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InvestmentsShipping industry faces ESG heat from lenders By Reuters

Shipping industry faces ESG heat from lenders By Reuters


© Reuters. A view of stacked delivery containers at Southampton docks, Southampton, Britain, October 18, 2021. Picture taken with a drone. REUTERS/Matthew Childs

By Jonathan Saul

LONDON (Reuters) – Banks are demanding a lot stricter environmental standards when financing delivery firms as investor stress grows on the sector to speed up going greener, in line with Boston Consulting Group (BCG).

Shipping, which transports about 90% of world commerce, accounts for almost 3% of the world’s CO2 emissions and BCG forecast the industry will want $2.4 trillion to realize 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,” stated Peter Jameson, accomplice with BCG, that are consultants for the COP26 UN local weather summit that begins on Oct. 31.

Standard Chartered (OTC:) has already supplied loans linked to sustainability targets for drilling group Odfjell and the delivery division of Oman’s Asyad Group, the financial institution has stated.

“When looking at lending on new assets, banks are going to create a bigger conduit for CO2 reductions through their policies,” Jameson advised Reuters.

“The banks are also seeing insurance companies feeling shareholder pressure and this is also causing big pension funds to reassess.”

Leading delivery financiers at the moment present near $300 billion of lending to the industry yearly, analysts estimate.

Of the $2.4 trillion that BCG estimates can be wanted to realize net-zero emissions by 2050, Jameson stated $500 billion could be required between now and 2030 with the remaining $1.9 trillion between 2030-2050.

The bulk of the entire quantity – round $1.7 trillion – would go in direction of creating future fuels.

“Funding sources are already becoming available, yet plenty more are still required,” Jameson stated.

ESG-related belongings beneath administration are estimated to signify as much as 80% of complete lending to delivery by 2030, BCG stated.

UN delivery company the International Maritime Organization (IMO) has stated it goals to cut back general greenhouse gasoline (GHG) emissions from ships by 50% from 2008 ranges by 2050, however industry teams are calling for extra progress from governments.

“The risks to balance sheets will start to force more questions being asked to the IMO,” stated Ulrik Sanders, managing director at BCG, including that this could “prompt more action towards decarbonisation”.

 

 

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