Decarbonisation of the marine industry

Date: Friday, April 1st, 2022 by dev.login.

The marine insurance industry has become the first line of business to establish a specific methodology to support the target of the Net-Zero Insurance Alliance, where members commit to transitioning their underwriting portfolios to net-zero GHG emissions by 2050. The industry currently accounts for nearly 3% of the global total, according to the International Maritime Organisation. The IMO target for decarbonisation is a 40% reduction in CO2 emissions compared with 2008 levels. This should rise to at least 70% by 2050, along with a parallel reduction of the total annual GHG emissions by at least 50%, again compared to 2008 levels. It is an ambitious target.

In July 2021, at the G20 Climate Summit in Venice, eight founding members launched the NZIA (Net-Zero Insurance Alliance), among them Axa, Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich Insurance Group. And in December 2021, six of the world’s leading marine insurers publicly launched the Poseidon Principles for Marine Insurance. The Principles are a framework designed to quantitatively assess and disclose the climate alignment of marine insurers’ underwriting hull and machinery portfolios and benchmarking them against the IMO targets mentioned, in an effort to provide transparency on carbon emissions.

The four Poseidon Principles are: assessment of climate alignment, accountability (the signatories will exclusively rely on the data types, data sources and service providers identified in the Technical Guidance), enforcement (this principle aims to create an equal burden for the signatories to ensure that the appropriate data is provided by shipowners) and transparency (to ensure both the awareness of the Principles and that accurate information can be published by the Principles for the Marine Insurance Secretariat in a timely manner).

Whilst I am delighted to see that our industry and the private sector is leading the way, governments and regulators will also have to take policy action that makes zero-emission shipping and fuel production commercially viable and available to all. We have a long way to go, but progress is underway at last.