Empowering the Trade, Treasury & Payments Industry

EMPOWERING THE TRADE, TREASURY, AND PAYMENTS INDUSTRY

FEATURED

Canada’s Minister Ng: Building ecosystems to support womenowned businesses

Dirty financing: the slow progression of ESG

What’s next for the Electronic Trade Documents Bill?

THANKS TO

MARY NG

DANI COTTI

KIERAN MAGUIRE

RAELENE MARTIN

JOHANNA WISSING

ROBERTA LEVA

NIELS NUYENS

MARILYN BLATTNER-HOYLE

WILLIAM TRUMP

ANDREAS HILLEBRAND

LYNETTE THORSTENSEN

CHAIR RETA JO LEWIS

CATHERINE LANG-ANDERSON

NATALIA CLEMENTS

SEAN EDWARDS

MICHAEL BICKERS ANDRE CASTERMAN

KATERYNA BOVSUNOVSKA

HAMZA HAMEED

PAUL SEBASTIEN

SADAR ABDUL RASHEED

SAMNA MEHAR

TFG EDITORIAL TEAM

DEEPESH PATEL

BRIAN CANUP

NATASHA ROSTON

CARTER HOFFMAN

DANIELA SANTOS

LAYOUT

JERRY DEFEO

PHOTOGRAPHS AND ILLUSTRATIONS

FREEPIK COMPANY S.L.

ADDRESS

201 HAVERSTOCK HILL

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LONDON NW3 4QG

TELEPHONE +44 (0) 2071181027

© Trade Finance Talks is owned and produced by TFG Publishing Ltd (t/a Trade Finance Global). Copyright © 2022. All Rights Reserved. No part of this publication may be reproduced in whole or part without permission from the publisher. The views expressed in Trade Finance Talks are those of the respective contributors and are not necessarily shared by Trade Finance Global.

Although Trade Finance Talks has made every effort to ensure the accuracy of this publication, neither it nor any contributor can accept any legal responsibility whatsoever for the consequences that may arise from any opinions or advice given. This publication is not a substitute for any professional advice.

MARY NG

Minister of International Trade, Export Promotion, Small Business and Economic Development

Canadian Parliament

NATALIA CLEMENTS

Senior trade finance specialist

Swiss Re Corporate Solutions

ANDRÉ CASTERMAN Founder & Managing Director Casterman Advisory

1

FOREWORD

BRIAN CANUP Editorial & Research Assistant Trade Finance Global

1.1

Two steps forward, one step back

As we have seen over the past few years, progress is not linear. In almost every aspect of life, two steps forward are often accompanied by one step back.

8 March 2023 marked Trade Finance Global’s (TFG) fourth consecutive celebration of International Women’s Day. This year, however, was different.

At TFG, we kicked off our largest ever campaign, championing 100 women in Trade, Treasury & Payments (TTP), along with an inaugural London based event with 30 of the most influential women in their fields.

Unlike the men-to-women ratio at most TPP industry events, the dinner was the exact opposite. Over 30 women in the room, and only one man.

While this moment was a great visualisation of the progress that women have made in the workplace, it is also a reminder that we all have so much farther to go. A female-dominated TTP event should not be a one off event. It should be commonplace, across all industries, all regions, and all countries.

Lynette Thorstensen, chair of the board at Fairtrade International, gave a keynote speech at TFG’s Women in Trade, Treasury & Payments dinner, and reminded us that progress is happening, even if it seems unachievable in the moment.

“This is the story of Café Femenino in Peru: The Cafe Femenino story begins with indigenous women growing coffee in the Andes of Northern Peru…These women had an idea. An innovative and entrepreneurial idea. Indigenous women from 60 communities became involved in a Fairtrade coffee co-operative. They shared the stories of their difficult lives. They decided that together they could change their lives by selling their coffee separately from the men.”

It began with 8 women in 2004, now there are more than 700 women involved.

For women, not all challenges are equal either. Some challenges do not revolve around careers but economic empowerment and safety, as evident across the globe and even on our doorstep. Some of the TFG team spent an afternoon in March volunteering at Sebby’s Corner in Hertfordshire, packing essential kits for mostly single-mum families, living in poverty or temporary accommodation, women and their children who have fled domestic abuse, refugees, asylum seekers and victims of modern slavery and human trafficking.

DEEPESH PATEL Editorial Director Trade Finance Global

1 in 3 residents in the county are income deprived, rising to 40% among children, and 1 in 4 adults are out of work, and with the current cost of living crisis, it’s getting worse. A sad realityhearing from mums who have to water down their baby formulas, reuse nappies, and sacrificing their own meals for their children. The team made packs of clothing, nappies, formula, toiletries and baby equipment, which were collected by seven families the next week.

As we have seen over the past few years, progress is not linear. In almost every aspect of life, two steps forward are often accompanied by one step back. The current economic climate is not only impacting international trade and large corporate deals, it is making the day-to-day experience much harder. It’s a frustrating relationship, but it is the reality that we all have to deal with.

An industry example of this is the UK is well on its way to passing the Electronic Trade Documents Bill (ETDB), marking a monumental milestone for trade digitisation legislation. Governmental support will certainly increase the speed of digital adoption within the industry.

Two steps forward.

But, on 22 February, a court ruling declared block-chainbased platform Marco Polo

Network insolvent, with more than €5.2 million of debt. Marco Polo Network was well respected throughout the industry, so their insolvency sent shockwaves through the community. The Marco Polo Network joins we.trade and Serai, and I’m sure, many more, within the challenging tradetech industry.

One step back.

The WTO reported that trade in February and March 2023 grew at a higher rate than previously expected. Supply chains have loosened, and energy prices fell significantly, helping avoid the worst-case scenario that many were fearing.

More and more international trade companies have adopted and implemented electronic practices, including electronic bills of lading (eBLs). The move to eBLs will save roughly $30-40 billion and 28,000 trees a year. A simple step will substantially further ESG efforts and reduce trade friction, greatly benefiting SMEs globally.

Two steps forward.

In the waning hours of Friday, 10 March, Silicon Valley Bank (SVB) shut its doors and was taken over by United States regulators. The SVB collapse was the secondlargest bank to ever fail in the US, and directly led to the collapse of Signature Bank. The March banking collapse forced the US FDIC to rapidly change their

deposit insurance policy in order to prevent a large-scale bank run.

We are only a few weeks removed from the collapse, but have already seen the dominoes impact the global macroeconomic landscape. Following a string of missteps, including Archegos, and Greensill scandals, and the 167-year-old Swiss banking giant Credit Suisse was taken over on 19 March by rival bank UBS.

The Swiss Federal Department of Finance, SNB and the Swiss Financial Market Supervisory Authority orchestrated a rescue deal for UBS’ purchase of the beleaguered bank Credit Suisse in an attempt to calm the jittery markets and restore confidence.

One step back.

The reality of the world, in the past, present and future, is that there will be significant barriers to progress. Nothing comes easy, and sometimes, it can be hard to see the light at the end of the tunnel.

It is easy to be occupied with the bad news and the setbacks, which there are plenty of. But oftentimes, in the face of macroeconomic and geopolitical uncertainty, there are real-life stories that are subtly taking two steps forward and ignoring the one step back. 

2

FEATURED

Canada’s Minister Ng: Building ecosystems to support women-owned businesses

As the readers of Trade Finance Global (TFG) know, March is International Women’s Month. This month, the world is highlighting women across the globe and all industries.

As the readers of Trade Finance Global (TFG) know, March is International Women’s Month. This month, the world is highlighting women across the globe and all industries.

Throughout the month, TFG has heard numerous personal stories, outlining what it is like to be a woman in the workplace in 2023, giving examples of how far the world has come, and pointing out the areas which need improvement.

Furthermore, many of the women involved in our campaign pointed out that studying data and statistics are a vital part of elevating women in the workplace. Many studies have shown that if women are given equal access, they elevate themselves and their community.

