In April 2025, the International Maritime Organization's (IMO) 83rd Marine Environment Protection Committee meeting ended without consensus on a global shipping levy. The proposed Net Zero Fund (NZF), a $150-per-tonne charge on shipping CO₂ emissions projected to raise some $120 billion a year to fund further decarbonisation projects, remains unagreed for now.
The noise declared progress on maritime decarbonisation had stalled, but there is an underlying signal that tells a different story, with quiet progress in procurement departments from Stockholm to São Paulo to Seoul.
Corporate sustainability teams asked the same question of their logistics providers: what is the carbon intensity of the ship carrying my goods, and what are you doing to reduce it?
Science Based Targets initiative (SBTi) commitments to reduce Scope 3 greenhouse gas emissions were already operative. They just didn't need a UN agreement.
But what is that signal, and how strong is it? Here we quantify that signal and what it means for shipping markets, and why it matters now, even at a fraction of the NZF's scale
Scope 3: the new charter conversation
Scope 3 refers to indirect emissions from across a company's value chain, up and downstream of its own operations. They are the least visible and least actioned part of corporate climate commitments.
Scope 3 are also, on average, 26 times larger than a company's direct (Scope 1 and 2) emissions. For a fashion retailer, a pharmaceutical company, or an electronics manufacturer, the largest single component of Scope 3 is usually transportation, and that transportation usually includes shipping.
The GHG Protocol's Category 4 (upstream transportation and distribution) and Category 9 (downstream transportation) capture this exposure. Until recently, few companies reported on them with any rigour, fewer still tying targets to them.
That has changed. In September 2025, 8.8% of all companies (1,046 of the full SBTi database of 15,564 companies) included SBTi-validated near-term targets naming upstream transportation with the top sectors, food and beverage (152 companies), textiles and apparel (91), pharmaceuticals (89), and retail (70). These are, without exception, the largest volume shippers of containerised cargo on the planet.
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1,046 |
Companies with SBTi-validated targets explicitly naming upstream transport (Category 4) SBTi targets dataset, September 2025 |
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8.8% |
Share of all SBTi targets-set companies naming upstream transport - growing at ~35% per year SBTi annual reports 2021–2024 |
And these are not soft commitments. SBTi validation requires targets to be consistent with 1.5°C or well-below 2°C pathways, independently reviewed, and publicly disclosed. If a major food group or a global apparel brand has an SBTi-validated Cat 4 target, it is legally and reputationally exposed if it cannot demonstrate progress. That exposure flows directly to the choice of carrier.
The fleet cannot yet deliver
So the demand for lower emission shipping is there, but there’s a problem. The fleet cannot absorb it.
The IMO's revised GHG Strategy requires international shipping to cut its carbon intensity by 40% from 2008 levels by 2030, dropping from a fleet average of approximately 100 grams of CO₂ per tonne-mile to around 72 by 2030. That 28% gap must be closed in less than four years, across 165,000 active vessels.
In the first year of Carbon Intensity Indicator (CII) reporting in 2023, 30% of the active fleet attained the two lowest grades, D or E, which trigger improvement plans and, eventually, commercial consequences. That is roughly 49,500 ships.
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1.5% |
Share of the active fleet that can run on alternative fuels (LNG, methanol, ammonia) today
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41% |
Share of the global fleet aged 25 years or more — vessels unlikely to retrofit economically Clarksons fleet data, 2024 |
The supply response is modest. Of those 165,000 active vessels, just 1.5% (2,493 vessels) could run on alternative fuels. Of the global orderbook of 10,355 vessels, by early 2024, only 14% of ordered new tonnage was alternative-fuel-ready (UNCTAD RMT 2024). At the current pace, replacing the D/E-rated fleet would take nearly five years, and most use conventional fuel.
There is demand for a product the industry is not yet building at sufficient scale, and the eco-vessel premium reflects this scarcity. Brokers at Clarksons Platou and Fearnleys have reported time-charter rate premiums of 10–12% for eco-efficient vessels over equivalents in the same class.
A year ago that premium barely existed. Today it is a negotiating variable on every long-term charter. And clients with Scope 3 targets are ever more willing to pay it, or require it as a condition of contract.
Quantifying the pressure
We modelled three scenarios for how 1,046 Cat 4-committed companies translate into shipping market demand. The scenarios bracket the plausible range of shipper behaviour given different levels of procurement engagement.
