In the trade finance industry, what many are wondering is: will these changes hurt trade finance, supply chain finance, factoring, and every other kind of financial vehicle connected to international trade?

Fortunately, there are ways to predict the tariffs’ effects – for example, using the data from the last trade war, which happened between 2017 and 2019, as a frame of reference. During that time, the devastating Covid-19 pandemic was also compounding the disruption impacting trade and therefore trade finance.

Global trade did decelerate in 2019 when President Trump imposed tariffs during his first term in office. However, as a report by Allianz Global Investors points out, “a closer examination of broader data suggests Mr Trump’s tariffs may have disrupted global trade only marginally.”

Despite the tariffs, international trade as a share of global GDP exceeded 60% for the first time in a decade only 3 years later, in 2022.  As many expected, trade did contract between China and the US, but growth from other regions offset the reductions. 

During the first trade war, supply chain finance grew at a compound annual growth rate of 26% from 2017 to 2023 despite an increase in global protectionism and tariffs.

Factoring finance ⏤ mainly used by small businesses and mid-market companies to raise finance against their invoices payable ⏤ still grew at a rate of 5%, despite the same headwinds and uncertainty.

If everything plays out along similar lines, then we can expect similar outcomes during this trade war.

The potential of trade finance distribution

Trade finance distribution is a way of unlocking liquidity from trade finance products. Once an originator (like a bank or fintech) provides financing, they can sell or distribute individual or groups of trade finance products to other investors in the market.

This is usually done on an “originate-to-distribute” (OTD) model to ensure a bank is holding on to large volumes of trade finance exposure on their balance sheets. It unlocks opportunities and growth revenue for every party in the transaction. 

How funds and documents flow in supply chain finance (SCF)

For banks, asset managers, institutional investors, non-bank lenders, and alternative credit funds, the attraction of trade finance and distribution is hard to ignore:

• Trade finance is a high-growth sector, currently worth $9.7 trillion and a projected growth of 3.1% in the next 10 years.
• 80 to 90% of global trade relies, in some way, on trade finance.
• There is currently a massive trade finance gap, estimated to reach $2.5 trillion this year. This trade finance gap is especially high in Africa, Asia, and the United Arab Emirates.
• Supply chain finance continues to grow at a yearly rate of 7% and is currently worth $2.34 trillion
• Asia and Africa are seeing the fastest growth in volume of supply chain finance, up 29% and 17% year-on-year, respectively
• Trade finance instruments are always short-term, self-financing, self-collateralized, and can be insured. This makes them very attractive from an investor perspective.
• Unlike other asset classes, such as debt financing or even real estate, the default rates of trade finance and asset distribution have always been very low (in most cases, under 0.25%).

With all of that in mind, trade finance distribution seems like an opportunity that can’t be missed.

It’s one of the reasons Trade Finance Global launched the TFG Distribution Finance initiative in July 2023, which aims to identify and address unmet demands in the trade finance market, working towards closing the trade finance gap

At the same time, with the impending gradual phase-in of Basel III Endgame rules, (which starts on 1 July 2025) banks are keen to de-leverage balance sheets.

Fortunately, the IMF already thought about the impact of Basel III on trade finance. Despite the rules around Tier-1 banks (especially the global 37 with over $100 billion on their balance sheets), trade finance is “clearly not the target of the re-regulation exercise” because they are “low-risk, highly collateralized . . . with a very small loss record”, as the  IMF noted in a policy paper about Basel III in 2014.

All of this makes now the perfect time for banks, asset managers, institutional investors, non-bank lenders, and alternative credit funds to get into trade finance distribution or scale-up current operations.

The question is, can this be done without over-leveraging risk, or increasing headcount?

Accessing distribution sustainably

Trade finance distribution should unlock new revenue opportunities for banks, asset managers, or corporates.

If organisations understand the market, they can leverage against any risk factors and avoid increasing their headcounts unnecessarily.

For financial players getting into or scaling-up distribution, LiquidX’s white-label platform enables seamless integration of distribution into the organisation’s existing offerings while maintaining brand identity.

Thanks to LiquidX’s award-winning capabilities and a deep partnership with Broadridge  ⏤ a trusted global fintech leader ⏤ financial institutions wanting to enter trade finance distribution can outsource this function completely without needing to recruit more staff. LiquidX’s software takes care of everything, from digitization at one end to distribution at the other; its solutions cater to a network of over 90 banks and asset managers worldwide.

Digital solutions for trade finance distribution

Organizations looking to get into trade finance distribution or wanting to scale up existing operations should be cautious and do quality research first.  The steps and precautions to take will vary according to whether companies are starting from scratch and want to syndicate, buy, sell, or use an originate-to-distribute model, or if they are looking to grow their existing offerings.

One of the biggest challenges faced by companies is often managing the inflows and outflows of money and documents from different sources. Having a tool for managing multiple sources of data that’s platform-agnostic makes getting into distribution much easier. 

Now more than ever, distribution is a high-growth opportunity for banks, asset managers, institutional investors, non-bank lenders, and alternative credit funds. Using solutions like LiquidX can help companies take advantage of this opportunity and leverage the enormous potential trade finance distribution has to offer.

The post Trade finance distribution: Unlocking liquidity in a fast-growing sector appeared first on Trade Finance Global.

Capital investment can be vital for driving economic development, but on its own, it is rarely enough. True development requires robust financial systems that serve all trade participants and minimise those trade finance gaps limiting opportunities for businesses in regions where liquidity remains a formidable challenge.