BCG and the S&P 500 released studies showing that companies with higher diversity numbers outperform the market and grow at higher rates than competitors.

These personal stories and numbers are an important part of supporting women in the workplace, but the campaign needs a widespread, collective effort to succeed.

The Government of Canada and Export Development Canada (EDC) understand the task ahead and are spearheading the effort to champion women globally.

TFG spoke to the Honourable Mary Ng, Minister of International Trade Export Promotion, Small Business and Economic Development to discuss the Canadian government’s role in international trade and supporting women in the workplace.

Access to capital: a path to equity?

Starting a business from scratch is difficult. While this varies depending on which country the owner lives in, the point remains the same, the barrier to entry is high.

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

MARY NG

Minister of International Trade, Export Promotion, Small Business and Economic Development Canadian Parliament

Minister Ng said, “one of the top issues that we hear from women entrepreneurs and womenowned businesses is the ability to get access to capital.”

This is why Canada is focusing on providing financing and insurance to women-owned businesses operating within Canada but who are also looking to expand beyond the border.

Minister Ng leads the Canadian Women’s Entrepreneurship Strategy (WES) program and has tasked the program with increasing funding by $25 million in the coming years. Since its inception, WES has helped over 10,000 women start their own businesses and over 12,000 women grow their businesses.

Canada’s strategy is not only a moral one, it will provide a massive return on investment for the Canadian economy. But the benefits don’t stop at the

The Government of Canada’s funding is “a $7 billion investment”, but “the return on investment is $150,000,000,000.

Canadian border, which is why Minister Ng is approaching other trade ministers to join her on this mission.

Minister Ng said, “I tell my colleagues around the world, trade ministers around the world, let’s do this together. Because if we do this together, it’s $12 trillion to the global economy by doing one thing. Empowering women so that they can take more space in our respective economies.”

Working with other countries and expanding relationships with foreign trade ministers is a vital part of the Minister Ng’s mission. According to Minister Ng, Canada has “very competitive free trade agreements around the

world, accessing over 60% of the global economy” and is currently negotiating with India and the ASEAN countries.

When asked about Canada’s current trade outlook, Minister Ng summarised it as fighting “climate change, transitioning our economies into the net zero economies of the future, creating those jobs for those workers in the economy. That’s really important. Continuing to diversify, growing our trade relationships, continue to negotiate their agreements.”

Canada - UK Free Trade Agreement: new ideas for an old partnership

Canada and the UK already have a Free Trade Agreement (FTA) that provides preferential access to each other’s markets. However, technology has advanced rapidly and trade agreements need to adapt as well.

Canada and the UK both have very strong bioscience, clean tech, AI and cybersecurity industries, and the new FTA will work towards creating an inclusive agreement. Specifically, Minister Ng mentioned that they would look towards building a green economy, “focused on making sure that there are opportunities for trading for small and medium-sized businesses, for women-owned businesses.”

Negotiations between the two countries began in March 2022, and the FTA is on track to be signed by April 2024.

The three pillars of promoting women

Prime Minister Trudeau approached Minister Ng and gave her a mandate: “increase the number of women entrepreneurs in Canada and to invest and provide the support to enable that to happen.” 99% of Canadian businesses are SMEs, and during Minister Ng’s tenure, the percentage of women-owned businesses has grown from 15.6%

in 2017 to 16.8% in 2020.

To ensure this mandate was met, Minister Ng and the WES implemented three pillars:

„ Provide women with access to capital

„ Create an ecosystem of support across the country

„ Create the “knowledge hub” - collecting and measuring data

Minister Ng specifically touted how vital the ecosystem of support is for women in the workplace, and has recently visited countries around the world to see how they support their women in business.

Two of Minister Ng’s main takeaways? Affordable childcare and parental leave are a must.

Minister Ng said, “We have implemented $10 a day childcare, so affordable, early learning and childcare in Canada, which is a game changer for women leaders, for women entrepreneurs, for women-owned businesses.” Additionally, Canada has

implemented parental care for both partners so the burden does not fall exclusively on the mother.

However, government policies can only be part of the equation. The next step is enabling the private sector to adopt these policies and pursue their own growth.

Creating a collaborative publicprivate ecosystem is the most efficient way to grow the economy and promote womenowned businesses. Through this ecosystem, best practices can be shared, open communication can help with trade negotiations, and mentorship programs can be implemented across the country.

Growth and equity for all is not just the government’s responsibility. It requires all of us to actively embrace equity. 

DANI COTTI Founder & CEO Cotti Trade & Treasury

2.2

Dani Cotti: 6 lessons from the tradetech industry

Excerpt - Trade Finance Global spoke to Dani Cotti, founder and CEO of Cotti Trade & Treasury to learn about his six takeaways from the tradetech industry, problems he has faced, and his outlook for the future.

2022 was a year of seismic and rapid changes for international trade and trade finance. War in Europe, COVID-19, and inflation created unimaginable disruptions in the industry. This dynamic phase is creating opportunities and gives way for new entrants in the ecosystem.

I entered the fintech world eight years ago after a long career in banking, and I haven’t looked back. It has been fascinating to be part of and observe the action across all domains and decipher why some companies and start-ups fold, while others flourish or join forces in the wider eco-system! Here are the lessons learned from the past very energetic and eye-opening years for international trade:

1. Blockchain is not the holy grail

Five years ago, it was all about technology and blockchain. We have learned that technology is an enabler through which you can offer services and connect with partners and clients, but it is not the sole driver for a successful business.

Trade Finance Global spoke to Dani Cotti, founder and CEO of Cotti Trade & Treasury to learn about his six takeaways from the tradetech industry, problems he has faced, and his outlook for the future.

Though many industry actors thought blockchain would be the holy grail of the trade finance industry, this proved not to be the case. What actually counts are well-designed and well-thoughtout value propositions that solve real day-to-day corporate problems.

2. Lack of horizontal solutions

A lot of processes and products have already been digitalised, but often as vertical, siloed solutions focused on a single pain point. These solutions seldom have broad enough connectivity to add sufficient value for mass adoption. Horizontal solutions that connect the end-to-end trade and payment processes of corporates are few and far between. While there are some exciting solutions on the market that can turbocharge

digitalisation, the actual “rails for a digital trade world” or a “common digital space”, are yet not in view.

Such solutions are tricky to design and implement because they span many domains in a very fragmented industry. Further, some components like globally prevalent trust services around digital identities are still missing.

3. Profitability requires more than technology

There are many reasons why start-ups and fintechs generally struggle to scale their solutions and become profitable. The number of start-ups is staggering, and so are the failures. Overall, 9 out of 10 start-ups fail and the success percentage for first-time founders is below 20%.

Failure happens even when there is a concrete strategy, product and value proposition.

There are two possible issues:

„ The value proposition is not broad or deep enough and hence they generate limited interest and uptake

„ The sales team is small and inexperienced without real connections in their target markets to close deals and grow their client base.

In other words, fintechs need help to commercialise their solutions and connect, sell and scale them. Even if they mastered a growth path, profitability can be difficult to achieve. Growth strategies are implicitly difficult to realise – this is not only the case for new entries but for established companies as well.

Established firms like Bolero, essDocs, and GTC have found new homes and new networks like Contour and Komgo have emerged.

It will be interesting to see who can achieve exponential growth and profitability similar to other networks in the supply chain and open account space which are growing and showing promise in sustaining success.

4. Partnerships strengthen horizontal layers

Overall, fintechs focusing on the end-user of the corporate value proposition and creating a network of partnerships with a

clear unique selling point (USP) are doing better than others. Partnerships are essential and help build the missing links of the horizontal layers in trade digitalisation. No fintech can achieve it on its own and those with the best partnerships will be the most successful.

5. People are crucial

However, from my perspective, the key ingredient for success is people and how they work together in collaborative teams. Having the right people and the right business culture is paramount and often the determining factor between the success or failure of a business.

