What are the prevailing KPIs in sustainability-linked loans in Shipping today?
The signatories to the Poseidon Principles to ensure that their ship finance portfolios are aligned with the targets set out in the IMO’s Initial GHG Strategy monitor climate alignment measures like the difference between a vessel’s actual carbon intensity and its ship type/ size decarbonization trajectory value, which represents the carbon intensity threshold value for its respective type and size per year.
The Poseidon Principles use the AER (Annual Efficiency Ratio) metric for ti calculate the carbon intesity.
- Ci is the carbon emissions for a voyage i (Σ[fuel consumption x emission factor of fuel(s)])
- dwt is the design deadweight of the vessel
- Di is the distance travelled on a voyage i
Thank you @Stela.Spiraj. This is indeed the main one. I was wondering what other KPIs can be used. If I find something interesting I will post it
Hi, with regards to the KPI concerning the AER of the vessel. This is very vessel specific and often we use a metric called Sustainability Score (as defined below) to calculate the score of the vessel or of the fleet.
Sustainability Score=Vessel AER (gCO2 per TNM)/ Proseidon trajectory AER (gCO2 per TNM)
This will allow us to see if the KPI is met and if a discount in the margin can be achieved (for loans). Now when calculating the Fleet Sustainability Score, banks usually prefer to use a weighted average taking into account the DWT (size of the vessel) and distance traveled. To prove the data, shipowners can obtain statements of compliance and fuel consumption reports from classification societies. Owners can perform the calculations and then banks will verify.
Now the norm in the industry is to include 3 KPIs on average for any transaction. We see those extended to non vessel specific metrics as well touching the other letters of the ESG being S for Social and G for Governance. When I know more about this I will post it. One metric that I am aware is being used is the Lost Time Injuries (LTI) KPI. Please see below for definition.