Unlocking Sustainability Opportunities in Trade Finance
This article examines how sustainability can be integrated into trade finance—and how ISS-Corporate can review financial institutions’ classification approaches and governance practices against market practices, including the International Chamber of Commerce Principles for Sustainable Trade Finance.”
A Lever for Sustainable Banking and Global Trade
Trade finance sits at the heart of the global economy and at a critical—yet underutilized—leverage point for advancing sustainability. Because trade finance underpins the vast majority of cross‑border commerce, embedding environmental and social considerations into these transactions offers banks a lever to influence real economy outcomes at scale.
According to the UN Environment Program, 80% to 90% of international trade transactions rely on a financial instrument at some stage to facilitate payment, secure performance, or provide financing. This central role uniquely positions banks to integrate sustainability considerations directly into trade flows, rather than solely at the corporate or balance sheet level. However, the extent to which such considerations translate into measurable environmental or social outcomes remains dependent on the maturity of market practices, data quality, and ongoing engagement with counterparties.
Trade finance encompasses a range of products and services that help sellers and buyers to mitigate the risks inherent in cross-border transactions, including letters of credit, working capital solutions, and guarantees. These instruments not only manage commercial risks, but also shape the incentives, timing, and conditions under which goods move across borders.
Sustainability considerations have been increasingly embedded across financial markets—spanning bonds, loans, indices, and investment funds—over the past 20 years, reaching $8.2 trillion in 2024 according to the UN Trade and Development (UNCTAD). Comprehensive data on the share of sustainable trade finance is lacking, adoption seems to have been slower relative to other asset classes. This reflects structural challenges: trade transactions often involve multiple counterparties, limited end‑use visibility at origination, short tenors, and data constraints, while definitions of what constitutes “sustainable” trade finance are still evolving. These same characteristics underscore the opportunity. If sustainability frameworks can be effectively adapted to the realities of trade finance, trade finance solutions have the potential to influence supply chains, production practices, and trade corridors.
Setting the Common Standard: The ICC Principles
To help address the gap in sustainable trade finance definitions, the International Chamber of Commerce (ICC) published the Principles for Sustainable Trade Finance in December 2025. This revised edition builds on the initial version released in November 2024 and expands the scope to cover Green and Social Trade Finance, and Sustainability-Linked Supply Chain Finance. The ICC has been working on the topic since 2021, beginning with a “minimum viable framework” issued in 2022.
The objective of the Principles is to help mitigate greenwashing and social-washing risks by providing banks and corporates with a shared framework, including common processes, terminology, and analytical approaches. The Principles have been endorsed by a broad group of major global banks.
Certain trade finance products already fall within the scope of the Loan Market Association’s (LMA) Green and Social Loan Principles. The ICC Principles are designed to complement and support the application of the LMA Principles to trade-related transactions. They also reference recognized market standards such as the EU Taxonomy, the IFC Performance Standards, and the Equator Principles, helping to align trade finance practices with wider sustainable finance frameworks.
The assessment is structured around four pillars: use of proceeds, evidencing, safeguarding, standardization and reporting. The Principles define Green and Social Trade Finance as “products designed exclusively to finance or mitigate financial risk from activities where the use of proceeds is clearly and verifiably allocated to green/social purposes, or, where the purpose is not known, to green/social goods” – an approach reflecting market pragmatism in trade finance. The identification of purpose and product, together with Do Not Significant Harm screening, forms the cornerstones of the analysis.
ISS-Corporate at the Forefront of Green and Social Trade Finance
ISS-Corporate is publishing the External Review of Societe Generale’s “Guidelines for Sustainable Global Transaction Banking”. The Bank uses these Guidelines to classify, track, and progressively expand its Sustainable Global Transaction Banking (GTB) solutions, including Trade Finance, Cash Management, Factoring, and Forfaiting. ISS-Corporate has assessed the robustness, governance and alignment of Societe Generale’s Guidelines against prevailing market practices, including the ICC Principles for Sustainable Trade Finance.
The Guidelines cover purpose- and good-based assessments, alongside a pure-player approach supported by clearly defined eligibility criteria. They have been developed in coherence with Societe Generale Group’s Sustainable Financing Framework, also reviewed by ISS-Corporate, as well as with relevant taxonomies. In addition, a comprehensive due diligence mechanism is in place to address environmental and social risks, including the application of explicit exclusion criteria.
Marie-Gabrielle de Drouas, Global Head of Sustainability, Global Transaction Banking at Societe Generale said: “Independent assessments are essential to strengthen transparency and continuously aligning market practices. Following our endorsement of the ICC Principles for Green Trade Finance last November, ISS-Corporate conducted an external review of Societe Generale’s Guidelines for Sustainable Global Transaction Banking and confirmed their alignment with prevailing trade finance market practices, including the ICC Principles for Sustainable Trade Finance.”
Since 2020, ISS-Corporate has reviewed financial institutions’ sustainable classification system used to determine which financing, lending, and investment activities can be labelled as “sustainable”. These reviews are grounded in established market practices across capital and loan markets. The ICC Principles provide a robust foundation for extending such classification frameworks to trade finance products, an area where methodologies are still evolving.
Building on this experience, ISS-Corporate is well positioned to deliver External Reviews of comprehensive classification systems, including frameworks specifically dedicated to trade finance. An External Review helps banks validate the robustness of their approach, identify areas for enhancement, and benchmark their practices against peers that have undergone the same assessment process. By fostering transparency around eligibility criteria and governance processes, such reviews strengthen stakeholder confidence, enhance investor trust, and signal a strong commitment to the adoption of a credible and disciplined sustainable finance strategy.