This is easier said than done, as many companies highlight admirable values, but do not embrace them in practice. Companies that lack genuine authenticity slowly erode the morale of their people and their relationships with clients. The mentality and attitude of entrepreneurs and their teams make or break a new venture, separating the good from the bad and the ugly.

6. Legal layer finally moving in favour of digital

Over the past 10 years, the talk of the town was the lack of legal frameworks to provide the certainty to make digital trade

possible. We are at the beginning of a new phase in this arena, with the upcoming English law change in the form of the Electronic Trade Document Bill (ETDB).

It will provide the holders of digital assets the same legal protections and benefits as the holder of a paper document. It will also allow the transfer of digital assets. This is a significant step forward to enabling fully digital ecosystems.

Industry participants can then deal with electronic transferable records that will support many angles of the businesses, and allow risk transfer and funding with legal certainty.

Conclusion: Puzzle pieces are falling into place

To summarise, the trade industry is in the middle of a major transformation that will last for many years. The industry has matured with digitalisation, and there is hope for significant progress over the coming years. However, commercially viable and integrated ecosystems are difficult to build.

Some of the jigsaw pieces of digital trade are starting to fall into place so that the “digital workspace for trade” we are all dreaming about will eventually become a reality. Trade digitalisation is proving to be an

evolutionary process rather than a revolutionary process.

Only true collaborators with a clear vision, integrated partnerships and skilled teams will be able to deliver commercial success while solving real business problems in the digital trade age. I am excited to participate in the progress of the industry and excited to look back on our successes in the future.

2.3

Trade and receivables finance, in football terms

Chelsea football club itself spent more money than the Spanish, French, Italian and German leagues put together. But going into more detail, this huge concentration of CAPEX is because the Premier League has the biggest broadcasting rights.

With an estimated 3.5 billion fans around the world, it’s no wonder the finance behind football piques interest, even in the world of trade and receivables finance.

Trade Finance Global (TFG) delved into various facets of trade finance that affect the world of football, including player and receivables finance, project and export finance for clubs, and the ownership and running of football clubs.

Football’s most popular league, the Premier League has grown revenues by 2600% since 1992, but with diverse ownership models and revenue strategies which don’t necessarily complement each other, financial strategies challenge football clubs all around the world. Trade Finance Global (TFG) spoke with the University of Liverpool’s Football Finance Lecturer Kieran Maguire, also the author of ‘The Price of Football’, exploring the complex world of trade, receivables and working capital finance in football and uncovering the hidden financial workings of the game.

The principles of football club finance

Cash is king.

Football clubs are mostly financially challenged by volatility and unpredictability.

Football clubs get their revenues from three main sources; broadcasting rights, ticket sales and sponsorship deals.

Maguire said, “Broadcasting rights normally pay three or four times a year, leaving erratic cash inflows. Ticket sales, in the case of a Premier League club, may have 40-50,000 season ticket holders, who tend to pay at the same time of year.

Sponsorship deals and commercial income, tend to be on an annual basis, so clubs might be paid once or twice a year.”

With erratic income streams on a month-by-month basis, managing cash flow is difficult. On the contrary, outflows tend to be quite constant.

KIERAN MAGUIRE Lecturer in Football Finance University of Liverpool

DEEPESH PATEL Editorial Director Trade Finance Global (TFG)

The main costs to a club are talent-related, in employee remuneration.

“We have some football clubs who are paying out 200% of income in wages alone, so that’s before they put on the floodlights, that’s before they mow the grass, that’s before, even by players, they’re already operating at a significant loss,” Maguire said.

Relegation is one of the most serious risks in football and budgeting.

“If we take a look at the step downs in revenue from relegation in the Premier League, if a club like Leeds or Everton was relegated this season, they could see a drop in income of close to £100 million. The people I speak to in the industry operate with two budgets. One on continuing to be in this division, and one based on a step up or a step-down,” Maguire said.

Trade credit insuranceunderwriting transfer fees

Europe’s top five football leagues spent nearly a billion pounds completing over 500 deals in this year’s January transfer window.

Chelsea football club itself spent more money than the Spanish, French, Italian and German leagues put together. But going into more detail, this huge concentration of CAPEX is because the Premier League has the biggest broadcasting rights.

The Premier League broadcasting rights are twice those of Italy, Germany and Spain and four times those of France.

As such, Premier League clubs have large financial commitments in terms of future payments.

Maguire said: “The Premier League clubs collectively, so we’re talking about 20 clubs here, collectively have outstanding payables of £1.8 billion and they have collective receivables of just over £600 million.

We have seen the credit insurance industry become involved as the volume and the value of individual transfer fees has increased.

It is now fairly common that if you do sign a player, that could be spread over three or four annual instalments, simply because even if you are owned by wealthy individuals, that doesn’t

necessarily mean that they have access at a day’s notice or a few hours notice to significant funds.”

As with trading companies, the UK Premier League tends to buy from overseas.

Countries such as Portugal remain a major export market for footballing talent and are therefore wanting upfront cash rather than guarantees or delayed payments. This opens up space in the underwriting market for football players and clubs.

Commercial banks versus non-bank lenders - transaction banking services for football clubs

Maguire said, “The likes of Macquarie are very big [in the football financing market], Santander sometimes dip their toes in.

We did have some non-bank niche lenders who appeared to have disappeared from the market.”

Often commercial banks might be hesitant to provide working capital facilities to football clubs, as they are inherently high risk, particularly in the case of relegation.

Maguire said, “Some of the clubs I mentioned to you earlier, the likes of Leeds United, Everton, and West Ham, are not having a good season. We got Southampton down there as well.

Would you be willing to lend to any business as a commercial lender, especially if you are a high street bank, if there was a chance of that club losing its biggest [broadcasting] income stream over the course of the next six months?”

The lender itself could suffer reputational damage, which is why there has been a rise in boutique providers of finance in the industry to provide alternative funding.

However, this often faces controversies and challenges around paying down highinterest debts which can accumulate, in place of shorterterm financing for players.

Maguire said, “If we take a look at the case of Manchester United, since it was acquired by the present owners in an LBO in 2005, it borrowed around about £600 million.

It’s not managed to repay any of the debt.

It did have a listing on the New York Stock Exchange in 2012 which partially paid down some debt, but then it’s continued to borrow since it paid out over £900 million on interest on a £600 million loan.

And the fans get very angry because they feel the money should be spent on facilities for them.”

Future financings, amortization and wizardry

A major cost amongst football clubs is wages, but the second highest cost is often transfer fee amortization.

Maguire said, “If a club signs a football player for £100 million on a four-year contract, it’s one divided by the other. You end up with an amortization cost of £25 million a year. You don’t mark to market because there is no market for individual players. They’re trophy assets, they’re the equivalent of a work of art. Therefore, we tend to go down the straight-line amortization route.

But what we have seen, because lots of people have queried the amount of spending by Chelsea football Club under their new ownership, is they’ve said, well, if we just use straight-line amortization, let’s sign the players on targets and contracts in terms of the amount of time involved. We’ve got players on eight-year contracts, so that same £100 million player works out as an amortization cost of £12.5 million.

From a cash flow point of view, it’s completely irrelevant because it’s actually the instalments which are due in respect of that transfer, which have an impact on cash flow.

But in terms of satisfying the cost control measures [set out by UEFA], it has allowed Chelsea to spend considerably more money than people would have anticipated and stay within the parameters of the allowable loss model that we have in existence at present.

One of the issues of perhaps using an EBITDA-based metric adjusted for cash commitments is one which I personally favour of the football authorities.”

Project

and export

finance

for building new stadiums - cheap money?

Football stadiums are costly CAPEX projects for clubs. Longerterm project and export finance facilities can often facilitate the building of such stadiums. In the case of London-based club Tottenham Hotspur had a very low risk of relegation.