To learn more about the power of financing, Mahika Ravi Shankar, Assistant Editor at Trade Finance Global (TFG) spoke with Ankita Pandey, a relationship manager with the Asian Development Bank’s (ADB) Trade and Supply Chain Finance Program (TSCFP), at TFG’s Women in Trade, Treasury & Payments event in London. 

A significant aspect of ADB’s trade finance initiatives involves research and data-driven advocacy. The bank’s Trade Finance Gaps, Growth, and Jobs Survey, published biannually, remains the only global analysis dedicated to quantifying the shortfall in available financing. 

Pandey said, “It is a survey-based assessment of the significant and growing gap between demand for, and supply of various forms of trade financing”

The insights provided by the survey and its accompanying report help organisations of all sizes and scopes refine their risk-sharing frameworks and inform responses to economic trends and events the world over, such as ESG standards, tariffs, and artificial intelligence. But perhaps most importantly, it provides us with insights into the financing struggles of internationally active businesses.

The absence of accessible financing affects businesses of all sizes, yet small and medium-sized enterprises (SMEs) are well known to suffer the most. Women-led SMEs have it worst of all, facing additional, often systemic, barriers that make it harder for them to secure the funding they need to fulfil expansion plans. 

Despite increased awareness and targeted programs, these disparities persist. Development banks and partner institutions provide financial literacy training and encourage banks to integrate more women into trade finance roles.  

Pandey said, “We work closely with a range of partners and stakeholders to deliver training programs to women-led SME businesses, on entrepreneurship, finance and trade financing specifically, among other relevant topics.”

ADB’s initiatives encompass supply chain finance, risk-sharing arrangements, and AI-driven sustainability tools designed to help SMEs understand and operate within complex regulatory frameworks. 

On the financing side, the bank works directly with local banks, increasing their capacity to fund businesses that might otherwise struggle to access credit. Risk-sharing arrangements with partner institutions push this even further, ensuring trade continues to drive economic development, hopefully, one day without the need for any ADB involvement whatsoever. 

Pandey said, “Our mission is to bridge the trade finance gap by effectively mobilising private sector capital. By including a broader range of society, especially SMEs, we aim to maximise the developmental benefits of trade.”

The post VIDEO | Enabling inclusion by bridging trade finance gaps at ADB appeared first on Trade Finance Global.

Africa has been in increasing its foothold in the global economy for a number of years. With the Global South enjoying new influence and wealth, the world’s economic centre of gravity is no longer under Western dominance. The volume of South-South trade has now surpassed the volume of North-South trade, reaching US$5.3 trillion – showcasing the growing connections between countries in the Global South. 

The South-South shift is not just about increasing trade volumes, but about an evolving landscape with highly diversified economies. Africa is rich in natural resources but is also actively diversifying its economic activities, with fast-growing sectors like telecommunications, energy and renewables, and Agri-tech taking the reins. The Gulf Cooperation Council’s (GCC) own journey towards economic diversification complements Africa’s aspirations for sustainable growth and infrastructure renewal. In this context, there stands a real opportunity for Africa and GCC states – to strengthen their ongoing relationship for mutual benefit. 

Double down on diversification

For GCC nations, these diversification journeys are not recent developments. Looking back at the Gulf’s own transformation, states like the UAE and Saudi Arabia have been transformed from desert landscapes into some of the world’s most advanced trade, logistics, finance and technology hubs by the end of the 20^th century, with both undergoing profound transformations. It is evident that over the past decade, unprecedented levels of economic progress, foreign and domestic investment, demographic growth and high-profile cultural and public-sector projects across the Gulf region have catapulted Gulf Cooperation Council (GCC) countries onto the global stage. 

Diversification – through ambitious projects to enhance infrastructure, real estate, and tourism – across GCC countries has been a successful strategy in unlocking new opportunities and revenue streams. Tapping into this further will remain a priority in years to come. An example is the Saudi Vision 2030, a government programme with the goal of diversifying the country economically, socially, and culturally. The vision includes forming new international partnerships, creating diverse job opportunities, and attracting global talent to build Saudi Arabia as a global trade hub. Similarly, the UAE’s Energy Strategy 2050 seeks to channel funding into energy efficiency, drive R&D and innovation in energy technologies, and encourage investment in the UAE’s renewables. 

Powering the GCC’s diversification goals

For Africa, the GCC’s focus on diversification and green initiatives represents an opportunity for collaboration and growth. Across the globe, environmental, social, and governance (ESG) standards are at the forefront of investment considerations, with climate initiatives remaining a top priority. The climate crisis continues to intensify, with stories of floods and droughts regularly gripping headlines worldwide. This is accelerating the urgency to transition to sustainable energy sources. 

Africa has an abundant resource base that can help power the GCC’s energy transition. The continent is home to around 30% of the world’s mineral reserves, including up to 90% of its platinum and chromium, alongside large deposits of lithium, phosphate, and nickel – and the global demand for these resources is escalating. As countries transition to renewable energy, the demand for critical minerals will increase due to their essential role in manufacturing batteries for electric vehicles and other clean energy technologies. This creates an opportunity for GCC nations and Africa to collaborate and secure the supply chain for the critical minerals that will drive the green energy revolution. 

