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In June 2020 export finance leaders from commercial banks, ECAs and government met at the TXF Digital Olympics in 'The Garden' to discuss how the export finance industry has responded to the demand for sustainability across all business lines. We now advance to the field to discuss practical applications within export finance and roadmap the next 10 years:
- While sustainable principles spread across all business practises, in terms of investment where is export finance best placed to help? How is our commitment to fulfilling the SDGs & ESGs changing both the projects we choose and the way we finance these?
- What targets have we set and how do we measure deliverables? Currently where do sustainable projects fit into total export finance volumes? In the next five years how do sustainable investment targets compare to the targets of the complete investment portfolio?
- How can we use data to track and enforce our commitments? What is the criteria we need for eligibility?
- How are products on the market from green bonds to SDG linked loans and ESG-tied debt performing? And what new products and innovations can we see coming to the fore?
- Renewables and energy transition have paved the way, will we diversify into new industries that respond to the SDGs and how can export finance evolve in order to be a suitable product for these?
- What does this mean for traditional ECA industries and legacy projects? Will we see stranded assets and how does this factor into strategy?
- How can all actors and stakeholders better collaborate to ensure standards are met? How can we ensure accountability and strict criteria are upheld?
Moderator
We have spent a lot of time quibbling over taxonomies and criteria, but the export finance industry is now taking sustainability far more seriously: some organisations are even pledging up to $200 billion in sustainability-linked financing by 2025. In a shift from previous years, companies are increasingly looking at the carbon footprint or ‘green’ impact that their investments leave behind. To transform ambitious targets into reality, we have got to rethink how we incorporate sustainability into deal-making. We consider how to make this happen:
- We will need to diversify our sustainability portfolio to meet ambitious targets. Which industries should we be considering outside the renewables space as potentials for sustainable investment? Do the answers lie in real estate and logistics companies looking to build warehouses and properties that meet international standards?
- How can we embed sustainability into financial structures as well as considering the types of projects we will and will not finance? Which sustainability-tied deals have emerged in the last year, and is a KPI-led incentive scheme the only option?
- Some countries, notably Indonesia, are still lacking the necessary frameworks to support ESGs. Has the attitude towards sustainability shifted enough in certain countries to see a significant difference?
- What needs to be done to move away from a world of ‘tick-boxing’ and into a market that takes sustainability seriously?
Moderator
An ECA’s mandate is to promote local exports, thereby boosting local economies. By this logic, ECAs should surely have a responsibility to engage in ethical practices that benefit local exporters and the world at large. We ask:
- Do ECAs do enough to support businesses owned by Black, female, and other marginalized owners, whose lack of access to capital costs the global economy trillions?
- Should ECAs take a more active stand when it comes to sustainability? Is it becoming an ECA’s role to disengage from projects which harm the environment or fail to provide safe working conditions for staff?
Moderator