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Impacts of ESG on Trade Finance - ASPAC

How risks and opportunities in trade finance are being reshaped by ESG and climate change

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A one day course

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Part One

ESG issues and their impact on companies

Environmental factors
- Climate change
- Natural resources
- Circular Economy (pollution and waste)
Social factors
- Labour rights
- Human rights
- Access to basic needs
Governance factors
- Corporate Governance
- Tax fairness and tax transparency
- Corruption and bribery

Trade finance exposure to ESG risks

Systemic relationships between companies’ activities and ESG issues
- Impact and dependence of business on natural resources
- Systemic impact of climate risks on the financial system
Deep dive in climate risks
- Transition risks
- Physical risks
Case Study: Transition vs physical climate risk for typical sectors for trade finance
How exposed trade finance is to ESG factors
- Per sector
- Per geography
- Per business model

ESG approaches and materiality

Approaches to ESG and implications for trade finance
- Financial materiality
- Impact materiality
- Normative approach
Case Study: Financial vs impact approach impact on trade finance products
Transmission channels of ESG materiality and risk
How ESG can negatively impact trade finance and risk-return
ESG data and ratings
ESG assessment

Part Two

ESG impact on trade finance

How ESG is impacting trade finance products and traders
Where and how has ESG had the strongest impact
- Profitability
- Cost of risk
- Reputational damage
Banks’ transition plans
Key tools to address risk

Impact of sustainable finance regulation on trade finance

The impact of regulation on climate change
- UN Sustainable Development Goals
- Paris Agreement
- Financial Stability Board’s Taskforce for Climate-related Financial Disclosure
Mismatch between trade finance and ESG regulation
Challenges of making trade finance sustainable
Key initiatives to support integrate ESG in trade finance
- ICC
- ITFA
Case Study: Compare and contrast resources available from key industry initiatives and what is relevant for your company/role

Engaging with clients on sustainable trade finance

Reasons for clients’ interest
Pitching products to clients (and addressing concerns)

Group exercise

Review of a case study on a bank looking to offer a letter of credit to an industrial, exporting company. Participants will be put into breakout groups to review the case study. The exercise will include a comprehensive review of ESG risks and assessment of the impacts, after which participants will jointly develop measures to avoid or mitigate these impacts. There will be a focus on looking for opportunities to convert risks into financing and business, as well as on identifying areas where trade finance has unique requirements to integrate ESG factors. Each breakout group will share its findings as part of a broad group discussion, tying together the learnings of the training.

The Impacts of ESG on Trade Finance Course trainer is a former banking sector analyst specializing in emerging markets. With experience in trade finance, commodity value chains, syndicated loans, fintech and agritech, he brings a wide range of experience in some of the most dynamic areas of banking. He is a regular speaker at conferences, including those specialized in trade finance, and a commentator in the media.

An economist by training, the trainer was previously Senior Economist at the Economist Intelligence Unit and head of research at pan-African bank, Ecobank. He has worked with international banks, multilateral financing institutions, hedge funds, and investment funds across the globe, and with multinational corporations that have operations in Africa.

The trainer holds a BA and a PhD from the University of Bristol.

To have an understanding of the key concepts related to environmental, social and governance issues
To identify systemic impacts of climate risks on trade and the financial system and how that relates to trade finance
To understand key environmental, social and governance risks and how they impact business models of clients of trade finance
To apply material ESG factors to: risk frameworks, risks associated with credit, reputational risk
To identify sectors and companies that can benefit from opportunities relating to a transition to a low carbon economy
Have an understanding of the role banks and traders can play in the transition to a low-carbon society via their products in a commercially viable manner
Become familiar with the various evolving ESG regulatory landscape for trade finance
Can compare and contrast key initiatives to integrate ESG into trade finance

Strikes the balance between covering environmental, social and governance issues, and in-depth analysis of the implication of these issues for trade finance
Insight from a practitioner who is a well-recognized figure in this space
Perspective based on international experience in ESG
Practical insights on ESG policy at the level of companies (clients of trade finance) and financial institution

This Impacts of ESG on Trade Finance Course is a 'must-know' for:

Trade Finance professionals;
Sustainability professionals within a banking environment providing support services to banking teams including Trade Finance; and
Legal and compliance teams that support trade finance activities within financial institutions.

ESG and sustainability have become dominating issues in the world economy. This presents a challenge for banks, which are struggling to integrate ESG into their risk management framework of trade finance.

This Impacts of ESG on Trade Finance Training course has been designed to directly address these challenges, providing bank professionals with the information and context they need to understand how sustainability issues impact their clients, depending on sector, geography and business model, as well as how these issues impact trade finance – risks and opportunities - directly.

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Impacts of ESG on Trade Finance - ASPAC

How risks and opportunities in trade finance are being reshaped by ESG and climate change