Maguire said, “Tottenham were able to go to the external market; they were able to go to DCM and raised somewhere in the region of £700 million at a 2.5-3.75% interest rate. Some of those loans are not repayable until 2051.”

This long-term project and export finance facility would also have derisked volatility in terms of interest rates, as the club purchased fixed-rate coupons.

As confidence in football as an industry has grown over the course of the last two decades, the industry risk for the elite clubs has decreased significantly, and now clubs can borrow at 2-3%, very much considered as ‘safe’ assets.

Maguire said, “In the case of Everton, things are slightly more complicated.

Everton is not one of the elite clubs. It avoided relegation last season on the last day of the year.

Therefore, trying to get individual corporate lenders to lend under those circumstances is more difficult and therefore we move into owner loans and owner funding, which is quite common within the football environment. At Leicester football club, the owners put in £400 million,

Brighton saw owners put in over £300 million.”

Owner loans are a standard way of funding a football club for two reasons.

First of all, there is a lot of caution by traditional DCM markets in relation to lending to a volatile industry. Secondly, the interest costs can be quite high.

NFTs and blockchain - the future of football financing?

There are many rumours about the potential for new technologies to support football club financings, including digital assets via nonfungible tokens (NFTs), and blockchain for merchandising.

Maguire said, “We are seeing football clubs get into bed with a variety of new digital asset companies, the likes of Liverpool, Arsenal, Paris, Sanjaman and indeed the Premier League itself are trying to create a set of digital assets NFTs.

There’s also one club in the fourth tier of English football called Crawley Town, which has been acquired by effectively a crypto company.

They are trying to make Crawley Town the Crypto Club and to attract interest from a variety of geographical locations to people who wouldn’t necessarily engage.”

However, with the unregulated and volatile nature of NFTs, a cautious approach should be taken.

Maguire said, “[NFT’s are a] highly volatile and easily manipulated market and it can be therefore used nefariously by clubs in terms of their objectives. It’s already a very expensive business being a football fan if you’ve got a season ticket or buying merchandise.”

Cash is (still) king

CFOs and treasurers of football clubs, particularly those in the Premier League, face many headwinds and complexities in running their organizations.

The challenges of fluctuating income streams, expensive players, and the constant threat of relegation require a dynamic and strategic approach to cash flow management.

However, there are practical use cases for trade, receivables, project, and working capital finance that can offer muchneeded support to clubs. At the heart of it all, cash remains king, and its efficient management is crucial to the long-term success of any football club.

Therefore, football finance requires a range of strategies, including trade, receivables and working capital finance, project and export finance, and the ownership and running of football clubs. 

RAELENE MARTIN

2.4

Bridging the gap in sustainable trade & finance

The International Chamber of Commerce (ICC), a global business organisation, has a central mission to promote international trade and investment as vehicles for inclusive growth and prosperity. ICC helps businesses adapt to the challenges of trading in today’s fast-paced global economy.

Global trade and the facilitation of goods and services across supply chains is a driving force of economic development, allowing countries to integrate into the global economy, gain access to differentiated goods and services, and achieve higher standards of living.

And what is clear is that global trade must transform itself into an engine for sustainable development, contributing to increased sustainability and action on climate and biodiversity at the international, sectoral, and enterprise levels.

Sustainability within global supply chains

Boston Consulting Group estimates that more than $22 trillion worth of goods flow across

the world every year, a figure expected to reach almost $35 trillion by the end of the decade.

A recent ICC report highlights that there remains considerable possibilities for trade to play a more significant role in achieving the Paris Agreement targets and become a key driver to help reach the UN Sustainable Development Goals.

As trade consists of intrinsically linked supply chains, ICC recognises that addressing sustainability is not possible without considering solutions across entire corporate supply chains and the broader geography of global trade.

Currently, global supply chains account for up to 80% of the economy’s GHG emissions, and also have a significant impact on nature and biodiversity.

As the global community shifts towards building a sustainable, more inclusive economy, we are just beginning to understand what this means for trade globally and also the linked financing.

We believe that the key to addressing this challenge lies in enabling the $10 trillion market in annual trade, to better recognise, facilitate, and even reward sustainable practices in global value chains.

Head of Sustainability International Chamber of Commerce

The WTO recently launched a flagship report highlighting the potential role that trade can play in accelerating the decarbonisation of the global economy. They concluded that there is lots of work to be done to align policy-making with global sustainability goals.

As banks and corporates look to extend their sustainability efforts beyond scope 1 and 2 emissions, there is a clear opportunity to take greater strides forward on sustainable trade and supply chain finance.

We believe that the key to addressing this challenge lies in enabling the $10 trillion market in annual trade, to better recognise, facilitate, and even reward sustainable practices in global value chains.

A first step towards sustainable trade

In order to encourage more sustainable practices across global trade, it is essential to first define sustainable trade, and set up meaningful, rigorous, yet implementable standards that

interpret the complexity of trade and assess the sustainability of individual trade transactions – something that is currently missing.

While a number of related standards for sustainable goods, services, and financial products exist, none have yet been adapted to define sustainable trade and capture its complexity in a clear, robust way. ICC has taken on the task to try and fill this gap and recently launched a new framework for sustainable finance after consultations with more than 500 companies from various sectors and geographies.

The ICC framework will help banks and corporates determine whether the different elements of a transaction are sustainable, drawing on readily available data and – to ensure the integrity of assessments –based on globally recognised sustainability standards.

The framework sets out an agreed industry definition of sustainable trade – taking into account both environmental and socio-economic factors. It also embeds an approach that covers the entire lifecycle of an international trade transaction across five different dimensions – from the buyer and supplier to the nature and purpose of the goods or services sold.

Banks and corporates will be able to use our framework to chart their sustainability across component parts of trade and throughout their supply chain for the first time.

We believe that this framework represents a major leap forward to surmounting obstacles for large corporates and SMEs alike, embedding sustainability at the heart of global commerce in a practical and robust way.

„ Since the framework’s launch at COP27, ICC has partnered with Boston Consulting Group, and more than twenty leading banks, global technology companies and major players in the textile sector for a pilot with real-world clients and transactions.

„ These partners include Coöperatieve Rabobank U.A., Esquel, HSBC, Landesbank Baden-Württemberg (LBBW), Lloyds Banking, Puma, Santander, Surecomp, and Unicredti, among others.

This pilot phase will allow us to test the framework in a realworld setting and build a more comprehensive view on the sustainability of global value chains over time.

This is the start of an important journey that we hope will enable robust sustainability criteria to be embedded in trade financing across all sectors. ICC fully intends to continually build thought leadership on the topic to make a real impact. For example, ICC will be focusing on launching ‘Wave 2’ later this year, broadening the scope beyond textiles, and applying a more ‘graded’ scoring methodology to the framework.

We have a unique opportunity and responsibility to set trade on a path towards maximising its contribution to global sustainability goals and are committed to making this a success.

2.5

Dirty financing: the slow progression of ESG

Properly financing green transition requires more than just investments from afar. To truly understand a country’s needs, financiers need to have a social and cultural awareness of the situation, as emphasised by the “S” in ESG.

Since 195 countries signed the Paris Agreement at COP 21 in 2015, ESG has been a central talking point in the trade finance world. The term “green finance” has seen a 300% search increase on Google.

Shifting the conversation towards sustainability was undoubtedly an important step, as the shipping and trade sector contributes around 20% of global emissions. But what has come from this dialogue?

The trade finance community continues to finance fossil fuels, and there have been numerous examples of greenwashing in recent years. What are realistic expectations for ESG standards, and how does the trade finance community accomplish them?

To better understand how the trade finance industry can take the next steps in sustainability, Trade Finance Global (TFG) spoke with Roberto Leva, trade & supply chain finance relationship manager, Asian Development Bank (ADB) and Johanna Wissing, board member, ITFA.

Walking the walk

Simply by reading the news in the past few years, one would know what ESG means and what the aspirational goals are.

