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Incentivising the trade of sustainably produced commodities

April 2016 – This discussion paper explores how to scale up the role that banks can play in supporting the shift towards sustainable soft commodity supply chains.

Incentivising the trade of sustainably produced commoditiesRead the discussion paper

A discussion paper prepared for the Banking Environment Initiative's Sustainable Trade Finance Council

Agricultural expansion is widely acknowledged as one of the greatest causes of tropical deforestation. Shifting to sustainable forms of production is known to offer developmental, economic and environmental benefits and companies, governments and civil society actors around the world are focused on achieving this transition. Banks have a unique role in working across commodity supply chains to support the shift to sustainable soft commodity supply chains.

The question of how they can support this shift is relatively new to the trade finance industry and, while momentum is visibly growing, many issues remain to be worked through.

The Banking Environment Initiative’s (BEI) Sustainable Trade Finance Council has been exploring ways to incentivise the trade of sustainably produced commodities, building on the work of the BEI, including the Soft Commodities Compact and the Sustainable Shipment Letter of Credit. This discussion paper outlines the group’s initial ideas on how to expand the product solutions available for sustainable trade, as well as the key drivers for industry level engagement.

The BEI’s Sustainable Trade Finance Council has started engaging the broader industry to gain feedback on the key findings and recommendations set out in the discussion paper.

About this paper

This discussion paper was authored by Andrew Voysey, Tamara Slater, Thomas Verhagen and Simon Tyler (Senior Associate) at the University of Cambridge Institute for Sustainability Leadership (CISL), with input from the Banking Environment Initiative’s Sustainable Trade Finance Council, and support from the UK Foreign and Commonwealth Office.

Published: April 2016

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Disclaimer

The opinions expressed in this report are those of the editorial team and not recommendations or official positions of CISL, the University of Cambridge, members of the Sustainable Trade Finance Council, or the FCO.