Insurers add pressure onto shipping with warning to get ahead of the tsunami
Insurers and the maritime P&I community have written their own Poseidon Principles, the framework agreement originally written by and for the maritime financial market as it took a verbal stance towards influencing the rate of maritime decarbonisation.
They come with a warning to take decarbonisation seriously or get caught up in an inevitable tsunami of change.
Six insurers have formed the Net-Zero Insurance Alliance, again under the Copenhagen-based Global Maritime Forum which orchestrated the first Poseidon Principles (for banks), as well as the Sea Cargo Charter (for cargo owners and shippers).
The six signatories are Swiss Re, Gard, Hellenic Hull, SCOR, Victor Insurance, Norwegian Hull Club. There are also industry associations such as CEFOR (Nordic Association of Marine Insurers) and IUMI (international Union of Marine Insurance) onboard as affiliate member and supporting partner.
As with the Poseidon Principles for ship finance, this new endeavour will not cut finance for shipping, but is set to be a growing influence as entities outside shipping put pressure on owners and operators to start or speed up their decarbonisation efforts.
The focus is still on net zero achievement, a broad enough term to allow owners and operators to chose CO 2 emitting fuel in the future providing there is carbon accountability, carbon price and some eventual offsetting permitted.
But regardless of the policies that will emerge, especially at the IMO where lobby groups and politics will fight to wen the decarbonisation agenda, the NZIA is set to be another pressure point of change, or Tipping Point, as the Global Maritime Forum calls it.
Decarbonisation of the value chain will not cost much.
During closing comments at briefing to launch NZIA, Swizz-Re CEO Christian Mumenthaler said the individual efforts of actors in the value chain may be expensive and hard at first, tis is an effort where first movers will be rewarded.
Insurance is becoming more transparent and other industries such as steel and aviation are learning from shipping, he said, which is setting an example of not hiding away anymore as it adapts to a new world.
By forcing change the decarbonisation efforts will snowball across the supply chain he predicted, and as it happens the cost of end products will not be high, about 1% to 4% in terms of value chain, even if individual companies may find it hard at the start.
He also implied that those who find it hard now and persevere with their decarbonisation strategies will be the ones that are ahead of an inevitable wave, or mass change, and will have a competitive advantage.
Increased pressure from the insurance companies at this stage will help, he insisted, in staying ahead of the wave and not getting caught up in it.