1. Sustainability in Trade Finance Update on Global Policies
Mark Hughes
Senior Environmental Adviser
Environment and Sustainability Department

2. Banks and Sustainability
Environmental and social responsibility in day-to-day operations:
Environmental…
recycling programs
improvements in energy
Socially responsible…
support for cultural events
improved human resource practices
charitable donations
Integration of sustainability into core business - product design, policies and strategies.
Example include…
integration of environmental criteria into lending and investment strategy
development of new products – focus on better behaviour or focused products.
08/11/2018

3. Finance initiatives include…
08/11/2018

4. Trade finance – E&S issues
Issues associated with traded product itself
Issues associated with conditions of production
Issues associated with transport
Issues associated with use of traded product
Issues associated with facilities at which product is used
08/11/2018

5. But what can we do? Its trade finance!
Lending
Size, term of loan, and sector
Longer term relationship
Security
Investment
Ownership and control
Building value for exit
Liability unlimited?
Trade Finance
Volume and size of transactions
Length of relationship
Timing
Lack of information
08/11/2018

6. …and who cares? How many trade finance transactions go public?
Smaller transactions
Fast moving
Often with companies with limited public scrutiny
A specialist product – who’s heard of trade finance outside of banking?
CSOs / NGOs?
The media?
08/11/2018

7. New Initiatives for Trade Finance
Banking Environment Initiative – Sustainable Trade Finance Council
Soft Commodities Compact
finance/banking-environment-initiative/programme/sustainable- agri-supply-chains/soft-commodities
Sustainable Shipment Letter of Credit
banking-environment-initiative-sustainable-shi.pdf
IFC’s Global Map of Environmental and Social Risks in Agro-Commodity Production (GMAP)
ernal_corporate_site/sustainability-at-ifc/company- resources/gmap
8 November, 2018

8. A practical process for E&S due diligence
Screening
Environmental and social exclusions
Identifying high risk transactions
Significant, negative and/or long-term environmental or social impacts
Consider traded product, size and tenor, end user
Undertaking due diligence
Written evidence, site visits, third party expertise
Monitoring and control
Warranties, corrective actions, delayed disbursements, reporting
8 November, 2018

9. EBRD Procedures for Trade Finance
Environmental Procedures for Issuing Banks Under TFP
8 November, 2018