Watson Farley & Williams (“WFW”) has advised a leading financial services company regarding a US$25m financing to companies controlled by Union Maritime Limited secured on three dry bulk carriers with a focus on sustainability and, more specifically, the IMO’s aim to reduce international shipping’s carbon footprint through the recent adoption a new operational carbon intensity indicator.
The transaction involved drafting of a margin adjustment mechanism based on carbon intensity rating as an incentive for the owners to reduce the carriers’ carbon emissions, which also included disincentives for non-compliance demonstrating our client’s commitment to promoting sustainable ship financing. WFW advised the client regarding the legal and commercial implications of the mechanism by proposing various drafting solutions in order to best document the commercial agreement.
WFW regularly advises shipping clients on a wide variety of sustainability-related matters, as well ESG generally. In addition to sustainability-linked financings, we advise on regulatory issues, the development and installation of sustainability-related technology and equipment, ship recycling and the expansion of the EU’s Emissions Trading Scheme to the shipping sector.
In addition, earlier his year WFW published The Sustainability Imperative: ESG – Reshaping the funding and governance of shipping, a first of its kind thought leadership report based on a survey of over 500 leading industry executives and interviews with ten key figures from the industry. WFW also helped develop the Poseidon Principles, to support the IMO’s goal of reducing shipping’s total greenhouse gas emissions by at least 50% by 2050.