By Jonathan Saul
LONDON (Reuters) - Leading Japanese lenders have joined an initiative that links the provision of shipping finance to cuts in carbon dioxide emissions as the sector accelerates efforts to go green.
In recent weeks, Shinsei Bank Ltd, Sumitomo Mitsui (NYSE:SMFG) Banking Corporation, Sumitomo Mitsui Finance & Leasing and MUFG Bank have signed up to the scheme, the banks said.
With about 90% of world trade transported by sea, global shipping accounts for nearly 3% of the world's CO2 emissions.
In 2019, a group of leading banks signed up to environmental commitments known as the "Poseidon Principles", whereby financiers would take account of efforts to cut CO2 emissions when providing loans to shipping companies.
Japan is one of the world's major maritime hubs, especially for shipbuilding.
By joining the scheme, MUFG Bank said on Tuesday it would "contribute to the sustainability of the shipping industry".
Sumitomo Mitsui Trust Bank was the first Asian lender to join in March last year.
There are now 24 institutions involved, including other major sector players such as Citi and Societe Generale (OTC:SCGLY). Their ship lending portfolios represent around $175 billion, nearly 50% of global shipping finance.
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).
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.
Michael Parker, chair of the Poseidon Principles Association, said he was optimistic further Asian lenders would join this year.
"The other important driver will be (UN summit) COP26 in Glasgow, where we expect the shipping sector ... to get global leaders’ attention on what progress the industry has made," said Parker, who is also chairman of Citi's global shipping, logistics and offshore business.