Odfjell has passed another significant milestone on its transition journey with the introduction of a ‘Transition Finance Framework’. The initiative is a first in the Nordic region and solidifies the shipping company’s position at the forefront of sustainable finance practices.

Odfjell has worked actively to reduce emissions for more than a decade. This work has led to documented results, positioning the chemical tanker operator as a sustainability leader in the international shipping industry. The company is now taking another proactive step toward reaching its ambitious climate targets by releasing a customized Transition Finance Framework aimed at supporting the funding of its transition.

Financing the transition of the Odfjell fleet

The Transition Finance Framework has been developed with support from DNB as Transition Finance Advisor.

"As the focus on reducing climate footprints grows across industries worldwide, so do the expectations for transition plans and concrete actions from banks and investors. We appreciate this strong interest from our funding sources and have decided to respond by piloting a new financial instrument," says Finance Manager at Odfjell, Henriette K. Bergesen.

The framework serves as a holistic approach to transition investments, capturing both small and large decarbonization projects that Odfjell intends to invest in. The framework can be used for both bonds and loans and adheres to the latest industry guidelines for use-of-proceeds instruments and transition financing.

"This commitment serves as a strategic roadmap for our investments in emission-reduction activities and is a proactive measure in our transition strategy. It ensures accountability in utilizing financial resources, ensuring that the funds invested in us go to eligible projects linked to our transition plan."

The first facility already successfully issued

The framework encompasses a wide range of energy-efficiency initiatives that will support Odfjell's journey towards a climate-neutral fleet in 2050. The participating financial institutions will benefit from Odfjell's commitment to transparency and see their funds being directed towards a wide range of initiatives aimed at emission reduction, such as:

Vessel-specific retrofits

R&D activities

WASP technology

Zero-emission capable new builds

Vessel life-extension program

The framework has already proven its effectiveness in a recent Transition Finance loan facility together with a refinancing for six supersegregators, at historically attractive terms, demonstrating the banking sector's enthusiasm for supporting transition investments.

A broader sustainable finance portfolio

The framework adheres to the latest guidelines set by the ICMA in their Climate Transition Finance Handbook 2023 and is verified by DNV.

"As a Second Party Opinion provider for Odfjell's Transition Finance Framework, we are delighted to have played a role in supporting their sustainability journey. We look forward to following Odfjell's progress and further contributions to the maritime industry's transition finance and positive climate impact," says DNV's Green Finance Lead Nordics, Ingebjørg Nueva Finnebråten.

The Transition Finance Framework complements Odfjell's successful Sustainability-Linked Finance Framework, which was the first of its kind in the shipping industry when first issued in 2021.

"Capital markets play an important role in the decarbonization of shipping. By issuing this new framework, we hope to contribute to the development of sustainable financing and set a high standard for climate initiatives in the shipping industry for others to follow," VP Finance at Odfjell, Gustav Sannem, concludes.