Transitioning trade finance is ESG’s biggest challenge
If the market for sustainable finance is ever to achieve true scale, it needs to crack the tough nut of sustainable trade finance solutions.
When it comes to sustainability, trade finance has been relatively slow off the mark. While an ever-expanding range of products has captured the wallets and imaginations of bond buyers and corporate lenders, sustainable trade finance transactions have been few and far between.
As transaction bankers are quick to point out, that represents a big, missed opportunity.
“The urgent need in sustainable finance is to achieve scale,” says Viktor Ivanov, head of sustainability for transaction banking in Europe Middle East and Africa at BNP Paribas.
“Sustainable bonds and loans are growing steadily but remain a fraction of what is needed to meet the goals of the Paris agreement. We have to move towards a broader range of solutions, which includes trade finance.”
Pradeep Nair, head of structured solutions at Standard Chartered, puts it more bluntly.