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The volatility of the geopolitical and macroeconomic environment in recent years has caused some problems in the trade, treasury, and payments industries. 

However, industry actors have adapted and are working together to build resilience and make international trade even stronger.

To hear about developments in the factoring and supply chain finance world, Trade Finance Global (TFG) spoke with Çağatay Baydar, Chairman at FCI and Irina Tyan, Principal Banker, TFP at the European Bank for Reconstruction and Development (EBRD).

Challenges and growth in the factoring industry

The factoring industry has demonstrated impressive growth since the turn of the century despite facing significant challenges, particularly in emerging markets. 

Baydar said, “The growth rate in 2023 was 3.3% globally in the volume of the world factoring and in 2022 it was 18%. Over the last 20 years, the average growth rate has been 8% which shows that factoring is becoming a mainstream financial product globally, which is very good indeed.”

The sector, which revolves around the purchase of receivables from businesses to provide them with immediate liquidity, has become an essential component of global trade finance, but it also faces challenges. One of the primary challenges is the bureaucratic and infrastructural limitations inherent in the current system. 

Factoring, being an invoice-based product, requires a significant amount of paperwork and documentation, which can be cumbersome and traditionally relies on a paper-based system that only adds to the administrative burden for businesses.

In developed regions like Europe, factoring’s penetration rate – a measure of the amount of trade volume that uses factoring – is around 15%, reflecting a more mature understanding and use of this financial product. By contrast, in emerging markets, the penetration rate is significantly lower, with countries like Turkey and Georgia showing rates as low as 3%.

This discrepancy highlights the knowledge gap and infrastructural deficiencies in these regions. Businesses in these markets often lack the necessary awareness and understanding of factoring, which limits their ability to leverage this financial tool to its full potential.

However, factoring usage in some emerging markets is growing.

Tyan said, “We see the progress in the countries where we started five to seven years ago, like Georgia. We recently had a workshop in Jordan, where we also see a more adapted market, more ready to look into this type of product.”

Further collaboration and efforts to promote regulatory reforms and technological advancements may be what is needed to drive factoring growth in these underutilised regions.

Regulatory reforms and technological integration

Regulatory reforms are crucial for the sustained growth and development of the factoring industry, and legal clarity is particularly important in emerging markets, where the absence of a well-defined regulatory environment can pose significant barriers to factoring’s growth.

One of the key areas that require attention is the standardisation of data exchange formats. 

Creating common data standards for supply chain transactions can facilitate smoother integration between different platforms and financial institutions, improving efficiency, reducing administrative burdens, and enhancing the overall effectiveness of the factoring process. 

Another important aspect of regulatory reform is cybersecurity. 

Tyan said, “As this product heavily relies on platforms, clear regulation on data security and cybersecurity is crucial to build trust among the participants.”

Ensuring the integrity and security of transactions protects sensitive financial information from potential cyber threats and is vital for the long-term sustainability and credibility of the industry.

Digitalising to draw clients and talent to factor

The factoring industry has been significantly transformed by the integration of digital technologies that have made the process faster, more efficient, and more accessible, especially for small and medium-sized enterprises (SMEs). 

Traditionally, the paperwork involved in factoring, particularly for international transactions, slowed down the process and added to its complexity but digital platforms are allowing for quicker access to funds and improving the overall client experience.

Baydar said, “Today, with digitalisation and the platforms, we are making our business much faster, quicker, and more effective. This really helps SMEs to touch the money very soon, very quickly. This makes our clients happier than before because they can experience a very fast, very effective, seamless transaction.”

This shift not only speeds up transactions but also minimises the risk of errors and fraud associated with manual paperwork and can help attract more young professionals to the industry. 

Baydar said, “Young people prefer to work with new technology and high-level startup businesses rather than traditional models.”

The new generation of workers is drawn to innovation and technologically advanced sectors. By embracing digital advancements, the factoring industry can position itself as a forward-thinking and dynamic field, appealing to young talent looking for exciting career opportunities. This influx of new talent is essential for sustaining the industry’s growth and development in the long term.

Organisations that fail to embrace digitalisation risk being left behind in a rapidly evolving market, meaning that investing in digital solutions is not just an option but a necessity for the future of the factoring industry.

The European Union announced on Thursday that it has given final approval to implement the remaining batch of Basel III rules, a set of tougher bank capital rules starting January 2025. These rules build on safeguards introduced after taxpayers had to bail out lenders during the global financial crisis over a decade ago.

The majority of the Basel III rules, created by the Basel Committee of banking regulators from the world’s major economies, have already been implemented. However, the final batch includes a key addition known as an ‘output floor’.