GCC countries are in a prime position to bridge Africa’s infrastructure gap. Having built its metropolises from the ground up just decades ago, it has unparalleled experience in modern infrastructure development, and as such, unique insights into the infrastructure challenges that many African nations face. In recent years, the UAE and Saudi Arabia have invested heavily in Africa’s ports and logistics networks. 

As the UAE and Saudi have diversified, they are seeing more and more opportunity in Africa. In 2023 alone, GCC companies announced 73 foreign direct investment (FDI) projects in Africa, totalling more than $53 billion.

The UAE’s Dubai Ports World (DP World) has built and expanded key ports to streamline logistics and supply chains, helping Africa to connect more efficiently with global markets. Its projects—like those in Senegal, Egypt, and Tanzania—offer direct improvements to trade routes, cutting down both time and costs for goods moving in and out of Africa. 

A golden age of Global South growth

Collectively, GCC countries have invested over $100 billion in Africa over the past decade, as they continue to cement long-term partnerships with African governments and businesses. Combining efforts to diversify and expand will unlock new opportunities for economic development and resilience—and herald a new dawn in South-South cooperation. 

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On 18 February, the EU unveiled the “Vision for Agriculture and Food,” its ambitious new roadmap to boost the European agricultural sector, making it more resilient and internationally competitive. 

The plan was reached after 8 months of consultation with 29 stakeholders, from farmers’ unions to industry representatives and environmental groups, to determine the concerns and goals of Europeans across the agricultural supply chain. The result, unveiled last week, includes a wide range of measures to revitalize EU farming, remove restrictive red tape, and make the bloc’s agricultural exports more competitive. 

The vision has four main goals: increasing farmers’ living conditions, making the agricultural sector resilient to global shocks and competition, creating “future proof” sustainable agriculture, and connecting the sector to the needs of the EU population and its rural areas. The plan centers innovation and technology as springboards for growth, introducing AI to analyse farming data and promoting the EU as a leader in bioeconomy through a detailed strategy to be published later this year. 

Supporting agriculture from the bottom up

Biopesticides, genome editing, and biotechnologies are all touted as ways for investment to have an immediate impact, increasing production and positioning the EU as a global leader in innovative farming. Excessive bureaucracy, which has long been blamed for a stagnating agri-food sector, is being reorganised, with more funding routed to agencies like the European Food Safety Authority to speed up certification processes. The plan promises “an unprecedented simplification effort” to make it easier for businesses to comply with EU standards and facilitate entry to the industry.

The plan also includes a range of sustainability initiatives meant to encourage agri-businesses to become more environmentally friendly without adding more regulation and further decreasing their margins; instead, environmental burdens will be more equally shared throughout the supply chain and farmers will receive more optional support from the EU to decrease their environmental impact. For example, the EU will set up an “On-farm Sustainability Compass,” a one-stop shop for all environmental reporting intended to streamline reporting and make it easier for agri-businesses to measure their environmental impact and improve in key areas. 

This focus on sustainability as supporting, not constraining, farmers comes as the EU’s sustainability measures are being increasingly blamed for the EU’s stalling economic growth. On Wednesday 26 February, the EU announced a “simplification omnibus” as industrial groups from France and Germany blamed excessive environmental regulations for complicating operations and hindering competitiveness. 

The changes include rolling back carbon reporting requirements to large firms, excluding 80% of firms originally affected by them, and softening the impact of the Carbon Border Adjustment Mechanism. The Corporate Sustainability Due Diligence Directive, a proposed measure to make firms liable for ESG breaches throughout their supply chains, will also be significantly altered after US complaints. That the EU’s Agriculture vision still includes ambitious sustainability goals is a testament to the EU’s commitment to climate action; however, it could point to a more pragmatic approach that supports companies to become sustainable instead of imposing more and more regulations. 

Trade and sustainability take the stage

The last important aspect of the plan, one which may attract international attention once in effect, is the EU’s proposed measures to increase domestic competitiveness and regulate imports. The Vision outlines measures to “be more assertive in promoting and defending strategically the exports of EU products” to decrease dependence on foreign countries and increase self-sufficiency. The EU’s trading partners will be able to benefit from trade facilitation measures, like prelisting – a way to pre-approve importers so they can skip border inspections – only if the partners extend similar measures to the EU. 

The Vision also pledges to strengthen “agri-food economic diplomacy” and ban imported products containing hazardous pesticides banned domestically, as well as potentially stop imports of banned pesticides and chemicals. In another blow to importers, the plan includes “a powerful strengthening of [imports] controls on the ground” in an effort to protect domestic production and stop dangerous or unfairly produced goods from entering the EU.

A dwindling crucial industry

Amidst the international trade chaos caused by recent conflicts and President Trump’s unpredictable tariff regime, global food chains are more fragile than ever – and the EU agriculture industry is rushing to protect itself. EU farming has struggled for years amidst high regulation, low margins, and cheap crops from abroad making exports uncompetitive: in 2025, only 12% of EU farmers are younger than 40, and few newcomers are joining their ranks. 

Politically, farming has been a hot-button issue throughout the EU: a core part of the region’s cultural identity, farmers are increasingly leaving the industry and being replaced by multinational corporations or crowded out altogether. Strengthening the European food supply has been identified as one of the critical goals for regional security, and will also be crucial to bringing a stagnating EU economy back on track: the EU’s agricultural industry generated over €900 billion in 2022, accounting for 15% of the EU’s total employment. 

