Trade Finance
Published  14 MIN READ

Clean, Lean and Green

Taking ESG to New Levels in Trade and Supply Chain Finance

Despite the ‘green’ epithet, the ESG space is often more of a ‘grey area’. Standardisation is lacking around the regulation and measurement of sustainable activities. Monitoring Scope 3 emissions and obtaining ESG data from supply chain partners are additional challenges. What’s more, greenwashing is a growing source of reputational risk. Nevertheless, progress is being made by industry bodies, regulators, banks, and corporates, to address these concerns. Treasurers are also playing their part in moving ESG forward, through mechanisms such as sustainable SCF.

Climate change. The Covid-19 pandemic. Russia’s invasion of Ukraine. These three events have arguably led to the most intense focus on supply chains in recent history, with the just-in-time model coming under fire and gaps in supply chain information becoming glaringly obvious.

This intense scrutiny of global supply chains, and international trade practices as a whole, has also flicked the spotlight onto ESG within value chains. Stakeholders, ranging from investors to regulators, banks, customers, and employees, are increasingly focused on areas such as greenhouse gas (GHG) emissions, biodiversity loss, human rights, and modern slavery.

For Amparo Pérez, Head of Trade and Working Capital Product Management, Europe, Barclays Corporate, the growing desire, and need, for transparency and accountability within supply chains has never been clearer. “We are all measured against ESG targets and performance, so the sooner we embed ESG into our operational processes and reporting tools, the better. Ultimately, ESG will be a driver of success going forward,” she notes.