Johanna Wissing said, “We are all sort of familiar from a dayto-day perspective what ESG stands for. This is not a mystery anymore, as it might have been five or six years ago”

Now that ESG is a mainstay term in the trade finance industry, ITFA has released two white papers on the practical next steps for its implementation in international trade. These white papers focus on creating common frameworks and standards, another challenge in globally implementing ESG practices.

The ADB has also focused on educating members and institutions on how to realistically embrace ESG standards in their company policies. However, they have also gone a step further, they have created a credit facility to cover the financial risks of the clean energy transition.

JOHANNA WISSING Board Member ITFA

ROBERTO LEVA Trade & Supply Chain Finance Relationship Manager Asian Development Bank (ADB)

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

Roberto Leva said, “Our program is not going to support oil transactions anymore from July, excluding a couple of exceptions for economies that really are economically dependent on oil for the moment”

Though the ADB and other multilateral institutions are off to a good start, this is a much larger topic to deal with. To truly succeed, these programs need cross-sector collaboration.

Roberto believes that “The role of a multilateral is to make itself useless. So we need to help set up trends, build up the necessary products, and then slowly step away.” It is important for multilaterals to support the private sector in the transition by promoting the necessary investment in green technologies.

However, there needs to be a system to ensure ESG standards are met. Johanna said, “Tech can certainly play a huge role in terms of data collection, ... tracking the origin of goods, and tracking that certain environmental standards or labour standards have been adhered to.”

As multilaterals and private companies continue to invest large sums of money in the green transition, there must be a uniform way to track compliance.

ESG in developing countries - a just transition

Though ESG standards stem from well-intentioned places, they cannot only be viewed in terms of the Western world.

Johanna stated, “Let’s face it, the majority of the world’s population lives in the developing world.” ESG goals cannot be uniform, as different people and different countries will have varying needs in the coming years.

That being said, it is still important to create an ESG framework for banks and FIs. This is what the ICC did with its Wave 1 framework. The ADB is attempting to bridge the gap between reports like the ICC, and on-theground efforts, specifically in developing countries.

Roberto said that the ADB created a template for ESG risk management trade finance with the collaboration of several banks in the ADB Trade and Supply Chain Finance Program (TSCFP) portfolio with the hope

to create an industry framework and to get live feedback.

Though the Western world claims it wants to get rid of dirty fossil fuels, it is not a realistic step to impose immediate, and stringent ESG standards on developing countries. Demanding that developing companies stop producing and using fossil fuels simply will not move the ESG needle.

Roberto believes that the world needs to embrace a different strategy, “I would say that the very important key message is transition.”

This is where public and private partnerships and ESG standards can make the biggest impact. A just transition is the most reasonable, and realistic next step in the ESG journey.

Properly financing green transition requires more than just investments from afar. To truly understand a country’s needs, financiers need to have a social and cultural awareness of the situation, as emphasised by the “S” in ESG.

Roberto says it is important that a lender has “an understanding of what the transition plans for that specific countries are and… speak to their customers, to their clients, to understand how they can better facilitate more sustainable activity in their portfolio.”

Why is it taking so damn long and how do we move forward?

We all know that ESG is important, but why can’t the trade finance community act quickly?

Johanna recalled, “[Trade

finance] is also still one of the oldest sort of instruments in the toolbox of financing…Letters of credit date back to the age of Medici”

But that doesn’t mean that there are no expectations of progress moving forward. Over the next year, the trade finance community should “have made some progress on creating a common framework of standards…continue on the education piece, and [communicate] the implications of the transition.”

For Roberto, the next 12 months should be about training, and focusing on specific solutions. Leading by example and developing a specific “ESG framework that actually helps build and develop new sustainable trade” will help spur sector-wide action.

2.6

DCSA member carriers’ commitment to eBLs will advance trade digitalisation

By committing to adopting a standards-based eBL, industry stakeholders are paving the way for an interoperable container trade ecosystem that can effectively support future growth.

Nine ocean carriers recently committed to 100% adoption of an electronic bill of lading (eBL) by 2030, with a waypoint goal of 50% adoption within five years. It is a significant step along the road to digitalisation, one that heralds a future for container trade processes that are simpler, more sustainable and more resilient.

Standards will provide a common language for the eBL so that information can be readily exchanged, regardless of the technology platforms in use, for unhindered international trade.

Why container trade needs to digitise the bill of lading

The bill of lading is the most important trade document in container shipping. It functions as a document of title, a receipt for shipped goods and a record of agreed terms and conditions. Currently, most bills of lading that are passed along complex supply chains, are in paper form.

That is an astonishing situation when you consider that container trade is heavily dependent on communication and that other industries in similar positions have transitioned to digital processes.

NIELS NUYENS Program Director Digital Container Shipping Association (DCSA)

Exchanging paper is timeconsuming, and it adds to expenses. Paper exchange isn’t environmentally sustainable, and it can contribute to supply chain bottlenecks.

If an original bill of lading, or title document, fails to arrive or isn’t processed in time, cargo in ports can’t be gated out.

Conversely, digital processes enable data to flow instantly and accurately, reducing delays and waste. Sharing information in this way can make international trade more efficient, reliable, secure and sustainable.

Why hasn’t an eBL already been adopted?

Digitalising container trade, and in particular transitioning away from paper and towards an eBL will deliver compelling benefits. Yet, in 2021, only 1.2% of issued bills of lading were electronic. Why?

The Future International Trade (FIT) Alliance, comprising DCSA, BIMCO, FIATA, ICC and SWIFT, set out to find out. It conducted a study with industry stakeholders across 66 countries, including banks, freight forwarders, carriers, shippers, agents and consignees. The study revealed that the largest factor hindering eBL platform adoption is concern over technology platforms, especially regarding the lack of interoperability between eBL platforms.

There are currently eight eBL platforms approved by the International Group of P&I Clubs for ocean carriers to use; however, the platforms are not interoperable.

This means that a trade finance bank, for example, that uses one platform can’t exchange shipping documentation with a stakeholder that uses a different platform.

As a result, everyone involved in a shipment must be onboarded onto the same platform. That takes time and is expensive and inconvenient for companies who transact with many organisations and therefore, may have to implement multiple platforms.

The solution to enabling 100% eBL adoption and benefits for trade finance

The solution is the adoption of DCSA digital standards for container shipping, which will enable seamless data exchange across all stakeholders and interoperability between platforms.

When organisations use DCSA eBL standards to transfer eBL data, information can be exchanged efficiently, consistently and accurately. When eBL platform providers adopt DCSA interoperability standards, standardised eBLs can be exchanged between platforms securely, enabling stakeholders to adopt just one platform regardless of whom they do business with.

Widespread adoption of DCSA bill of lading standards will establish a technological foundation for straight-through, end-to-end processing of electronic bill of lading data.

With trade volumes expected to triple again by 2050, digitalisation has become a priority for the shipping industry.

A recent McKinsey study estimates that if eBL achieved 100% adoption, it could unlock around $18 billion in gains for the trade ecosystem through faster document handling and reduced human error (among other improvements), plus $30-40 billion in global trade growth, as digitisation reduces trade friction.

Paperless trade would also save 28,000 trees per year and may significantly reduce carbon emissions.

For financiers and other stakeholders, standards for seamless digital information exchange support innovation and choice in the market, giving trade participants the flexibility to conduct business with the partners of their choosing in any digital transaction.

For too long, container shipping processes have relied on paper.

Where technology has been used, it has operated in a standalone way, not based on standards, and unable to streamline data exchange across the end-to-end supply chain. By committing to adopting a standards-based eBL, industry stakeholders are paving the way for an interoperable container trade ecosystem that can effectively support future growth.

3

PROGRESS THROUGH ACTION: DISCUSSIONS ON #EMBRACEEQUITY

3.1

5 challenges women face across trade, treasury, and payments

This roundtable explored the common gender-based challenges women face in the workplace and offered strategies for overcoming them.