This safeguard aims to prevent large banks, which can use their own computer models to calculate capital buffers, from exploiting the system to the detriment of smaller rivals, who must use more conservative calculation methods set out by regulators.

Vincent Van Peteghem, Minister for Finance for Belgium, which holds the EU presidency, said, “The rules adopted today will ensure that European banks can continue to operate in the face of economic shocks.”

“They will also make the banking sector more sustainable and better able to deal with the green and digital transitions. This is an important step towards deepening the Banking Union.”

The bloc has included other rules, not part of the Basel norms, to harmonise the minimum requirements across the 27-country bloc for authorising branches of banks that are headquartered outside the EU.

The package also includes transitional capital requirements for banks’ holdings of crypto assets and changes to enhance how lenders manage environmental, social, and governance (ESG) risks.

At the EBRD 2024 annual meeting in Yerevan, Armenia, the Trade Facilitation Program (TFP) was in the spotlight as it transitions leadership from Rudolf Putz to Shona Tatchell.

Trade Finance Global (TFG) spoke with both leaders to discuss the past, present, and future of global trade finance.

The evolution of global trade: Reflections from Rudolf Putz

Rudolf Putz, the outgoing head of TFP, has plenty to reflect on throughout his 40-year career. From seeing the shift from financing imports of raw materials and foodstuffs from emerging markets to supporting the export of machinery and equipment, and the transition from state-owned economies in Eastern Europe to the current landscape, trade finance looks very different.

Putz said, “When I started my career in Vienna 40 years ago, I financed trade trade with Eastern Europe, and it was all with the state-owned economies and with state-owned organisations in Eastern Europe.”

This shift brought new trade flows and partnerships, challenging but ultimately enriching the trade finance landscape.

A new era for EBRD’s Trade Facilitation Program

The EBRD’s Trade Facilitation Program, established in 1999, has grown significantly under Putz’s leadership. From a small team with just two assistants, it has expanded into a vital component of EBRD’s mission, dealing with a high volume of small transactions in high-risk countries.

The programme’s success lies in its ability to adapt and evolve, supporting partner banks as they transition to serve the contemporary needs of an evolving industry.

Putz said, “Our partner banks today need our support in different areas of trade finance than they did 25 years ago. The role is never finished, it keeps evolving.”

The latest evolution for the programme will take place under new leadership, as Putz steps out of his leadership role after 25 years at the helm.

Shona Tatchell, the incoming head of the TFP, brings a wealth of experience in trade finance, distribution, origination, sustainability, and trade technology.

Tatchell said, “I cut my teeth on distribution, at the very emergence of unfunded risk participations and the development of that secondary market in trade.”

“I later went into innovation because I could see that the digitalisation of trade was really beginning to emerge and I had the fortune of working with some really cool startups.”

While her own startup, Halotrade, a venture aimed at harnessing emerging technologies for sustainable trade finance, eventually closed, the lessons learned, and the vision behind it remains highly relevant today.

She said, “I’m just so excited about the future and being able to actually continue the legacy that Rudolf has established.”

Harnessing digitalisation and sustainability: Shona Tatchell’s vision

Tatchell’s vision for the Trade Facilitation Program focuses on enhancing, expanding, and securing trade finance through digitalisation and sustainability.

Tatchell said, “It probably won’t surprise you to hear that digitalisation and sustainable trade are very high on my agenda. They are so fundamental to the industry and the TFP is already doing great work in that space. I want to build on those foundations and really help develop a green economy around trade finance.”

Achieving such a lofty vision will require a high degree of cooperation between banks, development institutions, and trade finance associations.

Tatchell said, “We have such a huge challenge ahead of us in the global economy and in trade, in particular. The only way that we’re going to overcome the challenges that we have is through working together.”

By working together, these entities can overcome the challenges facing the global economy and trade, paving the way for a more sustainable and inclusive future.

Tatchell’s forward-thinking approach signals a promising future for EBRD’s TFP, one that will embrace digitalisation and sustainability to drive positive change in global trade finance for years to come.

But what’s next for Rudolf? 

“I don’t yet know – it will be an adventure for myself,” Putz said.

“I will take a few months off, but then I hope that we will soon meet again. I do not yet know where or for whom I will be working, but I hope that I will be able to continue my career in trade finance.”

Regardless of what he lands on, Putz will be able to rest easy knowing that the program he helped start 25 years ago is in capable hands.

The reality is that our Earth is in trouble. 

We’ve known it for quite some time now – Swedish scientist Svante Arrhenius theorised about the impact of increased carbon levels back in 1896 – but only in the last few years has the urgency of the situation and the need for immediate change become more mainstream.

