The Regulatory Reporting Reality of Making Trade Sustainable, May 2023

Written by the ITFA ESG Committee and Dr. Rebecca Harding

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 has the potential to:

  1. Disincentives lending the transition to more sustainable business models because there is no favourable regulatory capital for Environmental, Social and Governance (ESG) or “green” deals compared to non-transition or “brown” financing.
  2. Rely on a backward-looking risk-based approach to sustainability that does not model transition risk on reasonable time frames for climate change.
  3. Widen the trade finance gap in emerging markets and for smaller businesses in supply chains.
  4. Replace “green-washing” with “green-hushing” where minimum regulatory reporting becomes the norm where achievable, modest, targets are set to avoid accusations of green-washing.
  5. Where the “S” in ESG, is under-incentivised because it is an intangible and hard to measure compared to the “E” part.
  6. Where the focus on “E” creates a barrier to the development of appropriate frameworks based on “S” in emerging markets and Africa in particular.

This “regulatory paradox” is the basis of the report which have been launched on Thursday, May 25th. The report is based on 40 semi-structured interviews with ITFA members and a survey representing one quarter of the organisations across the ITFA membership.

Dr. Rebecca HardingIndependent Trade Expert and author of the report said, “This research is a comprehensive overview of the challenges that banks and insurance businesses face in relation to regulatory reporting for ESG around the world. It points clearly to the need to collaborate across the trade and trade finance sector and beyond to develop clear and workable guidelines for ESG reporting. If we don’t do this soon, the risk is that we exclude smaller businesses, take a one-size-fits all approach to regulatory reporting that excludes Africa and worsens the trade finance gap and, in short, undoes all of the good work that has been done within banks and trade associations to make trade sustainable.”

Mr Sean Edwards, ITFA Chair said, “Our report and research shows that the wealth of standards has led to a certain degree of paralysis which is making the life of banks as well as regulators, all of whom have the best intentions, very difficult as they seek to bring about the change that is needed to achieve net zero and meet global targets. We also emphasise the importance of measuring the inherent value of trade finance as a force for good in improving especially the “S” and the “G” in ESG metrics and to do this in a nuanced and relevant way for all markets. It is clear that banks and finance providers need guidance and a better sense of direction and our work is intended to kick-start this critical dialogue.”

Ms Johanna Wissing, ITFA ESG Committee Chair said, “The ITFA ESG Committee is extremely grateful for the efforts put into the report by its author, and for the wide contribution of ITFA members responding to the survey. We want to be an advocate for fair and impartial standards that attribute the due importance to trade finance to achieving the UN SDG, and a just and equitable transition to more positive ESG outcomes.”

Key Data Findings:

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

For additional information kindly reach out to:

Dr. Rebecca Harding is available for comment via email ( or phone (+44-(0)7803 710711


Mr. Sean Edwards is available for comment via

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