Regulation, Sustainability & ESG
The Poseidon Principles
Summary
The Poseidon Principles are a framework for assessing and disclosing the climate alignment of financial institutions’ shipping portfolios. Established in 2019 by a group of leading shipping banks, they set a common methodology for measuring how a loan book’s carbon intensity compares with a decarbonisation trajectory consistent with the ambitions of the International Maritime Organization.
Why this matters in ship finance
They translate high-level climate policy into a measurable metric that lenders can track, disclose and reference in credit decisions. For shipping companies, alignment with the trajectory increasingly affects access to bank capital.
The concept
The methodology calculates a portfolio’s carbon intensity — typically expressed as grams of CO₂ per tonne-mile — and compares it with the trajectory adopted by the signatories. Signatories publish an annual climate alignment score. Investor and insurance versions of the Principles have followed.
How it is used in practice
Signatory banks integrate the calculation into their portfolio reporting and, increasingly, into credit decisions and pricing. Borrowers whose vessels are misaligned may find some capital sources restricted, priced differently or subject to sustainability-linked structures.
Practical issues
The Principles rely on vessel-level emissions and activity data, which requires reliable collection and verification. Coverage of specific segments and the choice of trajectory are the subject of continuing methodological work. Alignment scores at portfolio level can mask wide dispersion at vessel level.
How ShipFinance.ai uses this concept
The platform can compute vessel-level and case-level carbon intensity under a consistent methodology, compare it with the applicable trajectory and highlight the alignment implications for capital sources that reference the Principles.
Key takeaways
The Poseidon Principles are becoming part of the credit infrastructure of ship finance, not an optional overlay. Understanding how they are calculated and how they are moving is now a core competence for both lenders and borrowers.
Primary source: Poseidon Principles for Financial Institutions (2019, current version).