From a lack of representation in decision-making processes to unconscious biases and disproportionate family responsibilities, women encounter numerous obstacles that can impede their career growth and success.

As part of Trade Finance Global's (TFG) International Women's Day campaign, we spoke to several prominent female leaders across the trade, treasury, and payments space.

This roundtable explored the common gender-based challenges women face in the workplace and offered strategies for overcoming them.

The roundtable participants included heads of trade finance and trade credit insurance, leaders from several development finance institutions, and trade association board members, representing the voices of trade and asset distribution.

1. Women still face many challenges in the workplace

Participants in the roundtable spoke of their experiences and the everyday challenges women face throughout their careers.

These challenges included needing more female role models, less representation in meetings and decision-making processes, unconscious biases, a tendency to take on undervalued tasks, and balancing work with family responsibilities.

2. Lack of female role models

One commonality amongst the women TFG interviewed were the need for more successful female role models in their fields, particularly career areas where women have traditionally been underrepresented, such as in business and politics.

Fewer mentors to guide women through their career paths may lead to less support and guidance throughout women's careers.

NATASHA ROSTON Head of People and Growth Trade Finance Global (TFG)

CARTER HOFFMAN Research Associate Trade Finance Global (TFG)

DEEPESH PATEL Editorial Director Trade Finance Global (TFG)

3. Less representation in meetings and decisionmaking processes

TFG noted that women often struggle to have their voices heard in meetings or decisionmaking processes.

They are likely outnumbered and often struggle to assert themselves in male-heavy environments.

4. Unconscious bias

Women face the challenge of being perceived differently due to an unconscious bias that causes people - including other womento may make assumptions about their ambitions, competence, or dedication based solely on their gender.

For example, women may take

maternity leave or be less committed to their careers, leading to discrimination and unequal opportunities.

The perception that women are the primary caregiver still exists in society today, and it can impact how they are viewed in the workplace.

5. Embracing undervalued responsibilities

Women are likelier to take on jobs that are not noticed, celebrated, or rewarded and may have to do extra work to prove their value.

They often feel the need to take on tasks not part of their job description to ensure that everything is running smoothly, a phenomenon one participant called organisational dusting. "If you do the dusting at home, no one notices you've done it.

But if you don't do it, it becomes abundantly clear that things need dusting."

When this extends to the workplace - through tasks like getting sandwiches for a meeting or keeping the lunchroom clean - it is organisational dusting. These unrecognised burdens can contribute to burnout and feeling undervalued.

Compounding this lack of recognition is the notion that many women need help promoting themselves, selling their accomplishments, or speaking up in meetings.

Self-promotion could be due to social conditioning, lack of confidence, or fear of being perceived negatively, but ultimately, their contributions are undervalued.

Balancing work and family responsibilities

Both men and women face challenges balancing their personal and professional lives, but the female respondents did not equally feel these pressures.

Many workplace cultures still do not encourage men to take paternity leave, work flexibly, or share the load of being a primary caregiver.

As a result, paternal responsibilities make many men uncomfortable asking for time off, with the perception that this will limit their careers.

Conversely, women face societal pressure to balance work and family responsibilities, which can be challenging and often

impact their confidence, work performance, and career advancement.

Women are left to juggle being primary caregivers, which might limit opportunities for career growth.

Differences in genderbased challenges across career stages

Particular challenges remain constant throughout a woman's career, such as the lack of representation and unconscious bias.

While representation has improved considerably over the past few decades, too many industries remain maledominated.

Unconscious bias is also likely to be present throughout a woman's career, although with experience she may develop strategies to help break down these biases.

One participant said: "At the start of my career, naturally, as a female, I didn't take up a lot of space in meetings - I'd sit back and cross my arms - and my voice would be quieter.

I noticed that my peers would sit taller, take up more space, and speak louder. They would come across as more confident and therefore more knowledgeable as a result when actually they weren't."

By recognising these patterns and adapting accordingly, women, and less naturally assertive men, will be better able to have their

voices and ideas recognised and valued in an organisational setting.

On the other hand, some challenges are unique to different stages of a woman's career.

For example, early in her career, a woman - like many of her male counterparts - is more likely to have the time and energy to devote to her work. As she gets older, however, other responsibilities like family and domestic duties - which women are often still disproportionately responsible for - may take over.

As one participant said: "There is no more: 'I'll work late tonight, I'll make this work, I'll close this deal'. It becomes: 'How am I going to get this deal done by 4:30 PM? Because if I'm not at the nursery by 6 PM, it shuts. What do I do with my children?'"

Not only do these responsibilities often cause a woman to scale back on her work, but it also forces her to navigate the complex trade-offs between work and family, which can be emotionally and mentally challenging.

Differences in genderbased career challenges across the developing world

The challenges faced by women in developing regions of the world are similar to those faced by women in developed areas, but the nature of these challenges is different.

The fundamental issues are the same - such as patriarchal norms that limit women's access to education, land ownership, and other opportunities - however,

women in developing regions face additional challenges - such as lack of access to technology, basic infrastructure, and transportation.

These women may also face cultural barriers that limit their ability to pursue careers. A lack of support and available resources can make it difficult for women to break out of such cycles.

In recent years there have been more grassroots capacitybuilding programs, primarily driven by non governmental organisations (NGOs), that are working to address these issues and provide support and resources to women in developing regions.

Fairtrade International provides training programmes such as the Women’s School of Leadership in Côte d’Ivoire to directly address capacity-building programmes aimed at women.

Addressing these challenges requires the involvement of multiple sectors, including government, civil society, and the finance sector.

By working together and breaking down barriers, it is possible to create more equitable opportunities for women in developing regions of the world.

Despite the lingering challenges, the industry has been making progress

While many challenges remain, it is difficult to deny the progress has been made in terms of increasing the representation of women in leadership positions in the workplace.

One participant described the progress made in her team, which is now comprised of about 50% men and women. This is unusual for most organisations, but it shows that progress can be made when more women are included in decision-making and leadership roles.

As more women reach positions of authority in their organisations, they will be able to help others that follow reach similar roles, which is an essential step towards catalysing gender equality in the workplace.

One participant said: "If you have a group of 10 people and there is only one woman, the perception is that she represents all of womankind. If there are only two women, the perception is that they are always colluding with each other.

But when you get to three women, that's where they just become part of the group of 10. From that point, that's where this fixes itself without needing too much intervention anymore."

With further awareness and collaboration, more organisations worldwide will be able to reach and surpass this tipping point and begin to see real and lasting change. „

3.2

International Women’s Day 2023. How can men get involved in supporting women?

All men, from entry-level positions to executives, must actively engage with each other and their female colleagues. Change will not happen if we rely on a few inspirational leaders; it needs to be a groundswell of support.

"Achieving gender equality requires the engagement of women and men, girls and boys. It is everyone's responsibility."Ban Ki-moon, Former SecretaryGeneral of the United Nations.

Trade Finance Global (TFG) is happy to champion International Women's Day 2023, highlighting the stories and success of women across the trade, treasury and payments (TTP) industry and beyond.

While promoting these women and their stories is the first step, the ultimate goal is to change the underlying structures of the industry to reach gender parity.

Reaching this goal is attainable but requires a collective effort from all parties involved.

Women supporting other women is vital to achieving gender equity, but this dynamic has always existed.

The next step is finding a way for men to get involved and champion the march to gender parity.

TFG gathered women leaders to discuss their experiences and strategies to get men more involved in promoting women in trade, treasury and payments.

Setting the tone - the role of culture in promoting gender diversity

According to a Deloitte study, men held 81% of C-suite positions and 95% of CEO positions globally in the financial services industry in 2021. While the ultimate goal is to increase the number of women in these positions, change has to stem from these male leaders.

Many roundtable attendees agreed they could sense the equitable nature and overall company culture from the first interview.

