Principles for Sustainable Trade
The International Chamber of Commerce (ICC) releases its third edition of Principles for Sustainable Trade, aimed at promoting sustainable trade development and achieving the United Nations Sustainable Development Goals.
The International Chamber of Commerce believes that global trade accounts for 30% of greenhouse gas emissions, and how to assess the environmental and social impacts of trade activities and encourage businesses to realize the value of sustainable trade is a key concern for stakeholders.
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Background of Principles for Sustainable Trade
In order to establish a clear and comprehensive set of principles to define sustainable trade, the International Chamber of Commerce gathered trade banks, businesses, and sustainability experts in September 2021 to develop global standards for sustainable trade. At the 2022 COP27, the ICC launched the first edition of Principles for Sustainable Trade, with a focus on the textile and apparel industries. In 2023, the International Chamber of Commerce launched the second edition of Sustainable Trade Principles, which includes the agriculture, energy, and automotive industries.
In October 2024, the ICC launched the Principles for Sustainable Trade Finance, providing sustainable guidance for trade and supply chain finance. The third edition of Principles for Sustainable Trades based on the aforementioned progress and was officially released at the COP29.
The International Chamber of Commerce hopes to support the global warming goals of the Paris Agreement through sustainable trade principles, achieve the United Nations Sustainable Development Goals, and establish a global sustainable supply chain. The Principles for Sustainable Trade not only considers traded goods and activities, but also takes into account the trading methods of both buyers and sellers of goods, in order to evaluate sustainability from multiple dimensions. The new sustainable trade principles will define what sustainable trade is and develop practical standards to help stakeholders understand the sustainability of the value chain.
Introduction to Principles for Sustainable Trade
Based on the implementation experience of the second edition of Principles for Sustainable Trade, the International Chamber of Commerce has formulated the objectives of the third edition:
- Expand the application scope of the principle to all industries and pay attention to the differences between industries;
- Simplify sustainable trade principles and provide feasible methodologies;
- Establish principles for sustainable trade financing and update the sustainability standards of the International Chamber of Commerce;
- Evaluate both trading parties and distributors based on double materiality;
Based on the above objectives, ICC has designed the third edition of Principles for Sustainable Trade, which evaluates trade from the perspectives of Use of Processes, buyer, seller, and distribution, and measures sustainability from both environmental and socio-economic perspectives. These evaluations are supported by three pillars: evidencing, safeguarding, and reporting, enhancing the rigor of the evaluations. Sustainable trade refers to trade in which the use of proceeds, buyers, sellers, and distribution methods conform to the environmental and socio-economic sustainability defined in the United Nations Sustainable Development Goals.
The International Chamber of Commerce has introduced the Sustainable Trade Financing Principles in its third edition, which include the following parts:
- Principles for Green Trade Finance;
- Guidance on Sustainability Linked Trade Finance;
- Guidance on Sustainability Linked Supply Chain Finance;
- Principles for Social Trade Finance;
The Sustainable Trade Financing Principles provide clear, transparent, and consistent guidance and have been incorporated into Principles for Sustainable Trade as an evaluation method for the use of proceeds. Banks, businesses, and investors can allocate funds towards sustainable trade activities based on principles to reduce greenwashing risks. The ICC invites stakeholders to submit feedback on Sustainable Trade Financing Principles and officially release it by the end of this year.
Reference:
ICC Launches Pioneering Principles for Sustainable Trade
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