On a global level, too, developments in the EU food supply chain will have a ripple effect in nearly every agricultural industry. The EU is the world’s single largest agri-food exporter, with a steadily growing trade surplus that reached €70 billion in 2023; developments in EU regulations, import controls, and export restrictions are set to be massively consequential for food supply and production everywhere. 

A pivotal step for the EU’s future

This vision represents a clear commitment to tackle those issues and strengthen the industry from the bottom up. However, some are unconvinced. Environmental groups have criticised the plan for not going far enough and ignoring the negative impact of meat consumption on the climate, instead excessively supporting livestock farmers. As the debate over the EU’s Common Agricultural Policy rages on, the Vision fails to clearly set a direction for the revamped policy, which many say should target newcomers and young farmers instead of being the more-or-less blanket subsidy system it is now. 

More crucially, the plan comes at a pivotal time for the EU, when the bloc is facing an existential crisis about its own security, independence, and long-term goals. As the US is moving closer to Russia in the Ukraine conflict resolution, the EU has once again proposed that Ukraine become a member of the bloc – both in a clear effort to distance itself from Trump’s foreign policy, and as a commitment to improving the bloc’s size and strength. The EU has also been working to become more independent, both from allies like the US, by increasing defense spending and moving closer to the UK, and from foes, as seen in the widely televised ceremony earlier this month where Estonia, Latvia, and Lithuania joined the EU power grid and became independent of Russian electricity.

As German voters clearly showed last week, EU citizens want an EU that is strong, prosperous, and self-sufficient – and to get there, there is no better way than to go back to the basics of any economy: the food industry. “The Vision is our resolute response to the agri-food sector’s call for action—shaping a future that is competitive, resilient, fair and attractive for generations to come,” said Raffaele Fitto, Executive Vice-President for Cohesion and Reforms and leader of the team producing the vision. The strategies set out in the plan are ambitious, and could be crucial to turning the EU’s troubled agricultural sector around – it just remains to be seen whether the EU bureaucracy can turn these lofty ideas into action. 

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The ICC published these principles in October 2024, establishing clear guidelines to help financial institutions, corporates, and investors direct capital towards sustainable and inclusive trade finance. 

“Standard Chartered first introduced its sustainable trade finance proposition in 2021 and as part of our efforts to support the creation of sustainable trade finance standards across the industry, we are pleased to adopt ICC’s principles,” said Sofia Hammoucha, Global Head of Trade & Working Capital at the bank.

Two frameworks govern the bank’s sustainable finance solutions: the Transition Finance Framework and the Green and Sustainable Product Framework 2024. These frameworks establish transparency on transaction and client eligibility criteria while ensuring adherence to environmental and social risk management standards.

The documents highlight that the climate transition is more challenging in emerging markets, particularly since only 10-20% of the capital required to deliver the objective of net zero by 2050 (which amounts between $1.8 trillion and $3 trillion) flows to these regions. 

Raelene Martin, Head of Sustainability at ICC, welcomed Standard Chartered’s adoption of the principles, calling it “an important step in aligning the industry around common methodology for the assessment of sustainable trade finance.”

The ICC Principles provide a standardised approach for evaluating sustainable trade finance transactions. They include methodologies for assessing use-of-proceeds, enhanced due diligence protocols, and unified reporting standards to ensure consistency across financial institutions.

Boston Consulting Group (BCG), a strategic partner of ICC, co-led the working group that developed the principles. Ravi Hanspal, Partner at BCG, noted the significance of this adoption: “The formal recognition and adoption of ICC’s Principles for Sustainable Trade Finance by a leading global financial institution is a huge step forward on this journey and is hopefully the first of many more.”

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The investment will support AgDevCo’s financing of small and medium-sized enterprises (SMEs) in rural areas producing high-impact crops, contributing to sustainable development and regional food security.

AgDevCo, founded in 2009, holds a portfolio of 40 SMEs across 11 countries in Sub-Saharan Africa, improving agricultural production in rural areas and bringing sustainable agriculture to small farms. BII’s $50 million investment comes on top of a previous investment of the same value, making BII AgDevCo’s biggest external investor. The Swedish and Norwegian investment funds will contribute a further $20 million and $15 million, respectively.

The investment will help AgDevCo expand its portfolio and support businesses to increase productivity and scale up sustainably. The company’s impact on small-scale agribusinesses in Sub-Saharan Africa has already been massive: over 2.4 million people benefited from opportunities linked to AgDevCo’s companies, ranging from access to markets to direct employment to support for rearing backyard chicken in individual households. AgDevCo estimates that thanks to the new investment, its portfolio will be able to deliver benefits to up to 4 million farmers and support 60,000 jobs by 2030. 

Agricultural businesses in Sub-Saharan Africa face a range of challenges, from limited financing access and stunting growth to underdeveloped value chains and restricted access to global markets. Geopolitical instability and extreme weather events caused by climate change have made agriculture businesses more vulnerable. A drought in September 2024 was declared “the worst in a century” by the UN, which warned of a major humanitarian crisis that could affect the livelihoods of over 27 million people.

The investment will enable AgDevCo to expand its portfolio of SMEs in the region, especially targeting businesses producing high-nutrition crops for local consumption and crops intended for export. This is expected to improve the resilience and adaptability of Sub-Saharan African agriculture in the long term – a crucial step to strengthen supply chains worldwide. 10% of the EU’s food imports come from the region, and the UK’s food imports from Sub-Saharan Africa have been rising since the 1990s: 87% of UK imports of green beans come from just five African countries in the region as well as much of the fruits and vegetables sold in UK supermarkets, especially during winter. 