Every company must now prepare for regulation whiplash in the coming years, as new climate warming data released this month paints a bleak outlook for a warming world, going beyond 2.5 degrees Celsius to previous estimates.

According to data from NASA, human activities have raised the atmosphere’s carbon dioxide content by 50% since the 1800s. This excess carbon dioxide changes the climate of our planet – increasing global temperatures, causing ocean acidification, and disrupting the planet’s ecosystems – and if left unchecked could lead to irreversible changes.

These environmental shifts also come with significant economic impacts, including increased costs in agriculture, infrastructure, and healthcare, further emphasising the urgent need for sustainable practices. According to a World Economic Forum report, climate change is likely to cause up to $12.5 trillion in economic losses by 2050.

Thankfully, governments and industries around the world are beginning to take action.

Emissions disclosures: Necessary, but a nightmare

Ecological needs and increased public attention have put pressure on regulators, consumers, and financial institutions to demand more transparency in terms of the environmental impact of global supply chains.

These stakeholders want assurances that commodities traders and financiers throughout the distribution network are compliant with current regulations and prepared to adapt to future standards.

While this is a step in the right direction for the health of our planet in the long term, it has led to a labyrinth of varied reporting frameworks that often require different types of mandatory emission information. Layer on the many voluntary disclosures expected by financial institutions and customers, and the reporting burden on firms can seem overwhelming. 

For instance, the European Union’s Corporate Sustainability Reporting Directive (CSRD) demands comprehensive Scope 1-3 emissions disclosures from corporations, while banks and trading partners might also require specific product carbon footprints or detailed trade portfolio emissions. 

Each of these frameworks may dictate different data types, ranging from estimated emissions to detailed supplier-specific data, further complicating the reporting process. 

And that doesn’t even begin to cover the technical challenges businesses face when confronted with carbon accounting. There is further difficulty in aggregating and analysing emissions data across complex supply chains, which requires systems to gather and normalise data from varied sources while ensuring information remains consistent and comparable. 

Robust carbon reporting relies on robust data

Needless to say, carbon reporting is a complex process. 

To get a semblance of accurate information, companies must source high-quality, primary data that is robust enough to withstand scrutiny from these various stakeholders while also providing meaningful, actionable insights to help the business navigate its way to net-zero emissions.

Ideally, this data would encompass both absolute emissions metrics (which measure the total amount of carbon an entity emits over a specific period) and carbon intensity metrics (which measure the amount of carbon emissions per unit of some physical or economic activity such as production output, revenue, or employee).

Acquiring intensity metrics from companies directly enables asset- or product-specific mapping, which dramatically enhances the precision of emissions reporting.

Metrics this precise have been difficult to gather in the past since supply chains can be long and complex and many firms have lacked visibility of their upstream suppliers and downstream customers beyond a certain tier.

As technology has improved, however, acquiring a degree of data granularity that can capture the nuances of specific operations is increasingly feasible. Today, tools such as big data or artificial intelligence (AI) can enable companies to quickly and accurately track asset-specific emissions metrics across the supply chain.

This is particularly important for firms in the energy and metals sectors as their emissions are embodied in the products they trade. Understanding carbon intensity and where the hotspots lie within the product life cycle or supply chain can provide valuable insights for these firms to make decarbonisation decisions. 

Carbon intensity reporting, however, will only be truly credible if it can impact absolute global emissions in a positive way. This makes the way that intensity-based metrics are used along supply chains and interpreted by stakeholders even more critical. 

For it to work, firms will need to engage more closely with suppliers to share consistent and comparable emissions data. Inconsistent or non-comparable data will make it difficult – if not impossible – to understand the actual impact that any decisions will have on emissions.

Embracing a future where robust carbon reporting becomes the norm rather than the exception requires a shift towards greater data transparency and collaboration.

Data transparency begets more data transparency

Improving trade data on product sources will provide a solid information base, but in the real world, there are going to be some gaps. When this happens it becomes critical to actively engage with suppliers to collect primary data to fill the gaps and enhance the accuracy of the carbon reports. 

We can take this a step further by encouraging data sharing across all levels to achieve greater transparency and foster accountability throughout the supply chain. 

As each participant begins to share data and align with broader environmental sustainability goals, more and more will feel pressured to follow suit, creating an environmentally virtuous domino effect down the supply chain. 

As more dominos fall, more data will become available.

Transforming that data into actionable insights requires a data management system equipped with advanced automation capabilities that are fine-tuned to handle asset-level, activity-based emissions factors. 

That’s where CarbonChain comes in.

