Sustainability in Export Finance
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In 2015, the UN General Assembly formally established the 17 UN Sustainable Development Goals (SDGs) to be addressed by 2030 and that same year, 195 countries committed to keep global warming to well below 2°C. An estimated $5-7 trillion a year of new investment is needed until 2030 to realise the SDGs globally, including investments into infrastructure, clean energy, water and sanitation and agriculture.
The financial services industry has taken important steps to contribute to help mobilise the required investments to achieve the SDGs and support the transition towards a low-carbon, more resource-efficient, and fair economy. Sustainability has become a critical strategic topic for the boards and C-suite of financial institutions around the world. There has been a flood of innovation in the industry, with new products aimed at channeling capital towards projects that achieve positive environmental and social impacts. For example, there has been a lot of focus on the issuance of debt instruments labelled as green, social and sustainable, the growth of blended finance structures, the integration of environmental, social and governance (ESG) criteria in investment decisions, the growth of the impact investing industry, etc.
In this context, Export Finance receives only a cursory mention in the broader sustainable finance conversation. Yet, Export Credit Agencies (ECAs), working closely with their banking partners, have a track-record of delivering investments at scale—in particular in infrastructure—in countries and sectors where private capital does not naturally flow. According to UNEP FI, by addressing financing gaps in the market, “ECAs are an important channel of public SDG financing flows. They play a critical role in promoting the export of capital goods of developing countries. […] Their role is therefore often indirect, acting as a catalyst and enabler of investments, especially in countries perceived to be high-risk.”
ICC set up a Global Export Finance Committee Sustainability Working Group (ICC-SWG) in 2018, with the objective to grow the share of Sustainable Export Finance and showcase how the industry can contribute to global challenges. This whitepaper is an important output of the Working Group.
This White Paper has two important objectives:
The approach for developing this White Paper was designed to be participative in nature, gathering the views of market participants across banks, ECAs and their Guardian Authorities, buyers, exporters, industry organisations, NGOs and civil society. This approach provides the rare opportunity to analyse the context of decision-making for various stakeholders at the policy, strategy, product and competitive layers.
With fewer than 10 years left to achieve the Sustainable Development Goals and less than 7 years left on the carbon clock for a 1.5°C scenario,2 this White Paper is a call for action to Export Finance market participants to ensure that the industry contributes meaningfully to the sustainability agenda and plays an important role addressing the global challenges we are all facing.
ICC is the institutional representative of more than 45 million companies in over 100 countries with a mission to make business work for everyone, every day, everywhere. Through a unique mix of advocacy, solutions and standard setting, we promote international trade, responsible business conduct and a global approach to regulation, in addition to providing market-leading dispute resolution services. Our members include many of the world’s leading companies, SMEs, business associations and local chambers of commerce. Follow us on Twitter @iccwbo.
About The Rockefeller Foundation
The Rockefeller Foundation advances new frontiers of science, data, and innovation to solve global challenges related to health, food, power, and economic mobility. As a science-driven philanthropy focused on building collaborative relationships with partners and grantees, The Rockefeller Foundation seeks to inspire and foster large-scale human impact that promotes the well-being of humanity throughout the world by identifying and accelerating breakthrough solutions, ideas, and conversations. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on Twitter @RockefellerFdn.
About Acre Impact Capital
Acre Impact Capital invests in climate-aligned infrastructure by partnering with leading commercial lenders and Export Credit Agencies. Acre Impact Capital’s Export Finance funds address the estimated $100 billion annual infrastructure financing gap in Africa, driving economic growth and providing essential services for underserved populations. www.acre.capital
About International Financial Consulting Ltd.
International Financial Consulting Ltd. was founded in 2000 to enhance the capacity and performance of government-owned financial institutions, such as Export Credit Agencies, Exim banks, and multilateral, regional, bilateral and national DFIs. Offering specialised expert advisory services, their mission is “Better Institutions, Better Outcomes”, supporting client institutions to better align their activities toward contributing to achievement of the World’s To-Do List, i.e. meeting the UN Sustainable Development Goals. www.i-financialconsulting.com