The International Chamber of Commerce (ICC) has recently concluded the Wave 1 Pilot, a critical step in shaping the future of sustainable trade finance. 

Leveraging key insights from the pilot, the ICC is now ready to forge ahead with its Wave 2 Framework, aiming to present it at COP28 later this year.

In an exclusive comment to Trade Finance Global (TFG), Raelene Martin, head of sustainability at ICC, highlighted the importance of the pilot phase. 

She said: “The Wave 1 pilot was critical to understanding how our framework could function in real-world settings. Our collaboration with key stakeholders including banks, corporates, and tech players led to insightful learnings which are instrumental in the development of the Wave 2 Framework.”

This news coincides with the launch of TFG’s recent initiative, Women in Trade, aimed at promoting gender inclusivity within the trade finance sector. 

ICC’s emphasis on sustainable and socio-economic development in their framework aligns with TFG’s focus on promoting equality and inclusivity, marking another step forward in making trade finance more sustainable and equitable. 

About the Wave 1 framework

In November 2022, TFG reported on the International Chamber of Commerce’s (ICC) launch of the Wave 1 Framework under its Standards for Sustainable Trade and Sustainable Trade Finance (STFD) program. 

The framework introduced a comprehensive approach towards assessing the sustainability of trade transactions. 

It encompassed environmental and socio-economic dimensions, facilitating a transition towards net-zero emissions, promoting local environments’ sustainability and ecosystems, supporting human and social rights, stimulating economic development, and alleviating complex poverty.

What was the Wave 1 pilot?

Following the framework’s launch, ICC initiated a pilot with several leading banks, corporates, and technology stakeholders. 

The pilot aimed to test the framework’s practical application using real-world data and clients. 

The Wave 1 pilot had several objectives:

• Validate the Wave 1 framework with real clients and data
• Understand the framework’s practical operation and implementation
• Assess the support required by banks and corporates from ICC
• Gain insights into the ‘distribution of outcomes’ from the framework
• Identify opportunities to enhance the framework for a wider launch

Over a period of four to five months, more than 30 leading trade banks engaged in this exercise. 

They applied the framework to select clients and a few transactions, testing the framework’s applicability and outcomes, and reported the results to ICC.

Key findings and learnings 

The pilot provided invaluable insights into potential areas of enhancement. 

Key findings include the need for integration of ESG scores, application of a graded scale to convey the sustainability degree, and an expansion to cover three more sectors – energy, automotive, and agriculture. 

Feedback also underscored the need for a ‘transportation’ component.

Implications for Wave 2 framework

These insights have set a clear direction for the development of the Wave 2 framework. 

ICC has already commenced work on this new iteration, with the ambition to introduce it at COP28 in November/December 2023. 

Some elements of the new framework are expected to be ready for testing by late summer 2023.

ICC invites interested parties to register for the ‘Interest Group’ to stay abreast of the latest developments. 

For more information on the Wave 1 pilot’s progress and outcomes, visit the ICC website here.