Eliza Eubank, Director and Global Head of Environmental and Social Risk
Management, Citi
Hui Wen Chan, Vice President, Corporate Sustainability, Citi
Knut Ola Skotvedt, Senior Vice President, Large Corporates, Ocean Industries, DNB
Holger Apel, Managing Director, Global Head Maritime Industries, KfW IPEX-Bank
Roland-Torsten Land, Director, KfW IPEX-Bank
Sebastian Fenk, Director Maritime Industries, KfW IPEX-Bank
Sabine Lehmann, Vice President, Strategy / Sustainability Management, KfW IPEX-Bank
Vishnu Prakash, Principal Data Scientist, Stena Bulk
Nigel Thomas, Chairman & Partner, Watson Farley and Williams
Lindsey Keeble, Partner, Watson Farley and Williams
Christina Howard, Partner, Watson Farley and Williams
Elaine Ashplant, Professional Support Lawyer, Watson Farley and Williams
Sabrina Chong, Trainee Solicitor, Watson Farley and Williams
Peter Appel, Chairman, Gorrissen Federspiel
Morten Berggreen, Attorney, Gorrissen Federspiel
Laura Düring Krabbe, Assistant Attorney, Gorrissen Federspiel
Michael Søsted, Managing Director, Head of Operations, Global Maritime Forum
Ingrid Sidenvall Jegou, Project Director, Decarbonisation, Global Maritime Forum
Layout by Housatonic.eu

65Poseidon Principles

6666

Poseidon Principles
Amaliegade 33 B, 3rd floor
1256 Copenhagen K
Denmark
www.poseidonprinciples.org
info@poseidonprinciples.org© Poseidon Principles