The opportunity to turn trade finance green, at scale 

In the vast machinery of global commerce, few financial instruments facilitate as many transactions as trade finance. Each year, trillions of dollars flow through the trade finance system – letters of credit, export guarantees and supply chain financing – funding everything from infrastructure for clean energy vehicles to steel shipments, medical supplies to semiconductors.  

Trade finance underpins 80% to 90% of global trade in some form, making it potentially one of the most powerful levers for directing capital towards climate-friendly activities. At such scale, even modest improvements in aligning these flows with sustainability goals could unlock vast pools of climate capital. 

Yet, until now, banks facilitating these trade finance transactions have operated in a partial regulatory grey zone when it comes to sustainability classifications, lacking reliable tools and global consensus on sustainability assessment methodology, evidence requirements, tracking and reporting standards. 

This lack of clarity makes it difficult to determine which transactions genuinely advance sustainability goals – and increases the risk of rewarding appearance over substance.  

Part of the problem lies in the very nature of trade finance. Unlike traditional lending – which funds a specific project, often long-term in nature – trade finance is a ‘flow’ product with sometimes less end-to-end visibility and increased complexity involving many actors across fast-moving supply chains.  

Many transactions involve individual components or intermediary goods with no standardised production method or traceable end purpose. For example, steel may be critical for building wind turbines, but if it is produced using carbon-intensive methods and under poor social guidance, its sustainability profile becomes far harder to assess. To determine genuine sustainability, banks must consider not only the stated purpose of a transaction but also the goods themselves and how they were produced.  

A turning point for sustainable trade finance 

Defining sustainable trade finance in simple, one-size-fits-all terms may seem impossible, yet our ICC Principles For Sustainable Trade Finance – developed with Boston Consulting Group and major trade banks – represent the most comprehensive approach yet to assessing sustainability across the entire trade journey. 

The principles create a common language for banks, corporates and investors and tackle the thorny questions:

What trade activities can be considered green with a high degree of confidence? What sources can evidence sustainability?  What constitutes genuine sustainability improvements versus mere box-ticking? 

With these clear, consistent principles in place, the credibility of sustainability efforts in trade finance can be strengthened and companies can more easily align with – and improve – their environmental, social and governance (ESG) performance. Banks, in turn, should link company performance to tangible incentives – such as lower borrowing costs, green letters of credit with reduced interest rates, preferential supplier pricing and better market access – and should be able to do so with greater confidence. 

This could ultimately trigger a positive feedback loop:

Clear, common standards build trust in a unified system; that trust unlocks meaningful incentives; those incentives drive better sustainability performance, which in turn reinforces the credibility and effectiveness of the standards themselves. 

Improved ESG performance would also make businesses more attractive to ESG-focused investors and partners. With an ESG investing market valued at US$25 trillion in 2023 – and expected to grow to US$80 trillion by 2030 – this represents a major and fast-growing source of capital for businesses leading on sustainability. 

On the other hand, for policymakers, the principles offer a market-driven solution to accelerate climate finance flows without requiring new regulations or public funding – effectively leveraging private capital to meet national climate commitments and Sustainable Development Goals (SDGs). Consulting a single framework could also streamline decision-making, reduce administrative burdens of navigating numerous independent ESG finance frameworks and allow for comparative data analysis on sustainable trade finance performance.  

Scaling through uptake and endorsement 

As a Boston Consulting Group white paper notes, only 3% of global trade can be definitely labelled as green without measurable standards – yet with robust, harmonised standards in place, that share could rise to as much as 75%. The ICC Principles for Sustainable Trade Finance now provide the clear, trusted framework to make this transformation possible. 

The next challenge is scale, which comes through endorsement from industry bodies, policymakers and regulators, and rapid uptake by banks, corporates and investors – joining the likes of Commerzbank, ING, Santander and Standard Chartered. 

By replacing today’s patchwork of standards with a single, credible framework, we can cut complexity, build trust and accelerate green finance flows – unlocking one of the largest untapped pools of climate capital in the world. 

---

2025 marks a pivotal year for the Paris Agreement – and the moment to act is now.  

We invite banks to join us in endorsing the ICC Principles for Sustainable Trade Finance by reaching out to Raelene Martin, ICC Head of Sustainability and Tomasch Kubiak, Trade Finance Policy Manager, and support our Opportunity of a Lifetime climate campaign as we work to secure the outcomes business needs at COP30 in Belém, Brazil.