CarbonChain Comply, simplifying a complex process

CarbonChain provides carbon accounting software for manufacturers, commodity traders, and their banks, with a primary focus on scope 3 supply chain emissions.

Unlike ‘one size fits all’ platforms, CarbonChain is purpose-built for energy and metals supply chains and builds up a complete picture of emissions from the transaction level using activity-based emission factors. We create a record of carbon in supply chains so that reporting and monitoring are easy. Other companies don’t need to waste time and money doing it themselves. That’s why we built CarbonChain, in concept, and as a company.

Our latest solution – “CarbonChain Comply” – acts as a source of truth for carbon data for commodity traders and manufacturers and allows users to create corporate emissions reports that comply with the Greenhouse Gas Protocol.

CarbonChain is purpose-built for complex global supply chains and big complex data sets with an AI-powered platform capable of handling data-intensive calculations, providing an interface for consistency for different actors across the supply chain. 

How complex is this data? CarbonChain modelled thousands of supply chains and used independent databases of emissions factors with 80% of global emissions coverage. We did this to ensure CarbonChain Comply is an accurate tool for companies to use for their carbon accounting needs.

In 2021, CarbonChain helped Gunvor Group meet customer demands by conducting a carbon accounting pilot.

Our team exported all the relevant data, using our automated carbon accounting software to calculate Gunvor’s carbon emissions, and providing a per-cargo analysis of each trade’s emissions, along with auditable reports for verification purposes. Since then, many more of the biggest commodity traders and trade finance providers have relied on CarbonChain’s software to take control of their carbon reporting and explore the development of sustainability-linked loans.

Carbon accounting seems like an overwhelming task, and it can be a confusing process but that’s why we’ve built CarbonChain Comply: so it doesn’t have to be difficult for you. 

We want to help our customers mitigate their future climate risks and communicate it to their stakeholders – through any credible reporting scheme. Without following new regulations like CBAM, companies risk being subjected to heavy fines, and potentially losing their license to import steel, aluminium, iron, electricity, hydrogen or fertiliser products.

At the end of the day, emissions reporting and transparency aren’t just necessary to avoid penalties, they are simply good for business!

Marsh has announced the launch of Tax Investment Default Insurance, a new solution designed to increase the capital available for investing in federal tax credits tied to US renewable energy projects.

Under the Inflation Reduction Act of 2022, which introduced new tax incentives to promote renewable energy project development, developers can now transfer future tax credits to investors without needing to take an equity stake in the project. 

By transferring their tax credits, developers can generate cash to support early-stage project development, while buyers, typically financial institutions, obtain future credits to offset their federal taxes.

However, project lenders have typically required prospective tax credit or tax equity investors to meet strict financial strength criteria of investment grade. While this has given developers access to high-quality capital, it has excluded a larger pool of investors lacking the requisite credit ratings demanded by lenders.

Marsh’s Tax Investment Default Insurance was created to protect developers against the risk of default if a tax credit investor becomes unable or unwilling to fulfil their financial obligations once the tax credits are generated. 

This coverage can reassure lenders, enabling them to accept tax investors who previously would have been excluded, with greater confidence. Marsh’s new policy is supported by several A-rated underwriters, including Everest Insurance® underwriting companies, which bound the first Tax Investment Default policy for a leading solar developer in March.

The launch of Marsh’s Tax Investment Default Insurance comes amid a significant rise in the number of Marsh clients purchasing tax insurance policies to protect their renewable energy tax credit investments against the risk of the credits being disallowed or reduced by tax authorities.

David Kinzel, a Senior Vice President, Structured Credit & Political Risk, Marsh said, “The transferability of tax credits plays an essential role in the growth of the renewable energy market by offsetting the high upfront costs of constructing solar, wind, and other projects.” 

“Marsh’s Tax Investment Default Insurance further supports this growth by enabling a wider pool of investors to capitalize more clean energy projects.”

IFC, a member of the World Bank Group, and South African bank Absa Group Limited, will provide a commodity trade finance facility of up to $60 million to Volcafe, a leading global green coffee merchant. This initiative aims to enhance Volcafe’s operations in East Africa, benefiting tens of thousands of coffee farmers in the region.

The financing will provide working capital to support the purchase of coffee cherries from smallholder farmers and local traders, and the processing, storage, and transportation of coffee to export ports.

East Africa is a major coffee-growing hub, responsible for over 80% of Africa’s coffee production and 10% of the global total. 

The industry supports an estimated five million smallholder farmers, who often face challenges such as limited access to financial support and the effects of climate change on crop production.

