It has long been said that trade finance, with its strong links to the real economy, is a natural fit for sustainability initiatives. Over the years there has been growing interest in environmental, social and governance (ESG) practices and decision-making throughout the trade industry as stakeholders increasingly focus on sustainability metrics, and demand businesses measure and address their ESG impacts.

Companies themselves are realising that integrating ESG into their business is becoming a necessity from a commercial as well as a reputational perspective, and that often their supply chains hold the biggest opportunities for breakthroughs in sustainability performance.

Much of this increased awareness has been driven by the 17 Sustainable Development Goals (SDGs), as set out in 2015 by the United Nations (UN), for countries to adopt and implement by 2030.

While the UN says that advances on achieving the SDGs have been made in some areas, including improvements in maternal and child health and expanding access to electricity, efforts were largely off-track by the end of 2019 due to factors such as the deterioration of the natural environment and growing food insecurity. The UN’s Sustainable Development Goals Report 2020, released only a few months into the pandemic in the middle of last year, found that over a very short period of time the crisis caused by Covid-19 was already resulting in significant disruption to SDG progress.

The annual stocktaking report shows that it is the poorest and most vulnerable who are bearing the heaviest brunt of the pandemic’s effects. Its key findings asserted, among other things, that global gains in reducing child labour are likely to be reversed for the first time in 20 years, and that climate change is still occurring much faster than anticipated.

The need to embed sustainability into business has never been more acute, and the trade finance community has an important role to play.

There have been some encouraging developments of late. In March, Swift integrated the International Chamber of Commerce’s sustainable trade finance guidelines into its KYC registry, creating an independent ESG reporting repository for companies. The move means that sustainability due diligence is being given the same footing as compliance with anti-money laundering and financial crime directives.

We’ve also seen banks unveiling new policies and announcing significant investments across their footprints to shore up the resourcing required to take action on ESG matters.

Nevertheless, as highlighted in this issue’s ESG roundtable discussion, which brought together several industry experts, there is more work to be done within the trade ecosystem as players recognise and assume their various roles and responsibilities. “The commercial realm is critical and will drive much of the journey. But it is a journey,” as one roundtable participant puts it.

Elsewhere in this issue, we explore how emerging technology is opening new opportunities for trade finance lenders looking to go green, and we investigate whether new regulatory activity can make trade in Asia more sustainable. We also examine the Great Green Wall project in Africa’s Sahel region, now looking to draw in private investment, and we take a look at what the US president’s new climate policies may mean for the export sector and those that fund it.