DEEPESH PATEL Editorial Director Trade Finance Global (TFG)

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

One participant said, "you just get a sense of this stuff."

One roundtable attendee said the company culture was immediately apparent when she asked for a flexible working arrangement.

The male executives supported her, "There was no awkward silence. There was no; we'll have to discuss that. We'll think about that later. Instead, it was, this can work for us. We can make it work."

This type of inclusive culture ultimately pays dividends for the company.

The roundtable participants agreed that leaders who support women employees and create a genuinely equitable workplace see a rise in loyalty and productivity in response.

Male leaders must step up and "exhibit equitable and inclusive behaviour and are not ashamed

of it, [I] think then it speaks volumes and spreads further around the organisation."

Not all women face the same challenges

For far too long, the conversation has only revolved around women in developed countries who face the challenge of balancing motherhood and a career. But this excludes many women from different backgrounds.

Research is limited in developing countries, but in the U.S. and U.K., 44% and 37% of women surveyed said they don't want children (figure 1).

How do we support women from different backgrounds with other needs?

One participant said, "We need to start by at least identifying the key challenges that many women face and have embedded policies that support them, and then we can respond to differing needs."

Embedded policies providing a framework for women to feel comfortable are essential for workplace equity.

Creating an open and transparent company culture can solve many of these issues.

One person said that creating this transparent environment can help normalise women's struggles, "I would love to see an environment where I can say, I can't come in today. I've just started my menstrual cycle, and it's incredibly painful. I'm really sorry; I have to work from home."

But not all women face the same challenges.

A participant asked, "Why can't I just say I need a half-day?"

Some women often need to disclose why they must take time off work, putting them in uncomfortable situations - this reinforces the fact that one policy cannot fit all.

The TTP industry needs to adapt accordingly.

It's not just a problem for mothers; it's an everyone problem

*Box "I have a recently divorced person in my team who has custody of his children. He needed to come to me and say, 'How will we organise my team? I need to be at home during the afternoon because I need to pick them up from school. I need to be with them. If I don't do that, they will take custody away from me.' This is a problem that everyone faces." *Box

Mothers and fathers face familial stresses in the workplace, but real inclusivity means understanding the problems of employees without children, partners, or LGBTQ employees.

Figure 1. Share of non parents younger than 50 who say they are not likely to have children is up from 2018. Source: Pew Research Center.

These people will face different challenges in the workplace and require other solutions. The key to making equitable progress for everyone?

"You have to speak up. Luckily, we have more women in leadership positions. As more women reach the top, they highlight these issues to the board and executives. They're talking with men about discrimination, about parental leave."

Male mentorship: Unconscious exclusion

"The majority of men that I work with have no ill intent. They don't think they discriminate; they think they're inclusive."

But the problem lies within the unconscious behaviour of male executives.

The roundtable agreed that mentoring is one of the most effective ways to help younger employees.

However, often, male executives offer out-of-work mentoring through pub nights or sporting events. "Suddenly, they want just to be boys, and then I have to try and recreate that relationship."

When the participant mentioned this issue, the executive immediately regretted the environment they created. Providing the proper feedback is important, but men must be aware of the culture they are building and spreading.

But the data doesn't back this statement.

More qualified women than ever are in the industry, which will naturally lead to a higher proportion of promotions.

For example, "Rwanda had 30% quotas for electing female members of Parliament. Over the years, the quota was removed. Now they elect 56% of women anyway because then they see that women are doing an amazing job and how diversity makes a difference."

Time and time again, women aren't hired or elected because they are a woman; they are hired or elected because they are qualified.

However, some men still feel increasingly insecure and challenged by growing diversity.

One roundtable participant said, "The numbers don't give them any reason to feel that way. That's the basic starting point. Just remind them of a few statistics, and you'll find that their case does not work."

Don't just talk about equity. Do it.

One of the more complex challenges is finding ways to hold companies accountable for their diversity, equity and inclusion (DEI) initiatives.

Moreso, there needs to be a system to ensure DEI initiatives are not box-checking exercises, filling a role with a woman just to hit a specific benchmark.

fill certain roles, but they must facilitate for those women to be skilled and be the right women, rather than just doing it because they're female."

Importantly, these targets must have financial and nonfinancial metrics. Companies and executives should "feel the pain if they don't push the strategies that support that objective."

Companies have publicly spoken about DEI policies, but things won't change until they feel the financial or social pressure to implement them.

Every man has to engage

Gender equity has certainly made improvements in the past few decades. But there is a long way to go still. Sometimes, it feels like women take two steps forward and one step back in the workplace.

One participant said, "I find that the agenda on diversity shifts depending on leadership, then that person moves on…there is no consistency in the effort."

All men, from entry-level positions to executives, must actively engage with each other and their female colleagues.

The change will not happen if we rely on a few inspirational leaders; it needs to be a groundswell of support. „

As more women are hired and promoted internally, this phrase is said far too often.

One participant said it is essential to clarify, "A company should strive to find X% of women to

"She got promoted because she's a woman"

CARTER HOFFMAN

The World Economic Forum’s Global Gender Gap Report 2022 reveals that despite progress made towards gender equality in education and health, the gender gap in economic participation and opportunity remains essentially unchanged.

The report states that at the current rate of progress, it would take another 132 years (figure 1) to close the global gender gap.

The COVID-19 pandemic has also exacerbated the gender gap, with women disproportionately

affected by job losses and economic insecurity.

One area where gender inequality is particularly pronounced is in financial inclusion, where women are more likely to be excluded from formal financial services, limiting their economic opportunities.

To accelerate progress, we need innovative solutions, including digital financial services and financial education programs tailored to the specific needs of women.

Despite research showing that investing in women-owned businesses positively impacts economic growth, many financial institutions fail to adequately target such businesses or create financial products tailored to their needs.

132 years is too long to close the gender gap. How can we accelerate financial inclusion?

Research Associate

Trade Finance Global (TFG)

At Trade Finance Global’s (TFG) annual Women in Trade, Treasury and Payments, we spoke to several prominent female leaders across the industry.

This wide-ranging roundtable discussion - explored global financial inclusion, gender lens investing, and how to get more women into senior leadership roles at major firms.

Gender lens investing: the economic benefits of investing in women

Participants unanimously agreed that investing in women is a real business case, which will ensure that more financing goes to this underserved market segment.

Despite research showing that investing in women-owned businesses positively impacts economic growth, many financial institutions fail to adequately target such businesses or create financial products tailored to their needs.

In many countries, womenowned businesses - particularly small and medium-sized enterprises (SMEs) - face challenges in accessing financing. These challenges, exacerbated by the COVID-19 pandemic, limit the potential of these businesses to grow, create jobs, and thrive in the economy.

One possible solution that the World Bank has trialled provides micro-loan programs to women who lack access to traditional banking services, helping them start small businesses.

While these programs and much of the rhetoric on the impact of investing in women-owned enterprises focus on developing countries, it is crucial to recognise that investing in women is relevant to all advanced and emerging economies.

Gender lens investing and other strategies for improving financial inclusion for women

Another emerging practice for removing gender inequalities across the financing landscape is gender lens investing.

Gender lens investing refers to considering gender and its impact on investment opportunities and allocating capital to businesses and organisations that promote gender equality and women’s empowerment.

Advocates can further support disadvantaged women by combining gender lens investing with micro-investing approaches.

Source:

Research has demonstrated that this can be an excellent way to support female entrepreneurs in

Figure 1. Global Gender Gap Report 2022, at current pace, when are regions likely to close the gap?

World Economic Forum

developing markets, particularly in informal business areas where they may not have access to traditional financing options.

According to the OECD, supporting the development of digital payment systems can help women entrepreneurs in developing markets overcome the challenges of carrying cash across borders and putting themselves at risk of attack or robbery.

By providing these entrepreneurs with safe and reliable payment systems, they can more efficiently and safely conduct business transactions and manage their finances.

