Sustainability has emerged as a prominent issue within the trade finance sector, particularly in the MENA region, as corporations and financial institutions increasingly seek to incorporate environmentally friendly practices into their trade operations. The challenges associated with implementing sustainable initiatives and the development of feasible solutions warrant further examination.
Anirudha Panse, the Managing Director and Head of GTB Trade Finance Product Innovation at First Abu Dhabi Bank (FAB), highlights the profound interplay between carbon emissions and the trade finance industry. Research indicates that a substantial 80% of carbon emissions can be traced back to global trade shipping and transportation, underscoring the pressing need for sustainability measures within the trade finance domain.
The pursuit of sustainability in global trade mirrors the complexities inherent in solving a multifaceted puzzle, with diverse stakeholders and regulatory frameworks contributing to the intricacy of the endeavour. Nonetheless, progress has been made, particularly with the transition towards digitization of trade documents, resulting in substantial reductions in emissions. The enactment of the Electronic Transferable Document Act (ETDA) is poised to conserve an estimated 3 million trees annually, and similar legislations in other countries further advocate for the use of electronic transferable records.
Notwithstanding these advancements, there remains a substantial amount of work to be undertaken. Noteworthy international bodies such as the International Chamber of Commerce (ICC) have commenced releasing publications delineating steps to cultivate a more sustainable global trade sector. First Abu Dhabi Bank remains resolute in its commitment to uphold the sustainability of its clients’ working capital requirements through both conventional and Islamic modes, marrying its expertise in Shariah financing with sustainability principles to ensure the accessibility and sustainability of its products across all markets.
The bank has also taken affirmative steps to anchor sustainability as a focal point within its array of products, including letters of credit, guarantees, and loans. Of particular significance is the bank’s sustainable supply chain finance solution, which assumes heightened importance in light of the escalating emphasis on Scope 3 regulations. Moreover, FAB is steadfast in eschewing any semblance of greenwashing, with stringent governance measures and dedicated Environmental, Social, and Governance (ESG) teams in place to substantiate the authenticity of its sustainable trade practices.
A standout achievement for FAB is its distinction as the first bank in the MENA region to proffer a fully automated supply chain finance proposition, a service that has since expanded to encompass the broader region. Furthermore, the bank has commenced offering sustainable supply chain financing, collaborating with industry partners to facilitate the adoption of sustainable practices by suppliers. FAB’s provision of financial incentives and risk mitigation through green bonds aims to propel sustainability throughout the supply chain.
The bank recognises the pivotal role of expansive collaborations in advancing sustainable supply chains, particularly in nurturing awareness on ESG matters among small and medium-sized enterprises (SMEs). Initiatives have already been undertaken to convene roundtable discussions and events to cultivate comprehension and action on sustainability issues within the community. FAB remains resolute in its dedication to advocating for sustainable regulations, heightening industry-wide awareness, and fostering a more digital, circular economy as it looks towards the future in 2024, underscoring the indispensable role of collaboration in steering impactful change.
In conclusion, the endeavours of First Abu Dhabi Bank in advancing sustainable trade finance within the MENA region are commendable, and it is palpable that the impetus for greater sustainability in trade will persist as a focal point for the bank in the forthcoming years.
+ There are no comments
Add yours