New study reveals Korean and Chinese financiers and major European banks could be most exposed to climate risks in shipping

Korean and Chinese financiers have over half of their portfolio tied to oil and gas carriers most at risk of becoming stranded assets from shifts to a global low-carbon energy system. European banks follow closely, with Standard Chartered, ABN AMRO, ING Bank, SEB and Nordea each having over one-third of their portfolios tied to fossil fuel shipping.

London, 22nd October 2025. A substantial portion of ship financing is tied to fossil fuel carriers that face risks of stranding in the global shift to a low-carbon energy system. A comprehensive study by researchers at UCL (University College London) has mapped the global landscape of shipping finance and uncovers the financial arrangements and institutions behind USD 378 billion of maritime assets, about 30% of the global vessel fleet value.

Whilst most financiers maintain diversified portfolios across various shipping segments, certain institutions show concentrated exposure to specific fossil fuel carrier types. Based on the identified transactions, five financiers have over half of their shipping portfolio tied to fossil fuel carriers, including China Merchants Group and Korea Eximbank (KEXIM). They are followed by mostly European banks, including Standard Chartered, ABN AMRO, ING Bank, SEB, Nordea and SMBC who have over one-third of their portfolio tied to fossil fuel carriers. BNP Paribas, the financier with the largest portfolio recorded in the dataset (USD 9 billion), was also found to have almost a quarter of its portfolio invested in fossil fuel carriers (USD 2 billion).

The research, which compiled data from over 3,000 financial transactions - loans, bonds, leases, and equity investments - provides the first detailed assessment of which financiers and economies are most invested in vessels that transport oil and gas. To maintain a liveable planet as stated in the Paris Agreement's climate goals, demand for these fossil fuels must decline. Vessels that transport these commodities may then be in oversupply and potentially become a ‘stranded asset’. Previous analysis identified gas carriers and oil tankers as segments that are particularly exposed to this demand-side risk. The demand for the transport of coal is also set to decline but options to switch to carrying other cargoes which will increase in demand, such as grains, and without major conversion costs, keeps the bulk carrier fleet at a low risk. In contrast, the young fleet of LNG carriers has a very high newbuild value and a purpose-specific design; repurposing to other commodities, if possible, would require high additional investments, reducing the fleet’s competitiveness and ability to generate profit.

Dr Marie Fricaudet, Senior Research Fellow at UCL Shipping and Oceans Research Group and lead author, said: “To our knowledge, this is the first attempt to map climate risk to shipping financiers’ portfolios. The results show many financiers have a substantial part of their portfolio linked to fossil fuel transportation and highlight that more transparency is needed to properly anticipate and price-in the climate risk carried by shipping financiers.”

Banks that finance the fossil fuel carrying fleet could be holding toxic assets: the study could identify financial arrangements of liquified gas carriers of approximately USD 36 billion – only counting those where the analysis was able to match a financier with a vessel. Among the identified transactions, loans account for over half of the amount (USD 21 billion) making them the most important LNG carrier financing instrument, followed by direct ownership and leases (USD 11 billion) and equity (USD 7 billion). For oil tankers, equity financing plays a more prominent role, accounting for about 40% of a total of USD 35 billion identified transactions. Bank loans represent around the same (USD 14 billion). This highlights that the financial risks do not only sit in the loan portfolio of banks, but a large chunk is spread across global capital markets.

Based on the headquarters of financiers, the United States, South Korea, France, PR China, and the United Kingdom dominate the financing of LNG carriers, with France and South Korea being heavily invested through bank loans. China, the United States, and Hong Kong dominate oil tanker financing, with bonds being the preferred instrument in Hong Kong, Asia’s leading bond issuance hub. South Korea seems most exposed to stranded asset risks, with nearly half of its shipping investments directed toward LNG carriers.

Dr Tristan Smith, Professor of Energy and Transport at UCL Shipping and Oceans Research Group, said: “These risks exist regardless of the IMO’s adoption of the NZF. However, reflecting on the NZF being delayed, this subject has now increased in salience - regulation has not gone away but is now more uncertain. Understanding and managing that risk will now be of greater importance than ever.”

The methodology combined data from the Dealscan database, London Stock Exchange Group (LSEG), Marine Money database, Clarksons World Fleet Register and Clarksons Shipping Information Network. The dataset covers approximately half of the shipping loan portfolio, which is just under USD 300 billion, and 25–40% of the global fleet value - equivalent to around USD 1 to 1.5 trillion. The coverage of the compiled dataset varies across segments, with cruise being by far the best covered segment. European banks and several other large institutions have better coverage, whereas several Asian financiers remain less covered by the dataset due to limited publicly available data. The analysis and the figures from the study should therefore be seen as a representative sample for some of the key financiers.

Dr Nishatabbas Rehmatulla, Principal Research Fellow at UCL Shipping and Oceans Research Group, said: “The gaps in data highlight an urgent need for much greater transparency in shipping finance. Building this dataset from various sources, whilst complex and novel, underscores the current failure of disclosure in the sector. Whilst initiatives such as the Poseidon Principles have made an attempt at this, the climate alignment scores are aggregated at the portfolio level, meaning that data cannot be traced back to individual vessels. Furthermore they provide only an annual snapshot on GHG emissions intensity, but to really assess exposure to stranded asset risks, more forward-looking understanding is needed.” To date, the Poseidon Principles reporting has focused on the GHG intensity of the financed fleet and have not considered demand-side climate risk i.e. the exposure to risks in major reconfigurations due to climate policy related energy transition.

Last month UCL Shipping & Oceans Research Group and Kuehne Climate Centre published an interactive online tool ‘Investment Risk Monitor for Fossil Fuel Carrying Ships’, available at https://shipping-transition.org, which provides users with high-level fleet-wide estimates of the future overall supply and demand balance for maritime transport services of different fossil fuel carrying ship types under different climate and energy scenarios. The findings show that particularly LNG carriers can be expected to be in oversupply over the next decade and thus face a risk of being written off.