02/08/2018
Back in December
2015, the ICC Commission on Environment and Energy issued a Policy Statement on
‘Sustainability Reporting - Future Directions'.
The statement
highlighted that sustainability reporting had become a key way for
corporations to disclose information relevant to their sustainability, in a way
that complements and adds nuance to standard reports on financial performance.
It went on to
propose an 8-point approach with key considerations on which each business
should reflect as they determine how to advance their corporate sustainability
reporting.
Since that time, the
ICC Banking Commission established a Sustainable Trade Finance Working Group.
Context:
-
In the past few years, there is an increased
expectation for all parties involved in global supply chains to tackle the
issue of visibility of sourcing; banks, as an actor behind the financing of the
supply chains, are also incentivised to take part to this monitoring activity
to meet expectations of clients and, possibly, regulators.
-
Although most banks do have specialised workforce
looking at sustainability initiatives across the financial sectors, a lack of
sufficient understanding of risks and of due diligence guidelines have been
identified in the trade finance department.
Goal:
-
The group aims therefore to promote sustainability
in trade finance and leverage banks' role in financing sustainable trade and
encouraging sustainable practices, by helping in providing clarity to banks in
their implementation of sustainability policy and standards.
-
The product scope of this working group refers to
Trade Finance and Supply Chain Finance products with a maturity up to 3 years and
which are within the scope of the working group. For these, risk management
will be the primary focus.
Objectives:
- Promote an
industry-wide consensus on a common view and definition for sustainable
trade finance, to dis-encourage further inaccurate use of the term or
greenwashing. ?
- Encourage
awareness and understanding of sustainability in the area of trade finance
by promoting best practices and their implementation, in anticipation of
potential official regulations and in line with more conscious and
demanding customer expectations. ?
- Provide guidance
for sustainable trade finance operations, including specific procedures to
identify sensitive sectors and commodities and evaluation criteria to
evaluate available standards and certification requirements. ?
- Monitor the
development of other industry initiatives around environmental and social
risks and finance provision. ?
- Maintain regular
dialogue with ICC Country representative bodies to ensure consistency of
approach and standards setting. ?
Further details can
be obtained from the ICC website - www.iccwbo.org
www.tradefinance.training
