LONDON: Banks are demanding much stricter environmental criteria when financing shipping companies as investor pressure grows on the sector to accelerate going greener, according to Boston Consulting Group (BCG).
Shipping, which transports about 90 percent of world trade, accounts for nearly 3 percent of the world’s CO2 emissions and BCG forecast the industry will need $2.4 trillion to achieve net-zero emissions by 2050.
“ESG-driven requests are already prompting more action from banks. Shipping is already feeling it and they (shipping companies) are under pressure now,” said Peter Jameson, partner with BCG, which are consultants for the COP26 UN climate summit that starts on Oct. 31.
Standard Chartered has already provided loans linked to sustainability targets for drilling group Odfjell and the shipping division of Oman’s Asyad Group, the bank has said.
“When looking at lending on new assets, banks are going to create a bigger conduit for CO2 reductions through their policies,” Jameson told Reuters.
“The banks are also seeing insurance companies feeling shareholder pressure and this is also causing big pension funds to reassess.”
ESG-related assets under management are estimated to represent up to 80 percent of total lending to shipping by 2030, BCG said.
UN shipping agency the International Maritime Organization has said it aims to reduce overall greenhouse gas (GHG) emissions from ships by 50 percent from 2008 levels by 2050, but industry groups are calling for more progress from governments.