ICC Principles for Sustainable Trade and Trade Finance

Trade underpins economic growth, connects markets and supports development. But if global trade is to continue delivering these benefits in the long term, and ensure resilient global economies and a healthy planet, it must also support sustainability.  

Yet, assessing sustainability within international trade and trade finance remains a major challenge. Trade transactions – which connect numerous parties across the globe – remain highly fragmented and complex in nature. This is further compounded by a lack of consistent, standardised definitions across countries for assessing the sustainability of transactions. Without clarity, efforts to promote sustainable trade risks being undermined. Crucially, it also makes it more difficult to align global trade with the goals of the Paris Agreement and mobilise the finance needed to deliver them.  

The growing interest in environmental, social and corporate governance (ESG) provides a beacon of hope for change. Yet, interest alone isn’t enough – clear, consistent definitions on sustainable international trade and trade finance are needed to turn ambition into action.  

With this in mind, the ICC, together with input and endorsement from major trade banks, have developed the Principles for Sustainable Trade and Trade Finance, providing the clarity and common ground needed to help global trade play its part in delivering on sustainability goals and in meeting the Paris Agreement’s 1.5°C target.  

The Sustainable Trade Finance Principles sit under the broader Principles for Sustainable Trade, which provide a frame to assess both the environmental sustainability of a transaction, and how it supports socio-economically sustainable development. 

The ICC Principles for Sustainable Trade 

The Sustainable Trade Principles, currently in its third iteration (Wave 3), aim to define standards for sustainable trade to accelerate the shift to a more sustainable economy. It provides a framework to assess sustainability of trade across four key components – the ‘use of proceeds’, ‘seller’, ‘buyer’, and ‘distribution’ – against two critical dimensions, namely environmental and socio-economically sustainable development.  

The ICC Principles for Sustainable Trade include:  

• High-level principles for banks to utilise and base their internal methodologies on  
• Guidance on methodology for how the principles can best be utilised in a common framework, with practical advice on assessments across different components  
• A framework providing nuanced sustainability assessments based on sector-specific evidence  
• A Sustainable Credential Library to consolidate recognised standards, conventions, and ESG scorers  
• Clear guidance on acceptable forms of evidence, to ensure the framework is more accessible and less burdensome, including for SMEs  
• The integration of any regional taxonomies, where appropriate, allowing for greater applicability across diverse markets  
• The Principles for Sustainable Trade Finance (PSTF), which enhance the Use of Proceeds assessment of the Principles for Sustainable for Trade by setting thresholds and assessments within trade finance to ensure alignment with established frameworks whilst enabling more flexibility in evidencing sustainability  

The Sustainable Trade Finance Principles 

Together with industry leaders, ICC further developed the Sustainable Trade Finance Principles, currently in its second iteration (Wave 2). The Principles include a sub-set of principles and guidelines, including:  

1. The Principles for Green Trade Finance (PGTF)  

Set of detailed, fully implementable principles that provide a common language and set of processes for banks to utilise when conducting a Use of Proceeds-based assessment for green-labelled Trade Finance products. These principles are closely aligned with the Loan Market Association (LMA) Green Loan Principles (GPLs) but allow assessment based on the purpose of a transaction or its goods in addition to purpose-based evaluations. 

What has been newly added in the Sustainable Trade Finance Principles (Wave 2)? 

2. ICC’s Principles for Social Trade Finance (PSoTF) 

Comprehensive framework for Use of Proceeds-based assessment for socially sustainable-labelled TF products, aligned to the LMA Social Loan Principles.  

3. ICC’s guidance on Sustainability-linked Trade Finance  

Tailored advice for sustainability linked assessments in trade finance, aligned to LMA Sustainability-Linked Loan Principles.  

4. ICC’s guidance on Sustainability-linked Supply Chain Finance  

Additional clarity on Sustainability-Linked Supply Chain Finance programmes, aligned to LMA SLLPs 

Previous milestones 

What’s next? 

Alongside the launch of the Principles, ICC is launching a consultation where participants are invited to pilot and test the principles in their trade finance operation, and provide feedback and contributions.  This collaborative approach collaborative approach will ensure that the principles remain practical, scalable, and reflective of industry needs.  

Industry professionals may provide their further insights and feedback in the survey link provided.  

Please  reach out to the ICC team for further details.