March 13, 2020 / 5:18 PM / 23 days ago

Japan's Sumitomo Mitsui joins effort to cut CO2 in shipping

LONDON, March 13 (Reuters) - Japan’s Sumitomo Mitsui Trust Bank (SMTB) has become the first lender in Asia to join an initiative that links the provision of shipping finance to cuts in carbon dioxide emissions, officials involved said on Friday.

Global shipping accounts for 2.2% of the world’s CO2 emissions and the industry is under pressure to reduce those emissions and other pollution. About 90% of world trade is transported by sea.

Last year, a group of leading banks signed up to environmental commitments known as the “Poseidon Principles”, whereby financiers will for the first time take account of efforts to cut CO2 emissions when providing loans to shipping companies.

The IMO aims to reduce the industry’s greenhouse gas emissions by 50% from 2008 levels by 2050, a target that will require the swift development of zero or low emission fuels and new ship designs using cleaner technology.

“We recognize that tackling climate change is one of the biggest challenges for global financial institutions,” said Koichi Onaka, global head of ship finance with SMTB.

The principles set a common baseline to assess whether lending portfolios are in line or behind the climate goals set by the U.N. shipping agency, the International Maritime Organization (IMO).

“Asia is a major center for ship finance, and the decision by SMTB will encourage other Japanese and Asian financial institutions to follow their lead in the coming months,” said Michael Parker, chairman of global shipping logistics & offshore at Citi and one of the architects of the Poseidon Principles.

There are now 18 financial institutions which have signed up to the Poseidon Principles including ABN Amro, BNP Paribas, Citi, Credit Suisse and Societe Generale. (Reporting by Jonathan Saul, editing by Pritha Sarkar)

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