Poseidon Principles: Monitoring ship-related CO2 emissions is important, although the calculation method challenges Finnvera

The outlook for cruise shipping has continued to improve and cruise tourism is growing internationally. The cruise shipping industry is most significant in Finnvera's export credit guarantee exposure. Therefore, monitoring and measuring emissions related to ship finance are also an essential part of Finnvera's climate monitoring. Finnvera calculated the emissions of the ship finance portfolio for the fourth time according to the Poseidon Principles. The targets to cut shipping emissions has become more ambitious, and the trajectories strongly challenge Finnvera as our ship finance portfolio consists of the world’s largest and most advanced cruise ships and as approximately two-thirds of our portfolio covered by the Poseidon Principles are LNG-powered vessels.

The original Poseidon Principles iniative is consistent with the policies and ambitions of the International Maritime Organization (IMO), to reduce shipping’s total annual greenhouse gas emissions by at least 50% of 2008 levels by 2050. Aligned with this target Finnvera’s score exceeded the trajectory by 37.4%. In relation to the IMO Revised GHG Strategy target Finnvera’s score exceeded the trajectory by 44.1%.

The calculation is based on the previous year’s data, thus the CO2 level being reported now has been calculated based on the year 2023.

“Even though we are further away from the trajectories than last year, the focus of our ship-related financing has not changed from previous years. As before, we finance new, technologically advanced vessels. As the calculation is based on the cO2 emissions in relation to the size of the vessel, the distance travelled, as well as the amount of credit related to the vessel, these factors affect the emissions score and annual volatility”, says Jussi Haarasilta, Executive Vice President. 

“Another feature typical to Finnvera’s ship finance portfolio is that the portfolio consists of the world’s largest and most advanced cruise ships and as approximately two-thirds of our portfolio covered by the Poseidon Principles are LNG-powered vessels. The impact of the calculation method is most evident in regard to default emission factors of LNG even if the new cruise ships represent the latest technology and energy efficiency. Although the trajectories strongly challenge Finnvera, we still consider it important to monitor the emissions development transparently”, Haarasilta continues.

The shipyard cluster is significant in Finland, and more than half of Finnvera's EUR 22.8 billion export credit guarantee exposure is related to ship cluster. The share of drawn ship exposure is EUR 4.9 billion (Q3/2024).

Finnvera has developed its climate targets and reporting

The calculation has improved the quality of the data as a source for assessment, based on which we are also able to specify our reporting on climate impacts. Poseidon Principles have brought measurability and comparability to the monitoring of the climate impacts of Finnvera's financing.

For its operations Finnvera has set a climate target in line with the Paris Climate Agreement’s 1.5. degree target. In November 2024, Finnvera joined the Net-Zero ECA Alliance, a UN initiative, whose goals include creating a measurement method for setting, reporting and monitoring emissions targets and building a common vision for the net-zero goal in export financing.

“As an export credit agency, Finnvera also has good opportunities to influence the development of climate solutions, as we essentially finance new projects and new technology aiming to build more environmentally efficient ships than the current ones. In our business activities we emphasize active dialogue with the cruise shipping industry widely from the engine technology developers to shipyards and shipping companies. A good example of a future development is the NEcOLEAP project of the Meyer Turku shipyard in Finland, where the aim is to develop a climate-neutral cruise ship concept by 2025. The project is financed by Business Finland, which is part of the Team Finland network along with Finnvera”, Haarasilta says. 

This is how the CO2 level is calculated according to Poseidon Principles

Poseidon Principles measures carbon intensity. The data based on which the overall climate alignment score is calculated is distance travelled, amount of fuel consumption for each fuel type, and size of the vessel. The outstanding debt per vessel also play a role when calculating the weighted average of the scores. The calculation is based on a formula that takes into account the distance traveled by the vessels during the year.

The calculation is based on the previous year’s data, and thus, the CO2 level being reported now has been calculated based on the year 2023.

The Poseidon Principles members are leading ship financiers, such as international banks, but there are export credit agencies among them. The signatories represent nearly 80% of the global ship finance portfolio. Finnvera became signatory to the Poseidon Principles in April 2021.

Further information:

Jussi Haarasilta, Executive Vice President, Large Corporates, Finnvera, tel. +358 29 460 2601

Read also:

Poseidon Principlesin press release and report 12 December 2024: 
Global shipping finance portfolio moves closer to alignment with net zero climate goals - Poseidon Principles for Financial Institutions

Home - Poseidon Principles for Financial Institutions