Businesses like AgDevCo can support small-scale farmers to be more resilient to climate change and strengthen supply chains throughout the region, especially by improving access to crops in rural areas. “Developing commercial agriculture in Africa requires patient and strategic investment. […] This latest capital injection from BII, Norfund, and Swedfund strengthens AgDevCo’s position as a leading specialist investor, enabling us to grow our portfolio and drive positive impact at scale,” said Daniel Hulls, AgDevCo’s CEO.

The post British, Swedish, and Norwegian development banks collaborate on $85mn investment in agribusinesses in Africa appeared first on Trade Finance Global.

• Complicated, expensive supply chains make the EU’s Carbon Border Adjustment Mechanism (CBAM) less effective.
• Small and medium-sized enterprises (SMEs) don’t tend to prioritise cutting carbon emissions since digital solutions are often unaffordable.
• As such, SMEs risk exclusion from the low-carbon economy.

In today’s climate-conscious world – where embedded carbon increasingly shapes trade decisions – the most vulnerable are the micro, small, and medium-sized enterprises (MSMEs). According to the European Commission, small enterprises represent 99% of all businesses in the EU and contribute nearly 50% of its GDP. For a region looking to be climate-neutral by 2050, small enterprises are the EU’s footsoldiers in making the European Green Deal a reality. However, limited access to climate technology for small enterprises can be a bottleneck in the EU’s green dreams.

Consider, for example, the EU’s recently introduced CBAM. This regulation is designed to restrict the import of goods with high embedded carbon emissions by imposing a 20% to 35% tax on select imports starting January 2026. For businesses to mitigate this impact or avoid penalties, precise and reliable embedded carbon reporting is crucial. However, the complexity of supply chains and the extensive data required for accurate carbon calculations necessitate robust technological integration – a resource that remains largely inaccessible and prohibitively expensive for MSMEs.

The unequal path to climate compliance 

A 2023 study by the European Investment Bank (EIB) found that only 45% of European SMEs have taken steps to reduce their carbon emissions, compared to 70% of large enterprises. This gap is largely due to limited access to funding, lack of expertise, and, most critically, the absence of affordable digital solutions.

Accurate carbon accounting and smooth reporting processes are essential for effective climate compliances like CBAM. Large-scale businesses benefit from access to cutting-edge carbon management tools and specialised sustainability teams; on the other hand, SMEs frequently use antiquated reporting systems, disjointed spreadsheets, and manual data entry – methods that are obsolete, ineffective, and prone to mistakes. In the absence of adequate climate reporting adoption, they stand to become irrelevant in the global economy, making this a necessary barrier to overcome.

Threat of exclusion for SMEs in the low-carbon economy 

Large corporations and multinational brands are increasingly prioritising low-carbon suppliers, meaning that non-compliant SMEs may soon find themselves locked out of key business opportunities, which could lead to a greater hegemony, leading to mismanagement of global supply chains and higher prices of goods.

According to estimates from the European Commission, about 30% of UK SMEs are already having trouble incorporating sustainability into their business plans. Therefore, there exists a need to support European small businesses and provide CBAM software solutions to keep them thriving in this era of a dynamic political-economy-sustainability troika landscape. A sizable section of the market would find it difficult to remain competitive without access to reasonably priced digital solutions.

Climate compliance isn’t a privilege, but an imperative 

Today, we see a top-down approach to climate technology adoption, with major players leading the way by investing in the necessary resources for compliance. However, we cannot afford to wait for these innovations to eventually reach the grassroots if we are to meet our global decarbonisation goals. A more democratised approach is required, one that guarantees small-scale businesses equal access to vital climate technology. In doing so, the playing field will truly be levelled, where affordable and accessible digital sustainability tools empower every enterprise.

To accelerate this transition, governments, trade associations, and technology providers must collaborate in building an ecosystem that equips small businesses with the resources they need for genuine climate compliance. Moving beyond mere regulatory paper trails, our collective efforts must drive real-world decarbonisation and lasting environmental impact.

The post CBAM under threat: Slow climate tech adoption threatens climate compliances for SMEs appeared first on Trade Finance Global.

The responses assume 2025’s key financial trends: digitalisation through generative AI (GenAI), cloud adoption, and API-driven ecosystems. These come with a strong emphasis on regulatory compliance and environment, social, and governance (ESG) initiatives, and better integrating small and medium-sized enterprises (SMEs).

Andrew Bateman: Lenders will focus on driving productivity and efficiency to reduce risks and increase profitability  

Digitalisation: 2025 will see banks increasingly turning to generative AI (GenAI) to “plug lending and technology knowledge gaps and optimise processes,” said Bateman. The technology’s capacity to curate tailored content enables the creation of personalised, interactive learning experiences for upskilling teams. 

“With large language models (LLMs), banks can, for example, process and interpret Letters of Credit and instantly perform checks on the documents to make quicker, and potentially more informed trade finance decisions,” Bateman explained. “In customer-facing applications, corporates could ask for a breakdown of their loans and ways to optimise their finances, thereby enhancing their own user experience while also reducing bank resource requirements.”

Partner ecosystems underpinned by Open Finance principles will be essential. By integrating value-added services through application programming interfaces (APIs)—such as automated ESG scoring, document verification, and GenAI assistants—lenders can maintain competitiveness and reduce time to value. A microservices approach will likely become increasingly prevalent, enabling greater organisational agility and risk mitigation.

