PRINCIPLE 1

Assessment

Signatories will will measure the emission intensity of their hull and machinery portfolio relative to established decarbonisation trajectories. This assessment is based on a robust industry-appropriate methodology outlined in the Technical Guidance.

We will annually assess climate alignment in line with the Technical Guidance for all business activities.

Role of affiliate members

Affiliate members will support signatories by sharing knowledge about the Assessment principle and climate alignment methodology with relevant stakeholders, in line with the Technical Guidance.

Assessing climate alignment

The Poseidon Principles for Marine Insurance use carbon intensity relative to established decarbonisation trajectories to measure climate alignment. Climate alignment is defined as the degree to which a vessel, policy, or portfolio’s carbon intensity is in line with a decarbonisation trajectory that meets them corresponding IMO ambition. To assess climate alignment of a single vessel, the vessel’s annual emission intensity is compared with the decarbonisation trajectory for its ship type and size class. The climate alignment of a product and or portfolio is a weighted average of the vessel emission intensities in each product or portfolio.

The Poseidon Principles for Marine Insurance rely specifically on the Annual Efficiency Ratio (AER) as the carbon intensity metric due to the availability of existing data from the IMO and for consistency with the Poseidon Principles methodology. The AER uses the parameters of fuel consumption, distance travelled, and deadweight tonnage at summer draught.

The requirement to assess climate alignment takes effect the calendar year after a financial institution becomes a signatory. In other words, if a financial institution joins in October 2023, they will not be required to assess climate alignment until 2024.

What is a decarbonisation trajectory?
A decarbonisation trajectory is a representation of the amount of emissions a single ship can produce to move one tonne of goods one nautical mile over a given time. To assess climate alignment of a single vessel, the vessel’s annual emissions intensity is compared with the decarbonisation trajectory for its respective ship type and size class.

Standard decarbonisation trajectories are produced by the Secretariat of the Poseidon Principles for Marine Insurance for each ship type and size class. The decarbonisation trajectories used by the Poseidon Principles represent the 2023 IMO GHG Strategy ambition of reducing total annual GHG emissions to net-zero around 2050 in a well-to-wake CO₂e perceptive. It also takes into account the interim checkpoints in 2030 (20% reduction, striving for 30% compared to 2008 levels) and 2040 (70% reduction, striving for 80% compared to 2008 levels). 

Learn more about Assessment in the Technical Guidance