The International Chamber of Commerce (ICC) has formally ratified the Principles for Social Trade Finance (PSoTF) and the Principles for Sustainability-Linked Supply Chain Finance (PSL-SCF), following a public consultation launched at the United Nations’ Fourth Financing for Development Conference in Seville in July.
Together with the existing Principles for Green Trade Finance (PGTF), the newly ratified standards complete the ICC Principles for Sustainable Trade Finance (PSTF). The framework is intended to provide a standardised global approach for assessing sustainability in trade finance.
The PSTF were developed jointly by ICC and Boston Consulting Group (BCG) and shaped through consultations with more than 100 stakeholders, including banks, corporates, multilateral institutions, technology providers and civil society organisations. According to ICC, the principles were tested across different geographies and trade finance products to ensure practical application and comparability.
The announcement follows recent public endorsements of the Principles for Green Trade Finance by several banks, including Standard Chartered, Santander, ING Bank, Commerzbank, BNP Paribas, Intesa Sanpaolo, Natixis, Rabobank, Société Générale, Standard Bank and United Overseas Bank.
The PSTF framework is structured around three assessment pillars. The Principles for Green Trade Finance set use-of-proceeds criteria for environmental sustainability and are aligned with the Loan Market Association’s Green Loan Principles and the International Capital Market Association’s Green Bond Principles. The Principles for Social Trade Finance establish a use-of-proceeds framework focused on identifying and safeguarding social impacts in trade finance, aligned with LMA Social Loan Principles and ICMA Social Bond Principles. The Principles for Sustainability-Linked Supply Chain Finance set out governance expectations for sustainability-linked supply chain finance programmes, including the selection and calibration of key performance indicators and sustainability performance targets, as well as verification and coordination among lenders.
ICC said the combined framework is intended to enable market participants to assess and communicate sustainability performance in trade finance more consistently. The organisation has invited stakeholders across the trade finance ecosystem to endorse the newly ratified PSoTF and PSL-SCF.
BCG, which has worked with ICC on its Sustainable Trade programme, co-led the working groups that developed the principles.