Sustainability mandated by regulation: “Sustainable, inclusive, and responsible lending will high on the boardroom agenda in 2025, particularly as deadlines for Section 1071 of the Dodd-Frank Act and Basel 3.1 approach. These regulations mandate complex lending data reporting and more accurate risk calculations,” said Bateman.

A growing market demand exists for ESG solutions, including sustainability-linked loans, bonds, and supply chain finance. Bateman said, “Cloud and SaaS will play a big role here, providing the necessary agility to navigate this rapidly evolving market.”

SME integration: “Modernisation efforts are crucial, particularly for SMEs, since manual processes, siloed operations, and outdated technology can render SME lending risky and unprofitable. Banks must consolidate loan portfolios onto contemporary platforms to address this.”

Siobhan Byron: To keep pace in 2025, institutions must reimagine banking through innovative technology and ecosystems

Digitalisation: Institutions must reimagine banking to remain competitive. Adopting the right technology—implemented to maximise innovation while minimising risk—will be paramount. Strong growth is anticipated regarding cloud adoption in the US, UK, Germany, France, Singapore, and UAE, amongst others. Institutions recognise the benefits of cloud and Software-as-a-Service (SaaS) solutions in increasing agility and innovation whilst reducing risk, time to market, and overall ownership costs.

“Fintechs, neobanks, and technological innovation have flourished worldwide, technologies are being adopted by the masses at a pace we haven’t seen before, and Open Finance is a reality. This has led to heightened demand for instant, digital, seamless, and personalised services,” said Byron.

Conversely, regions with slower cloud adoption due to regulatory constraints require alternative strategies. “For these banks to remain competitive, they must invest in on-premises solutions that provide robust security, scalability, and data analytics. Ideally, solutions that can easily migrate to the cloud as and when the regulatory concerns are addressed,” said Byron.

A “flexible, modular transformation strategy” is increasingly preferred over the disruptive “rip and replace” approach for upgrading core systems. “More banks will adopt a Symbiosis approach, where a next-generation core banking system is deployed alongside existing infrastructure,” explained Byron. 

Microservices architecture and APIs allow banks to implement functionalities such as lending or Islamic banking services. AI-driven analytics further enhance insights into customer needs, operational performance, and growth opportunities.

ESG: ESG initiatives are increasingly supported by Open Finance ecosystems. “For example, a bank can bring together the services that a homeowner needs to fit solar panels on their house – from advice on selecting the right ones, choosing the installer, applying for the grants, complying with the rules, and so on.” These holistic, customer-centric approaches will continue to drive innovation and competitiveness.

Wissam Khoury: Automated workflows and real-time technology will be key

Regulation: Industry and societal transformations are occurring at unprecedented speeds, creating new opportunities and risks for banks to navigate. Continued volatility in capital markets, increasingly stringent regulatory requirements—including upcoming Basel 3.1 reform deadlines—alongside growing demand for ESG services and technological adoption pressures are reshaping the financial landscape.

AI ubiquity: GenAI will help drive the movement towards fully automated trading workflows. Its ability to analyse extensive historical data and real-time events offers deep market sentiment and positional insights. 

“By embedding natural language capabilities within interactive workflows and GenAI-powered assistants, institutions benefit from streamlined processes and elevated user experiences. As LLMs become a popular search engine for trading and analysis, access to information will become faster, simpler, and more intuitive,” said Khoury. 

“Traders can, for example, retrieve real-time market data, quotes, or transaction details – such as a detailed summary of all the FX spot trades executed – and run APIs to automate tasks such as booking trades and calculating risk measures,” he explained.

By embedding GenAI-powered assistants into trading platforms, institutions can automate tasks like trade booking and risk calculations; decisions about liquidity, cash management, investment strategies—including ESG criteria compliance—and comprehensive risk mitigation will grow faster and more informed.

“Modernisation efforts are also increasingly occurring via a microservices-based environment, allowing institutions to pick and choose functionality while reducing the potential risks of a large migration from a legacy system,” said Khoury.

Collaboration: Recognising that neither banks nor technology partners can independently deliver comprehensive functionality, robust partnership networks and ecosystems founded on Open Finance principles will be instrumental to success.

Barry Rodrigues: As instant payment volumes grow in 2025, banks must prioritise resilience, scalability, and speed of recovery

Digitalisation: From software to instant payments, digital transformation is inevitable.

“More than 80 countries today have domestic instant payment systems, such as FedNow in the US, SEPA Instant in Europe, SIC5 in Switzerland and FAST in Singapore,” said Rodrigues. Consequently, global instant payment volumes are anticipated to continue growing, encompassing both wholesale and retail transactions. 

Central bank digital currencies (CBDCs) are also gaining traction; over 60% of banks recognise their additional revenue opportunities, and 134 countries are exploring tokenised fiat currency versions that could disrupt cross-border markets.

Regarding payment modernisation, said Rodrigues, “more banks are looking to consume smaller, standalone components that can be easily integrated through APIs. With containerised, composable microservices and cloud deployment, institutions benefit from faster deployment cycles and greater efficiencies, with scalability and agility, while reducing risks associated with large-scale migrations from monolithic systems.”

GenAI will play a crucial role in anti-money laundering compliance, sanctions screening, and fraud detection—increasingly critical for instant and irrevocable transactions. With regulators mandating near-universal payment availability—in some instances up to 99.9%—institutions must upgrade capabilities to maintain compliance and provide secure solutions.