The one-year facility, with contributions of up to $30 million each from Absa and IFC, will enable Volcafe to connect more than 75,000 farmers to the market. The facility will also fund training on sustainable production techniques and good agronomy practices to improve crop resilience and profitability through the Volcafe Way program.

“Volcafe is truly excited by this chance to work with partners like IFC and Absa as we continue to develop the tremendous potential of East Africa’s coffee sector,” said Melvin Wenger Weber, Volcafe Chief Financial Officer. “With this new facility, we will be able to engage more directly with tens of thousands of coffee farmers while bringing their produce to even more markets.”

Additionally, the facility will allow Volcafe to purchase green coffee beans from established auction systems.

Sérgio Pimenta, IFC Vice President for Africa said, “Agriculture is a major source of jobs in East Africa, and coffee is a major contributor to those livelihoods. We are pleased to work with Absa and Volcafe to ensure that farmers across the region have opportunities to realise the potential of their industry.”

Tshimbi Ntuli, Director of Structured Trade and Commodity Finance, Absa Regional Operations at Absa Corporate and Investment Banking said, “We are delighted to announce our partnership with Volcafe and the International Finance Corporation in this East African US$60 million structured working capital coffee transaction. 

“This collaboration showcases our capabilities as a pan-African bank to work closely with development finance institutions that share our strategic vision of supporting Africa’s growth and development. We are committed to being customer-centric and constantly evolving to meet the evolving needs of our clients.”

As part of the agreement, Volcafe is aligning its operations with IFC’s Performance Standards. To meet standards on biodiversity and natural resource management, Volcafe has partnered with The Biodiversity Consultancy, a global provider of strategic, technical, and policy services for biodiversity management, and performed a biodiversity risk assessment in its arabica and robusta supply chains.

Today, the International Finance Corporation (IFC) and Egypt announced a $100 million financing deal at the “IFC Day in Egypt”.

Rania Al-Mashat, Egypt’s Minister of International Cooperation and the country’s representative at the World Bank, presided over the signing of the financing deal between the IFC and Banque du Caire.

This event also included the ratification of a consultancy contract with the General Authority for Comprehensive Health Insurance.

The signing ceremony was a notable event at the “IFC Day in Egypt”, attended by Prime Minister Mostafa Madbouly, along with ministers overseeing Planning, Finance, Communications, and the Public Enterprises Sector. The event also welcomed participation from numerous bank executives and representatives from the private sector.

The consultancy agreement for the Comprehensive Health Insurance System was formalised by Finance Minister Mohamed Maait and the Chairman of the General Authority for Comprehensive Health Insurance. Meanwhile, Banque du Caire’s financing agreement was signed by the bank’s Chairperson, Tarek Fayed. Representing the IFC, Sérgio Pimenta, the Regional Vice President for Africa, signed the agreements.

Minister Al-Mashat witnessed the agreement between Banque du Caire and the IFC, earmarking $100 million to enhance the growth of small, medium, and micro-enterprises within the private sector. 

This deal includes a $50 million allocation to support women-led entrepreneurial ventures, alongside another $50 million dedicated to facilitating trade through the IFC’s Global Trade Finance Program (GTFP).

The Minister highlighted the importance of today’s agreement, noting it builds upon previous collaborations, such as the IFC’s $100 million investment in Egypt’s inaugural green bonds for the private sector, a step towards sustainable development and emission reduction.

Minister Mashat reiterated the Ministry of International Cooperation’s commitment to executing presidential directives that strengthen and empower the private sector. This involves enhancing partnerships with various development entities to secure a broader spectrum of financial instruments for private enterprises, thereby expanding both direct and indirect funding avenues within Egypt.

From 2020 to 2023, the Egyptian private sector secured concessional development funds totalling $10.3 billion, encompassing direct investments, stakeholder contributions, technical assistance, and credit facilities.

Regarding the Consulting Services Agreement, Minister Al-Mashat confirmed that its endorsement strengthens collaborative efforts with development partners to support Egypt’s Comprehensive Health Insurance System. This initiative is vital in the government’s quest to ensure universal healthcare services and insurance coverage, facilitated through agreements with a network of private healthcare providers.

The Minister acknowledged the success in mobilising concessional development funds of $900 million, contributed by the World Bank ($400 million), the French Development Agency ($181.6 million), and Japanese entities ($326.7 million), reflecting Egypt’s efforts to increase ties with development partners.

Under the new agreement, the IFC leverages its experience in private sector engagement across over 100 countries to analyse and refine contracting processes, engage with key stakeholders, and offer technical support for partnerships with private healthcare providers. This comprehensive support extends to the General Authority for Comprehensive Health Insurance, aligning with the project’s strategic goals.

