There is currently no industry-wide accepted definition of ‘sustainable trade’. The ICC established a programme in September 2021 to begin ‘defining and setting the standards for sustainable trade finance in a manner that is practical, comprehensive and provides sufficient transparency into the sustainability of a transaction’. The ICC has brought together stakeholders from numerous trade banks, corporates, infrastructural players and Boston Consulting Group and published a position paper in November 2021 ‘Standards for Sustainable Trade and Sustainable Trade Finance – A roadmap and vision for industry, policymakers and traders worldwide.’ (ICC Position Paper). The ICC project marks the start of a journey of defining, recognising and setting the standards for sustainable trade and trade finance, while acknowledging that this is a complex task:
‘Although existing definitions and standards may exist for other forms of sustainable finance, these rarely capture the complexities of trade. For example, a single trade transaction can involve as many as 20 different parties, involve different types of goods, services and raw materials, cross multiple jurisdictions, require different forms of transport – and, crucially, represent one step in a much larger supply chain. In addition, while specific goods may not in themselves be sustainable, they can often be used for purposes such as sustainable infrastructure. And the same applies in reverse – the trade of sustainable goods for non-sustainable purposes. Breaking through such complexity to provide visibility and transparency on genuine sustainable trade, in a way that is implementable at scale, is a substantial challenge that requires collaboration across the industry.’
John Denton, Secretary General, ICC. November 2021.
The ICC Position Paper states that ‘The standards will be inspired by the UN’s Sustainable Development Goals (SDGs) as a taxonomy of reference to enable a comprehensive framework for sustainability. However, SDGs will not be assessed on an individual basis, considering underlying targets are not always applicable to goods, transactions and organisations. Rather they will be collapsed into more relatable dimensions of sustainability.’