Shipping industry faces ESG heat from lenders
19/10/2021 14:39
By Jonathan Saul
LONDON, Oct 19 (Reuters) - 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% of world trade,
accounts for nearly 3% 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 STAN.L 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."
Leading shipping financiers currently provide close to $300
billion of lending to the industry annually, analysts estimate.
Of the $2.4 trillion that BCG estimates will be needed to
achieve net-zero emissions by 2050, Jameson said $500 billion
would be required between now and 2030 with the remaining $1.9
trillion between 2030-2050.
The bulk of the total amount – around $1.7 trillion – would
go towards developing future fuels.
"Funding sources are already becoming available, yet plenty
more are still required," Jameson said.
ESG-related assets under management are estimated to
represent up to 80% of total lending to shipping by 2030, BCG
said.
UN shipping agency the International Maritime Organization
(IMO) has said it aims to reduce overall greenhouse gas (GHG)
emissions from ships by 50% from 2008 levels by 2050, but
industry groups are calling for more progress from governments.
"The risks to balance sheets will start to force more
questions being asked to the IMO," said Ulrik Sanders, managing
director at BCG, adding that this would "prompt more action
towards decarbonisation".
(Editing by Susan Fenton)
((jonathan.saul@thomsonreuters.com; + 44 207 542 4357 ; Reuters
Messaging: jonathan.saul.thomsonreuters.com@reuters.net))