Expressing appreciation for the IFC’s consistent support, Minister Al-Mashat commended the corporation’s role in fostering robust partnerships that contribute to Egypt’s developmental aspirations across various sectors. She emphasised the importance of this agreement as an extension of the IFC’s $34 million commitment to Egypt, spanning manufacturing, agriculture, public-private partnerships, eco-friendly construction, gender equality, and the financial industry.

Estimated reading time: 6 minutes

Sustainable finance, changing macroeconomic landscapes, digitalisation, and increasing financial inclusion. 

All are big challenges facing the international trade community today and all are topics on the agenda at the European Bank for Reconstruction and Development’s (EBRD) 33rd Annual Meeting and Business Forum in Yerevan, Armenia.

To learn more about the bank’s work and gain insights into these challenges ahead of the forum, Brian Canup, Assistant Editor, Trade Finance Global (TFG) spoke with Francis Malige, Managing Director, Financial Institutions, EBRD.

EBRD and its Trade Facilitation Program

The EBRD serves a vital role in bolstering economic stability and growth within its regions, and the Trade Facilitation Program (TFP) is an integral part of achieving these goals. 

The TFP facilitates international trade across EBRD economies and the global economy by providing guarantees to international commercial banks that cover political and commercial payment risks associated with transactions performed by issuing banks located in EBRD countries. 

This structure allows for the mitigation of risks that might otherwise deter banks from facilitating trade finance.

Furthermore, the EBRD TFP extends short-term loans and cash to selected banks and factoring companies, which is crucial for supporting trade-related financing for local companies, particularly small and medium-sized enterprises (SMEs). 

The program’s influence is extensive, working with over 100 issuing banks in 26 EBRD countries and over 800 confirming banks worldwide, with annual transaction limits frequently surpassing €3 billion. 

This substantial network highlights the TFP’s role in maintaining trade flows, especially during periods of economic disruption like the war in Ukraine and throughout the COVID-19 pandemic, when the bank acted as a countercyclical investor to keep trade moving.

Malige said, “When it comes to geographic areas today, of course, Ukraine and its reconstruction and support during the war is the number one priority. The TFP has remained active without any interruption since the first day of Russia’s invasion.”

However, the bank is no longer limited to work within Europe.

The EBRD is broadening its geographic footprint and expanding operations into sub-Saharan Africa and Iraq, reflecting a commitment to using financial instruments and partnerships to support economic development further afield. 

Malige said, “We’ve been approved to grow into six countries of sub-Saharan Africa. All of them have applied to become members of EBRD: Nigeria, Kenya, Ghana, Ivory Coast, and Senegal. Benin, as well as Iraq have become full members. We are going to set up operations in those countries with a view to continuing to use banks and trade to support these priorities. ”

The expansion aims to bring EBRD’s expertise and resources to a broader array of developing economies, enhancing their access to international markets and promoting sustainable economic practices.

Banking as a catalyst for greener change

One of the main aims of the EBRD is to promote the greening of the broader economy, starting with the banking sector.

Malige said, “I see the banking sector as the equivalent of the blood circulation system in the human body. That’s what banks do in an economy. They carry the oxygen – the funding – into the muscles that are the companies, the entrepreneurs. If you can green the DNA of your blood, then you can green the entire body, and that’s exactly what banks are going to be used for.”

In addressing the environmental impacts traditionally associated with trade, such as emissions from transportation, the EBRD is focused on introducing and facilitating access to green technologies in its countries of operation. This includes the import of equipment for renewable energy sources like wind power and sustainable resource management technologies such as water treatment systems.

On the digital front, the bank recognises the critical role of digitalisation in modern economies and considers it one of its strategic priorities, alongside greening the economy and enhancing inclusiveness. 

Digitalisation underpins these dimensions by streamlining processes and reducing inefficiencies, which in turn supports environmental and inclusive initiatives. The EBRD is committed to reducing the digital divide between its regions of operation and more advanced economies, thereby ensuring that these regions are not left behind in the digital transformation. 

Malige said, “This is especially important because we work in economies that are typically not the first recipients of investments when it comes to digital investments.”

Initiatives include supporting the digitalisation of trade processes and encouraging partner banks in the EBRD’s countries to adopt digital solutions for operations such as KYC and client onboarding. 

Through these efforts, the EBRD leads the way in fostering economic development by integrating digital technologies that support green and inclusive growth within its member countries.

It all starts with the right people

The EBRD’s success and that of the TFP hinges significantly on effective collaboration and the strategic engagement of diverse stakeholders, which makes establishing and nurturing key partnerships across various international bodies and institutions vital. 

