COP27: New industry framework to measure sustainability of trade transactions
The International Chamber of Commerce (ICC) has published a pilot version of the first-ever industry framework to assess the sustainability performance of trade transactions.
The “Wave 1” framework is the product of a year-long consultation with banks, corporates and technology providers — in partnership with Boston Consulting Group — based on the roadmap announced by ICC at the Glasgow climate summit.
The new ICC framework sets out an agreed industry definition of sustainable trade – taking into account both environmental and socio-economic factors. It also embeds an approach that covers the entire lifecycle of an international trade transaction across five different dimensions – from the buyer and supplier to the nature and purpose of the goods or services sold.
The Wave 1 framework relies on simplified scoring system to allow it to be readily tested by banks and corporates – recognizing continued industry challenges accessing the high-quality data necessary for more granular sustainability assessments. Binary “ticks” for each component of a transaction will be used to show whether it meets ICC-approved sustainability standards.
Raelene Martin, ICC Head of Sustainability, said: “We have been careful to ensure that this initial framework is immediately implementable – making use of recognized standards, data and technology that are readily available to banks and corporates. This will allow us to test the framework in a real-world setting and build a more comprehensive view on the sustainability of global the value chain over time.”
At the COP27 climate summit, ICC Secretary General John W.H. Denton AO announced that more than 20 banks and corporates have pledged to pilot the application of the Wave 1 framework for transactions in the textiles sector. These include: BNP Paribas, Commerzbank, Lloyds Bank, Commonwealth Bank of Australia, DNB, Santander Bank, Société Générale, Wells Fargo, Yes Bank. ICC will be announcing other members joining the pilots in due course.
ICC will publish the findings from these pilots and set out how it will use these results to enhance the framework by mid-2023.
Tomasch Kubiak, ICC Policy Manager, said: “The industry pilots launched today will provide vital learnings that will enable ICC to continue to iterate the framework – and provide any necessary practical support to promote its implementation. This is the start of an important journey that we hope will enable robust sustainability criteria to be embedded in trade financing across all sectors.”