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ICC to help define sustainable trading definitions

The International Chamber of Commerce has set out proposals to define and set common standards for sustainable trade and associated financing.

According to the ICC, the paper will outline ‘[…] the first-ever standardised framework and assessment methodology to qualify the sustainability profile of trade transactions’.

The ICC said in a statement: “Unlike other asset classes, such as bonds, no standards currently exist to allow financial institutions to grade the sustainability performance of trade finance transactions – the global market for which is currently valued at $5trn annually.”

Through its proposed framework, the ICC said it looked to break through the complexity around sustainable finance by guiding banks and corporates towards best-practice standards.

John WH Denton, secretary general of the ICC, said: “We recognise the imperative to ensure that international trade is a trusted vector of economic, societal and environmental progress. But the difficulty of defining workable sustainability standards for cross-border commerce should not be underestimated. The proposed framework we are setting out today is intended to cut through the inherent complexity of global value chains – establishing a standard methodology for banks and corporates to reliably grade the economic, environmental and social performance of individual transactions.”

Accelerated role

The proposed framework reportedly takes an ‘innovative approach’ by drawing on existing standards while shying away from the complexity that has cursed this sector.

Denton added: “We see a remarkable opportunity to put the $5trn trade finance market squarely behind global sustainability goals. But to achieve this, we need to ensure we land an approach that sets a high-bar on sustainability while still being capable of being implemented in the real world by banks and corporates – regardless of their size, sector or geography.”

The release of the report, The Roadmap and Vision for Industry, Policymakers, and Traders Worldwide, is said to be the first in a project by the ICC on sustainable trade and finance. The ICC did not give any details on what the subsequent stages are set to be.

However, it said, “The end-state ambition of the project is to accelerate global trade’s role in helping businesses meet both the Paris agreement towards a reduction in global greenhouse gas emissions as well as the UN’s Sustainable Development Goals – that go beyond environmental sustainability. In addition, the project aims to enable greater understanding of sustainability considerations in global supply chains and inspire change across them.”

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

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