This includes prominent organisations such as the International Chambers of Commerce (ICC), the World Trade Organization (WTO), and other international financial institutions like the International Finance Corporation (IFC) and the Asian Development Bank (ADB), which share technological frameworks and cooperative strategies with the EBRD.

Such collaborations, while adding layers of complexity, are crucial for aligning strategic initiatives and implementing them effectively. 

Malige said, “Only through dialogue, cooperation, and knowledge sharing can we attain the synergies that will help to amplify our efforts.”

Leaders in the space are encouraged to embrace trade as a complement to local industrial strengths and to invest in it as a critical driver of economic development with an emphasis on training, community building, and fostering personal connections within the trade sector.

Malige said, “Trade is not just about sending messages via Swift to one another. Our experience is that trade works much better when people who know one another physically, who have met.”

Such investments in knowledge and relationships can make trade not only more effective but also more rewarding, positioning trade finance as a vibrant and impactful field for aspiring professionals.

What advice would Malige give to professionals just entering the trade finance industry? 

“For aspiring readers or aspiring trade practitioners, it’s a fantastic field, and you will absolutely enjoy it. Invest your time in it and become industry specialists, because you will enjoy every minute of it.”

For those interested in the future of trade finance and economic sustainability, consider attending the EBRD’s 33rd Annual Meeting and Business Forum in Yerevan, Armenia from 14 – 16 May. 

Rental services are becoming more common throughout the shipping industry and among online customers. What should sector professionals do to support the continued growth of these services?

Partner with services that shorten last-mile delivery distances

As e-commerce purchases remain popular, many decision-makers in the shipping industry have explored possibilities for reducing last-mile delivery challenges. One option gaining popularity is to have parcels delivered to lockers people rent. 

In the ideal case, the lockers are in places people must visit anyway, such as their offices or the public transit stations they use daily. Then, it is easy for customers to get their delivered goods and shipping specialists do not have to bring the packages to individual homes.

Delivering to residences comes with many challenges, including people not being home to accept the parcels. It also becomes time-consuming for delivery drivers to get in and out of their vans repeatedly to make deliveries in residential communities with dozens of houses. If a delivery driver can go to a single locker and make dozens of deliveries on a single stop, such arrangements allow much better use of time.

In India, a new app the Delhi Metro offers allows people to purchase products and get them delivered to specific metro stops. Elsewhere, Nigeria’s SmartParcel service places package lockers in highly populated locations, such as hospitals, banks and airports. 

Customers can use apps to see available lockers and temporarily use them as parcel pickup or drop-off points. The company’s team says the maximum transaction time when using the lockers is only 25 seconds, making them convenient solutions for customers.

Increased utilisation within the shipping sector will be essential for these services and others like them to gain mainstream popularity. When someone sees their preferred courier or e-commerce site offers free delivery to these lockers, they will be more open to trying them.

Be open to new opportunities

Rental arrangements enable people to take advantage of the latest offerings without the upfront investments of buying them. Construction industry leaders learned this by renting equipment to save money and achieve safer operations during their projects.

Some rental services catering to the shipping industry and its customers challenge people to be willing to try new things. Consider ROXBOX — a UK-based enterprise offering sustainable containers for storing or transporting fine art. Company founder Andrew Stramentov says 90% of the art world’s packaging is single-use, which he wanted to change. The current system involves shippers making containers for each art shipment and charging for their disposal after use.

However, ROXBOX’s Loop service creates a circular economy by offering artwork containers to rent in cities where such services would be most in demand. London, Paris and New York are some of the current participating locations. This option became possible after European, Asian, and American shippers collaborated with ROXBOX to store reusable packaging and containers in warehouses.

People who rent the containers pay fixed amounts according to the artwork’s size and weight. Numerous international galleries are ROXBOX clients, and use the service to send pieces to and from international art fairs.

Andrew Stramentov compares his brand to the e-bike services that allow people to hop on pedalled vehicles with minimal friction. However, he acknowledges that everyone must work together to insist on more reusable packaging in the art world. Once people know other options exist and are open to using them, their willingness will go a long way in reducing packaging waste.

Promote reusable e-commerce packaging

It is easy to see how consumerism harms the environment. Vast assortments of merchandise and speedy shipping options encourage people to buy more rather than use what they have and be happy with it. The consumerism push also contributes to waste. Even if people donate unwanted clothes or give them to recycling services, the items often get shipped to other countries and dumped.

However, getting people to give up their shopping habits is largely unrealistic. A good compromise is to figure out how to make the current shipping infrastructure greener. Some companies are doing that by encouraging consumers to return their e-commerce packaging, resulting in more reuse and less waste.