Regulatory deadlines: “With the US Federal Reserve’s March 2025 deadline for ISO 20022 migration approaching, financial institutions must ensure compliance and strategise their instant payment approach.”

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In their words, enhancing operational efficiency, productivity, risk management, and profitability will be top priorities for financial institutions across the industry in 2025. Since digitalisation is inevitable, preparation is vital for those who want to best take advantage of its promised benefits. Regulation has forced companies to reassess strategy, particularly ESG, while remaining innovative and competitive. Finally, SMEs are being increasingly recognised as crucial to the financial ecosystem.

Taking heed of these expected developments could allow financial institutions to best insulate themselves from the usual ups and downs of the industry.

The post Finastra executives share their 2025 predictions appeared first on Trade Finance Global.

• Islamic financing aligns in its nature with ESG compliance.
• The issuance of green sukuk has seen success across Asia and the Middle East.
• Now, the question is of scalability.

The global push toward sustainability has highlighted the urgent need for innovative financing mechanisms to support green infrastructure. Among these mechanisms, Islamic finance stands out for combining ethical principles with an emphasis on equitable wealth distribution, particularly in emerging and underserved markets.

Five decades ago, the Arab and Islamic worlds focused heavily on development challenges and aspirations to achieve self-sufficiency. Today, they have introduced the world to Green Sukuk—an essential financial tool for governments, corporations, and institutions to secure liquidity for environmentally sustainable projects. Rooted in Islamic principles and offering competitive costs, Green Sukuk expands funding opportunities and propels the development of eco-friendly initiatives.

Shariah financing in an ESG context

Shariah-compliant financing operates on the principles of profit- and risk-sharing (mudarabah), prohibition of interest (riba), and ethical investments. Its alignment with environmental, social, and governance (ESG) values stems from its emphasis on real economic activities and avoidance of industries deemed harmful, such as gambling and alcohol: principles which naturally lend themselves to promoting sustainable development.

For example, the prohibition of speculative activities (gharar) in Islamic finance ensures that investments are grounded in tangible assets, such as manufacturing or renewable energy infrastructure. This focus on real economy investments directly contributes to the development of sustainable infrastructure and equitable growth.

One notable instrument in Islamic finance is the sukuk, also referred to as ‘shariah-compliant’ bonds. Green sukuk, in particular, has gained traction as a vehicle for financing renewable energy projects and other sustainability initiatives. These instruments not only comply with Islamic principles but also align closely with the UN’s Sustainable Development Goals.

Successful implementations of Shariah financing for sustainability

The practical impact of Islamic finance is evident in several successful projects around the world. In Southeast Asia, Malaysia has actively leveraged Islamic financing mechanisms to support its renewable energy sector. The issuance of green sukuk by private and public entities has enabled the construction of solar farms and hydroelectric projects, contributing to the country’s goal of achieving 40% renewable energy capacity by 2035.

Similarly,  Indonesia has also been a pioneer in using green sukuk to fund sustainable projects. In 2018, the country issued the world’s first sovereign green sukuk, raising $1.25 billion to finance renewable energy, sustainable transportation, and waste management projects. This initiative demonstrated how Islamic finance can mobilise resources for climate change mitigation and adaptation efforts.

Moving around the world, Shariah-compliant financing has also played a crucial role in supporting energy and infrastructure development in Pakistan. Projects like the Quaid-e-Azam Solar Park in Punjab, funded through sukuk, and the Dargai Hydroelectric Project in Khyber Pakhtunkhwa, financed through Islamic loans, highlight the shift toward renewable energy. 

Finally, Saudi Arabia has used Shariah-compliant financing to develop the King Abdullah Economic City (KAEC), a large-scale infrastructure project aligned with Vision 2030. This ambitious development, financed partly through sukuk, promotes sustainable urbanisation, renewable energy integration, and economic diversification, reflecting how Islamic finance can drive long-term development goals.

Next steps for scaling impact

While the achievements of Islamic finance in promoting sustainability are commendable, there remains significant untapped potential. To maximise its impact, the following steps are recommended:

1. Establishing globally recognised standards for Green Sukuk issuance can attract more investors by ensuring transparency and credibility. Collaborative efforts by organisations like the Islamic Development Bank (IsDB) and other international bodies can help achieve this goal.
2. Many underserved markets lack the expertise to design and implement Shariah-compliant financial products. Capacity-building initiatives, such as training programs and knowledge-sharing platforms, can empower local stakeholders to leverage Islamic finance for sustainability.
3. Governments and private entities should collaborate to scale up sustainable projects; Islamic finance can play a crucial role in these partnerships by providing ethical and socially responsible funding options.
4. Leveraging Islamic financial technology (FinTech) can enhance the accessibility and efficiency of Islamic finance. Blockchain, for instance, can improve the transparency of Sukuk issuance and tracking, fostering investor confidence.
5.  It is essential to raise awareness about the benefits of Islamic finance among global investors and policymakers. Advocacy efforts should highlight its compatibility with ESG goals and its potential to bridge funding gaps for sustainability.

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Islamic finance represents a viable and impactful solution for addressing the world’s pressing sustainability challenges. Its focus on tangible economic activities, ethical investments, and equitable resource distribution, aligns seamlessly with the principles of ESG. 

