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BEI ‘Sustainable Shipment Letter of Credit’ concept warmly received by BAFT-IFSA and ICC Banking Commission

last modified Jan 14, 2015 11:47 AM
April 2013 – The BEI’s inaugural Forum in London in November 2012 inspired an idea for integrating commodity-specific sustainability standards into the documentary trade finance process. This could prove to be a key enabler in the emergence of verifiably sustainable commodities on traded markets.

Photograph above shows Daniel Schmand, Advisory Board Member, ICC Banking Commission Head of Trade Finance & Cash Management Corporates EMEA, Deutsche Bank and Sabrina Borlini, Global Manager, Business Development, Global Trade & Supply Chain Solutions, International Finance Corporation

The BEI’s inaugural Forum in London in November 2012 inspired an idea for integrating commodity-specific sustainability standards into the documentary trade finance process. This could prove to be a key enabler in the emergence of verifiably sustainable commodities on traded markets.

The BEI has nurtured the idea since then, working with commodity buyers, trading houses, major trade finance banks and multi-lateral development banks to develop a specific proposal.

In the last three months, BEI banks have been hosted at a number of influential trade finance summits to test industry interest in the proposal. These have included:

  • BAFT-IFSA Asia Council (Hong Kong, March 2013)
  • BAFT-IFSA Europe Council (Zurich, March 2013)
  • ICC Banking Commission Biannual Summit (Lisbon, April 2013)
  • BAFT-IFSA Global Annual Meeting – The Americas (Florida, May 2013)

At every stage, the BEI has been encouraged to develop the concept further and BAFT-IFSA and the ICC Banking Commission and have both committed to supporting this process. In addition, at the ICC Banking Commission meeting in Lisbon in April 2013, the IFC announced that it is prepared to support the initiative by giving preferential treatment to sustainable LC business with its partner banks through its flagship programme, the ‘Global Trade Finance Program’. This would be similar to the benefits that IFC extends through its ‘Climate Smart Trade' initiative, which targets trade that has clearly defined climate change benefits.

The BEI will now be taking forward the next step of the development of this concept by convening a ‘deep dive’ process to explore and agree how the BEI’s ‘Sustainable Shipment Letter of Credit’ would work in practice with one case-study commodity . It is hoped that this will serve as a blueprint for other commodities.

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