Deutsche Bank among 16 banks supporting ICC in Sustainability in Export Finance paper
As sustainability finance discussions intensify among lenders and investors, the role of export finance as an enabler is becoming more prominent. This new ICC Sustainability in Export Finance report provides a helpful primer
The International Chamber of Commerce has published Sustainability in Export Finance, a white paper that explores how the US$700bn export finance industry can significantly increase its contribution to the achievement of the UN Sustainable Development Goals (SDGs) and the 2015 Paris climate accord.
Written in partnership with International Financial Consulting Ltd and Acre Impact Capital Limited, members of ICC’s Global Export Finance Committee Sustainability Working Group and The Rockefeller Foundation were also instrumental in defining and developing the content of the report.
The 16 banks comprising the Working Group are: ANZ, Banco Santander, BNP Paribas, Citi, Commerzbank, Crédit Agricole CIB, Deutsche Bank, DZ BANK, HSBC, ING Bank, Investec Bank, J.P. Morgan, MUFG Bank, Standard Chartered, Sumitomo Mitsui Banking Corporation, and UniCredit
James Pumphrey, Managing Director, Structured Trade & Export Finance, represents Deutsche Bank in the Working Group.
Export finance and sustainability
Export finance is used to enable the purchase of capital goods through loan agreements granted to importers and secured by sovereign guarantors – most commonly, an Export Credit Agency (ECA) in the exporter's home country. Despite its strategic importance in facilitating the types of capital expenditure called for by the SDGs, the asset class has previously received relatively little attention as a potential driver of sustainable development.
The report was developed to “bridge the knowledge gap between export finance professionals and sustainable finance professionals”. While export finance already contributes to the rich ecosystem of sustainable finance in a number of ways, many export finance professionals, notes the report, “may not be fully aware of the extent of their contributions to the sustainable finance landscape, or of the recent trends and developments in the field”. Similarly, explain the authors, “sustainable finance professionals may not be familiar with specific aspects of the export finance product”.
Method and recommendations
Through an extensive six-month market consultation of over 500 market participants and more than 150 interviews – including with export credit agencies, government authorities, banks, buyers, exporters, industry associations and civil society – the white paper presents for the first time product and policy recommendations to accelerate the flow of export financing towards sustainable activity globally.
The report concludes with several headline recommendations, including:
- Aligning ECAs, bilateral development finance institutions and domestic financing initiatives to enable a “whole of government” approach towards global sustainability commitments;
- Scaling support for innovative export finance deals, including leveraging blended finance structures to meet the capital expenditure needed to meet the SDGs; and
- Reviewing – and potentially revising – the OECD’s framework governing the operations of ECAs to encourage more flexibility and incentives for transactions that support global sustainability goals.
The report also helpfully sets out the main principles, taxonomies and frameworks currently shaping the sustainable finance market, as well as summaries of banking and capital market products.
“We are delighted to be associated with this seminal piece of work which is so relevant to the discussions on sustainability finance,” says Pumphrey, who participated in the follow-up GTR roundtable discussion Making export finance more sustainable published on 21 October 2021.
Download Sustainability in Export Finance from the ICC website here