Success stories from around the world illustrate its potential to drive green infrastructure in emerging and underserved markets. Scaling these efforts will further cement Islamic finance as a conduit to sustainable development.

The post Bridging the funding gap for sustainability: Islamic finance appeared first on Trade Finance Global.

With environmental, sustainability, and governance (ESG) considerations becoming increasingly integral to companies’ success, it is crucial for firms to be aware of their impact on the environment and ensure their values are upheld at every step of the supply chain.

Alexis Garatti, Climate Expert at Allianz Trade, said, “Supply chain transparency is fundamental to ESG accountability. More importantly, it serves as the cornerstone of sustainable trade, paving the way for greater resilience and enhanced efficiency across global value chains.” Businesses must take steps to increase transparency in their supply chains to maintain accountability around their ESG goals and increase resilience to shocks and regulatory changes.

The many faces of supply chains

Supply chain transparency encapsulates a company’s awareness of all aspects of its supply chain down to the primary sources of its products – from environmental emissions to labour standards, trade routes, and the origins of raw materials. Awareness about the importance of following supply chains down to primary sources is increasing in every aspect of ESG. For example, most environmental reporting guidelines now divide emissions in three categories: scope 1 and 2 emissions measure the impact of energy usage directly controlled by companies, while scope 3 emissions now include all energy usage throughout the supply chain. 

According to some estimates, scope 3 emissions account for as much as 90% of companies’ total emissions – making it all the more crucial for firms to monitor and reduce them, even before they are mandated to do so by regulators. Scope 3 emissions include both downstream emissions, generated after the product is released to the consumer, and upstream emissions, generated before the product arrives at the manufacturer. For companies to stay true to their commitments to reduce their environmental impact, they must monitor their emissions throughout the supply chain, working with their suppliers to become more sustainable at every step of the production process. 

Many reporting guidelines do not yet include scope 3 emissions, citing difficulties in measurement and in applying standards equally across supply chains that can span multiple jurisdictions. Similarly, few place a strict cap on these emissions at this point in time.

However, this could change soon as technology makes supply chain transparency easier and governments face increased pressure to curb global emissions. The UK government recently published the results of a call for evidence on scope 3 emissions reporting, which found that despite some challenges, future regulation should include scope 3 emissions in companies’ emissions totals. The EU non-financial reporting guidelines recommend that companies include scope 3 emissions in their total emissions reporting, focusing on disclosure rather than direct operational emissions. 

Transparency for accountability

Even though not all ESG rating initiatives value, or even consider, upstream aspects of supply chains, it is important for companies to take the lead in monitoring this themselves to prove their commitment to sustainability and avoid accusations of greenwashing.  

Richard Wulff Executive Director of the International Credit Insurance & Surety Association (ICISA) noted that closing our eyes to what happens upstream and downstream is increasingly unacceptable.

“Parties involved in manufacturing, trading and financing are under increasing scrutiny when it comes to the societal impact of their activities. Not only aspects related to sustainability play a role. In the current geopolitical environment, compliance with export controls and sanctions is of paramount importance. A transparent supply chain is necessary to live up to this,” he said.

As reporting standards evolve and become more stringent, emissions throughout the supply chains will likely be considered more and more in calculating total emissions. Companies wishing not to be caught unaware should start monitoring scope 3 emissions now, both to prove their commitment to sustainability and to ensure resilience in the face of regulatory changes. 

Beyond environmental considerations, having transparency in all steps of a supply chain is important to ensure that company principles of equality and governance are respected at every step of the production process. As customers become more aware of social issues like child labour, modern slavery, and unsafe working conditions, there are growing calls for transparency on labour standards for suppliers as much as in companies themselves. Recent calls for a boycott on Apple and other microchip producers for exploitation of workers in mineral mines in the Democratic Republic of the Congo should serve as a warning to all industries of the importance of being aware of ESG aspects throughout supply chains. 

Increased awareness of labour exploitation in the mining of “conflict minerals”—minerals like tin, tungsten, and gold, used in everything from jewellery to microchip production and sourced from politically unstable areas—has led to export restrictions and public outcry against companies unwilling to monitor the source of their raw materials. 

Increased public awareness of ESG considerations throughout supply chains and the prospect of regulatory change to include upstream emissions in reporting should encourage companies to increase transparency over their supply chains and enact changes that reflect their values at every level of the manufacturing process. 

The technology panopticon

However, this is easier said than done. Companies often find it difficult to monitor every step of their supply chain, especially when their production processes involve different producers spread out across the world, who themselves have multiple producers or suppliers that they might not have complete oversight of. 

Many companies will find that digitisation is the key to streamlining data collection and enabling greater transparency. As noted in a 2022 Tinubu whitepaper, digitisation can give businesses the tools to standardise ESG data and monitor the application of policies, contributing to greater transparency at all levels of production. Periodic audits of supply chains can be a useful investment, increasing transparency while also strengthening resilience by highlighting weak points or possible bottlenecks in the event of a global disruption. 

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There is a ways to go before complete supply chain transparency is truly possible across all industries. However, this is a crucial goal that any company committed to its ESG principles should strive for in the near future if it wants to remain relevant to customers and resilient to regulatory changes. 

To learn more about why supply chain transparency is so crucial to ESG principles and how technology can help support it, attend the “Supply chain transparency and ESG considerations” panel at the online Tinubu conference on 5 February. Get your ticket on this link. 

The post Supply chain transparency: The key to ESG accountability appeared first on Trade Finance Global.