The ITFA ESG Report – The Regulatory Reality of Making Trade Sustainable

ITFA is delighted to launch its report, “The Regulatory Reality of Making Trade Sustainable” authored by the ITFA ESG Committee and Dr. Rebecca Harding. Based as it is on a survey of ITFA members and 40 in-depth interviews with banks, credit insurance providers and fintechs, it represents the views of an industry which is frustrated by lack of clarity in reporting requirements and audit standards. It argues that the current regulatory structures that govern sustainability reporting by Financial Institutions are creating a raft of unforeseen consequences that will ultimately militate against the long-term objective of meeting sustainability targets globally in the long run. These unforeseen consequences are the result of a market distortion that is providing perverse incentives to banks and may increase the trade finance gap, increase the risk of green-hushing, exclude key parts of the trade finance ecosystem – especially Africa, and militate against transition to more sustainable business models that include Social as well as Environmental factors.

The report concludes with strong recommendations for the industry and for ITFA in particular: the establishment of an Audit Council, the creation of a shared database to produce scenario models that are appropriate to trade finance, and mechanisms for including all players in regulatory conversations, including a commitment to measuring “intangibles” in the social aspects of ESG by involving African banks who have more experience in this process. ITFA is dedicated to making trade sustainable and will review, with the members of the ESG committee, all the actions that have been raised by the report and set up working groups accordingly to move this ahead quickly. This is a wakeup call for the industry, governments and regulators. Participants in the research want us to take action to speak with a single voice to regulators and this is where we see our future role. 

We would like to notify you that the complete report has been uploaded to the member section of the ITFA website. We invite our members to access the report and make use of the valuable insights it contains. For ease of reference, we have also prepared an executive summary

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