- Passive: the conservative floor
Five per cent of committed companies actively specify vessel performance in charter decisions. The rest report but do not act. At a shadow carbon price of $20 per tonne CO₂ equivalent, the implied annual demand signal on containerised trade is worth approximately $0.7 billion. This is the floor and already happening.
- Active Procurement: the base case
Twenty-five per cent of committed companies specify eco-vessels, consistent with observed behaviour among Sea Cargo Charter signatories. After a 40% efficiency discount, accounting for vessel availability constraints and contract timing gaps, the implied signal on 2.335 billion tonnes of containerised trade, at a shadow price of $45 per tonne, is approximately $4.7 billion per year.
- MBM / Book & Claim: the upside
An additional 10% engage via Book & Claim certificates or nascent maritime emissions trading mechanisms, adding to the Active scenario. After a 60% efficiency discount (the Book & Claim market for shipping is still thin), the combined signal reaches approximately $10.7 billion per year.
These are shadow carbon costs: the value shippers assign to emissions when choosing between vessels. No money changes hands, and there is no tax or surcharge but these numbers influence real chartering decisions. A shipper using a $45 carbon price and accepting a 10-12% eco-premium is making the same basic calculation as under a carbon levy, just on a voluntary basis.
What the NZF stalemate means
The IMO NZF is a supply-side mechanism that would change the economics for every ship at $150 per tonne of CO₂, raising $120 billion a year to find alternative fuel infrastructure in developing countries and de-risked newbuild orders at a scale that the market cannot achieve alone.
Scope 3 pressure is demand-side, working through very different levers, the shipper's procurement decision, the charter contract, the sustainability questionnaire, the annual CDP disclosure.
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3 – 5 years |
Head start: Scope 3 pressure has been market-operative since 2022, NZF effective date is 2027 at the earliest SBTi data, IMO MEPC 83 outcome, April 2025 |
However, the Scope 3 signal covers only a fraction of seaborne trade, primarily containerised cargo where shipper brand exposure is highest. It seldom reaches bulk carriers where cargo owners rarely have a Scope 3 alignment incentive. Scope 3 incentives are uneven, voluntary, and unenforceable. When it eventually comes, NZF, will do things Scope 3 pressure structurally cannot.
But the SBTi commitment pipeline is growing at approximately 35% per year. The first wave of Cat 4 targets, set in 2021 and 2022, hit reporting deadlines in 2025 and 2026. Companies setting 30% reduction targets with a 2025 base year will be audited against those targets imminently. That creates a step-change in the urgency of Scope 3 procurement, independent of anything IMO does.
What Scope 3 means for shipowners and financiers
For shipowners, eco-efficient vessels now carry a demonstrable commercial premium, and that premium has a structural driver, the Scope 3 commitment pipeline, that will intensify over the next three years regardless of IMO outcomes. Vessels with verified emissions intensity data, GLEC-compliant reporting, and CII ratings of A or B will be the only choice for the committed shipper segment.
The 36 Poseidon Principles signatory banks represent some 75% of global ship finance and measure their portfolios' carbon alignment annually. An owner’s access to competitive financing increasingly depends on its emissions profile. The Scope 3 and Poseidon stories are converging: the shipper's charter choice and the bank's lending decision are shaped by the same underlying decarbonisation pressure.
For financiers, the 41% of the fleet aged 25 years or more represents the most acute risk. These vessels are unlikely to retrofit economically, many facing accelerating obsolescence as the charter market polarises between compliant and non-compliant tonnage.
The combination of CII D/E ratings, Poseidon Principles portfolio pressure, and shipper Scope 3 specification requirements creates a compounding stranded-asset risk for older tonnage not yet priced into most residual value curves.
The window that exists right now
The three-to-five-year gap between now and any plausible NZF implementation is will further skew the market in favour of owners who can demonstrate carbon performance. The 1,046 companies with SBTi Cat 4 targets have reporting deadlines, audit committees, and their reputations shaping which ships they book, and more companies are following their lead.
Positioning themselves to take advantage of this demand are owners with more efficient or alternatively fuelled ships who are not waiting for MEPC 84.
LR Advisory helps shipowners listen through the noise for the underlying signal, and this Scope 3 pressure model is a structured way to quantify the committed cargo base, assess the fleet's ability to serve it, and stress-test three scenarios for how demand translates into market outcomes.