One example is KIUD, which turns textile waste into rigid packaging and offers a rental program for e-commerce companies in Estonia. Participating businesses must install plug-ins on their online ordering portals, after which consumers can choose reusable packaging and pay a modest deposit for it. Shoppers get that money back once they return the package.

There is also Hipli — a French brand that allows e-commerce enterprises to pay monthly subscriptions to rent a choice of four flexible mailers and one rigid design. Belgian postal operator Bpost launched a pilot of Hipli’s mailers, meaning stores could reuse packaging up to 100 times instead of relying on single-use options. 

One participating e-commerce company expected to ship about 4,000 orders in water-tight, tearproof packages during the three-month pilot.

Customers who receive these reusable packages can return them to designated points overseen by Bpost or numerous other locations in their areas. Since both this example and KIUD will only work if customers return the packaging, shipping professionals should explore how they could launch programs to support these initiatives and help people develop new habits.

Rental services gaining momentum

These examples show people have more options once they get curious about reducing waste through rentals. Sometimes, the rentals address wasted time — in others, they eliminate single-use packaging. No matter a rental business’s specific approach, these initiatives will have better chances of succeeding when the shipping sector supports them.

In an era where environmental concerns are at the forefront of global discussions, the maritime industry, often seen as a major contributor to pollution, is under increasing pressure to adopt sustainable practices.

With approximately 90% of global trade relying on maritime transport, finding ways to mitigate the environmental impact of shipping has become imperative. Fortunately, innovative approaches are emerging, offering hope for a more sustainable future in the shipping industry. 

The shipping industry is actively steering toward sustainability, addressing environmental challenges and striving for a greener future.

Decarbonising international shipping is a critical endeavour to decrease the industry’s impact on the environment.

There are various challenges and costs that decarbonising shipping requires, which are a shift in technology by adapting low and zero GHG fuels, including operational changes to enhance efficiency and investments for ship design adjustments, alternative fuel production, and green onboard technologies. 

These changes may lead to increased maritime logistics costs, shipping rates, and voyage times. There have been global collaborations as shipping operators work across borders, making uniform enforcement of new IMO rules crucial. To be successful, transition costs must be lowered to support vulnerable economies.

Carrier strategies for decarbonisation

Decarbonisation is becoming a strategic imperative for companies across the shipping carriers. Some compelling reasons why businesses are actively pursuing decarbonisation:

Reduction of energy consumption:

Speed reduction: Slowing down vessels can significantly reduce energy consumption and emissions.

Air lubrication: Innovative hull designs that create air bubbles reduce friction, leading to fuel savings.

Alternative fuels:

Low-carbon fuels: Transitioning from traditional fossil fuels to cleaner alternatives is a key focus in sustainable shipping. Biofuels, hydrogen, and ammonia are being explored as viable alternatives to reduce emissions. LNG (liquefied natural gas) is gaining traction as a transitional fuel, offering lower emissions compared to conventional marine fuels.

Carbon-free fuels: Hydrogen and ammonia are promising candidates for a zero-emission future.

Carbon capture:

Developing technologies to capture and store carbon dioxide emitted during shipping operations.

When combined, these methods contribute to a more sustainable and environmentally friendly shipping industry. By embracing these strategies, carriers can play a pivotal role in achieving global decarbonisation goals. 

Electrification and hybridisation

Electric propulsion systems and hybrid solutions are being developed to minimise emissions from vessels. Battery-powered ships and hybrid propulsion systems combine conventional engines with batteries or fuel cells, enabling more efficient energy usage and reducing greenhouse gas emissions.

Wind-assisted propulsion

Reviving ancient practices, modern shipping is rediscovering the benefits of wind-assisted propulsion. Technologies such as sails, kite propulsion, and rotor sails harness wind energy to supplement engine power, thereby reducing fuel consumption and emissions.

Digitalisation and smart shipping

Digital technologies, including artificial intelligence (AI), blockchain, and IoT (Internet of Things), are revolutionising the maritime sector. Smart shipping solutions optimise vessel operations, route planning, and cargo management, resulting in fuel savings, emissions reductions, and improved safety.

The transition towards sustainability in shipping is a complex but necessary endeavour. By embracing technological innovations, regulatory frameworks, and collaborative efforts, the maritime industry can mitigate its environmental impact while continuing to support global trade and economic growth.

However, achieving a truly sustainable shipping sector requires collective commitment and ongoing investment in research, development, and infrastructure. With concerted efforts from all stakeholders, the vision of a cleaner, greener maritime future can be realised, ensuring a healthier planet for generations to come.