Just as companies emerged from the worst of the Covid-19 pandemic, they moved into the headwinds of rising interest rates, persistent inflation, the Russia/Ukraine war and a global energy crisis. With organisations worldwide grappling with liquidity in a volatile environment, their financing needs are becoming more complex, says Jared Rorrer, managing director – global commercial banking lead, at Accenture.


A recent Accenture survey of 675 finance executives in 15 countries shows how today’s trading conditions are exacerbating many of the challenges companies faced before the pandemic.

The complexity of trade and supply chain financing transactions, which involves significant manual work for companies and banks alike, is set to multiply as companies of all sizes and throughout the supply chain come under growing pressure to report on and reduce carbon emissions.

As the world continues to face ongoing disruption and challenges, governments and regulators are shining a spotlight on the impact of trade on the environment and climate change. An analysis from Coriolis Technologies concludes that nearly 80% of world trade contributes negatively to the United Nations Sustainable Development Goals.

Changing this picture is a challenge that will demand cooperation right across the ecosystem—from governments and multilateral global institutions through to large multinational corporations and small and mid-sized businesses. Banks, too, will be expected to play a role in reducing trade emissions by offering sustainable trade finance and supporting companies in their drive to become more sustainable.


Sustainable trade: A growth market for banks and fintechs

Sustainable financing is emerging as a growth market for commercial banks that grasp the nettle. About eight out of 10 respondents to our survey indicated that they are interested in sustainability products around development and project financing, financial advisory services and trade and fixed asset loans.

The research highlights how rapidly sustainability is moving up the agenda for trade finance customers. Nearly four of five respondents said their business has put in place environmental policies that apply across its supply chain.

The larger a company is, the more likely it is to have these policies in place, but smaller companies are also treating the imperative seriously.

The number rises to 92% for the largest companies with annual revenues exceeding US$5bn and falls to 65% of those with turnover below US$5mn. And there is considerable variance by country, with more than 90% of respondents in Indonesia, Thailand and the United Arab Emirates having supply chain-wide environmental policies in place, compared to 63% in Spain, 67% in Malaysia and 67% in North America.

More than 90% of respondents agreed that sustainable financing is important to their business, with 68% reporting that it is very important or essential. Three-quarters of importers and 72% of exporters said that sustainable financing is very important or essential, while more than 80% from India, Thailand and the UK were in agreement with these same factors.

Yet even as they acknowledge the importance of driving sustainability across their supply chains, most companies face a range of barriers to meeting their goals. Our research indicates that a lack of experience in measuring sustainability, an inability to invest in sustainable solutions, and a lack of internal know-how and expertise are all obstacles to trade finance clients’ sustainability strategies.

There is growing incentive for banks to consider collaboration with more than one fintech that focuses on specific aspects of the sustainable financing value cycle, such as developing and evaluating data-driven insights, ESG certifications, green transactions, etc.



Financing a greener trade agenda

Our research shows that many trade finance clients are turning to banks and fintechs that offer innovative solutions for reducing credit risk, forecasting cash flow and allocating working capital, reaching new customers and suppliers, and discovering new channels to buy or sell goods. Increasingly, sustainability advice and services will be part of what they seek in trade finance solutions.

Larger multinationals, for example, are looking for offerings that help them to incentivise suppliers to meet sustainability-linked metrics, which in turn helps the multinational meet its own sustainability targets. Such incentives may take the form of preferential financing rates for meeting targets on carbon data disclosure and emissions reduction.

Banks have also been engaging with customers to support and lead the transition to a low-carbon world by adopting and moving to sustainable financing models themselves. For example, HSBC set a target of net zero and earmarked US$1bn for green financing by 2050.

Small and mid-sized companies, meanwhile, will be looking to their trade finance partners for advice about how they can track and reduce emissions to meet the targets their regulators and larger trading partners set. Innovative banks are looking at partnerships with fintechs as one way to reach these customers, which are often left behind by complex onboarding processes.

Digitalisation and sustainability go hand-in-hand, offering solutions to the challenges many companies experience with manual, paper-based processes. For example, in Singapore, four commercial banks and the Singapore Trade Data Exchange (SGTraDex) have collaborated to develop digital solutions for the application of clear, consistent green trade financing standards across industries.

Facing growing scrutiny from regulators and customers alike, neither banks nor their trade finance customers can ignore the net-zero priority. Banks that embrace their central role in financing the sustainable trade finance agenda will not only keep ahead of regulatory expectations, they’ll also be able to capture significant opportunities in a new market and strengthen public trust.

Read Find your competitive advantage in today’s trade finance sector, an executive summary of Accenture’s research on www.accenture.com