Finally, it’s essential to embrace and bring women into the formal banking sector, which can help to break down the barriers that prevent women from accessing financing and other financial services.

Introducing women to banking can be achieved through initiatives such as Visa’s financial literacy programme, Practical Money Skills, whose outreach efforts help underserved communities and bridge local organisations and community groups.

While gender lens investing has many demonstrated benefits, it has some potential downsides.

One of the challenges is that if the focus is solely on gender, it may limit the mainstreaming of the investments and create specific funds, which could have a smaller pool of funding available than mainstream investments.

Additionally, there is a risk of negative screening, where certain investments are excluded based on gender considerations, which can lead to a narrow investment portfolio.

To overcome these challenges, it can help to have women in prominent leadership positions across the industry.

Strategies for helping early-career women progress to leadership positions

While progress moves towards gender equality in the workplace, a recent report from Deloitte highlights the ongoing underrepresentation of women in top corporate leadership positions, with women occupying only 20% of boardroom seats globally.

Participants at TFG’s roundtable agreed that nurturing the talent pipeline is crucial to getting more women into the boardroom.

Several initiatives can help women early in their careers develop the skills, experience, and confidence to reach and excel in senior leadership positions.

One approach organisations can take is providing mentorship and coaching programs to support women’s career growth.

Mentoring programmes benefit women - pairing junior women with more senior female leaders who can provide guidance, advice, and support on a personal level whilst also using their influence in the organisation helps create opportunities for other women.

Figure 2. According to this survey by ‘Deloitte, Women in the boardroom’, among the most senior roles across the globe within financial services institutions, women held 21% of board seats, 19% of C-suite roles, and 5% of CEO positions in 2021.

Organisations need to ensure that the excellent female leaders who have already broken through to senior roles are visible so that early-career women can see what is possible and have role models to look up to.

Providing opportunities for women leaders to speak at conferences and events can be one way to highlight their achievements.

Companies must also instil policies that ensure women don’t feel penalised for choosing motherhood in their careers.

The best way to promote this is to offer flexible work arrangements, parental leave, and other policies that support work-life balance for both men and women.

One final suggestion from the discussion was to have goals and targets for gender diversity in hiring and promotions, which can involve setting targets for the number of women in leadership positions and tracking progress towards those targets.

Many of these approaches may require firms to develop a different organisational mindset. They involve actively prioritising

gender diversity and creating a culture that values and supports women’s career growth.

This type of change is not always easy.

6 tactics for creating a gender inclusive company culture

Developing an organisational culture that respects and actively encourages gender equality is vital to nurturing the next generation of female business leaders to take that first step and enter an industry that has yet to shed its outmoded ‘old boys club’ existence entirely.

Here are some practical suggestions for organisations and the individuals within them to achieve this goal.

ƒ Open up entry-level jobs to more women: Companies should ensure that entry-level positions are accessible to women, allowing them to get a foot in the door and kickstart their careers.

ƒ Be deliberate about hiring, training, and promoting women: Companies need to be intentional about hiring, training, and promoting

women. They should set specific goals to ensure that women are included and are progressing at the same rate as their male counterparts.

ƒ Provide visibility and space for women to thrive: Companies should give women in the workplace visibility and an area to thrive. This will ensure that they are not overlooked, and it will help to break down the misperception that women are not as creative, firm, or committed to their careers as their male counterparts.

ƒ Have more women at the top: Having more women in leadership positions will help to accelerate the progress of young talent and boost the careers of other women in the company. It will also help to break down the perception that trade finance and other male-dominated fields are not for women.

ƒ Launch programs that support diversity: Women in leadership positions should be responsible for launching programs that support diversity and take care of the young talent in their organisations. This will help to create a more inclusive workplace and boost the careers of women in the company.

ƒ Be brave and speak up: Sometimes, it is about being brave and being in a room full of men. Women should not be afraid to raise their voices and highlight the need for additional female voices in leadership and other positions. This will help to break down barriers and create a more inclusive workplace culture. 

3.4

More than just checking a box. Are quotas the way forward for promoting gender diversity?

Implementing quotas into hiring practices is a long-standing and controversial idea to increase the speed of this process. Even amongst TFG’s roundtable, opinions were divided about using quotas to enforce gender diversity amongst teams within the TTP space.

“If they don’t give you a seat at the table, bring a folding chair”Shirley Chisholm.

Progress does not happen when a society sits by idly.

Women’s progress in the workplace, family life, and the world in general only marches on when we all participate actively.

It requires courage to think outside the box and break the status quo by introducing new ideas and initiatives to empower women worldwide.

Some of these initiatives will be industry-specific, some must include individuals from all walks of life, and some will be a product of their time.

The world saw how COVID-19 changed workplace dynamics and had varying impacts on groups worldwide. The key to progress is flexibility and adaptability.

And the reality is that only some initiatives will work. But that is part of the process. Progress is not linear, and it takes many attempts by all members of society to find the right path forward.

To find out which initiatives have been successful, which have not worked, and how the trade, treasury, and payments (TTP) industry can support women in the workplace, Trade Finance Global (TFG) held a Women in Trade roundtable discussion with female leaders in the TTP.

Gender tokenism - how genuine efforts lead to genuine results

Simply going through the motions of highlighting women in the workplace will not produce results.

One roundtable participant said: “when a woman is invited to speak because you’re a woman

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

NATASHA ROSTON Head of People and Growth Trade Finance Global (TFG)

rather than because you’re the expert, it can reinforce a negative stereotype.”

These types of “gendertokenism” efforts are examples of companies that want to check the box instead of supporting female experts in their field. Often, there is lots of public communication around these initiatives or speeches, but “what lacks is the follow through.”

One participant said, “You need to see a genuine leadership commitment to have gender parity, to implement a gender diversity approach through all levels of the organisation, including at the leadership level.

Because if employees see only males in those senior positions, they won’t buy into the organisation’s strategy.”

A way to start this process is by “allowing women to have their voices heard in the same way men do.”

Quotas: Is there a correct answer?

It is well-accepted that gender equity is not progressing at an acceptable speed. The WEF’s Global Gender Report shows that, at our current pace, we will not reach gender equity for another 132 years.

Implementing quotas into hiring practices is a long-standing and controversial idea to increase the speed of this process.

Even amongst TFG’s roundtable, opinions were divided about using quotas to enforce gender diversity amongst teams within the TTP space.

One participant, who does not support quotas, said a colleague told her, “I’ve got here on my merit, and actually, that was much harder for me. The last thing I want is for somebody to think that I’ve got to this position to tick a box or to fulfil some statistic.”

But another speaker said data regarding gender, racial, and sexual orientation representation shows a different picture.

Another roundtable member said, “Every time somebody talks about women in corporate boardrooms,

where’s that number? We’re down at the bottom. Every time they talk about women in senior positions, we’re down at the bottom. Every time we talk about black people, minorities, people from the underserved or LGBTQ+ community, we’re down at the bottom.”

Ultimately, there was a consensus that if quotas are not the way forward, companies need to use data to track gender statistics and create “specific goals and conscious efforts to be more inclusive and give women a fair opportunity.”

Using data to drive conversation and force action can be the catalyst for real change. One participant said you don’t need to implement quotas to force change. “If executives don’t achieve agreed-upon goals, they don’t get their bonuses!”

Elevating women’s role in decision-making roles

A theme that arose in the roundtable is that not everything is black and white, things often are nuanced. A male was recently appointed as president of a prominent international organisation. How did the roundtable attendees feel about this?

“I think he is going to be terrific, he was the best person for the job.”

Importantly, numerous women on the search committee were involved in the entire process. The key is creating a companywide culture of inclusion and understanding.

“Women in those leadership positions are important in sending a signal throughout the organisation, not only to employees internally but to external stakeholders.”

The impact of COVID-19 on women’s progress

The COVID-19 pandemic changed how the world works, which has benefits and negatives.

On the one hand, studies have shown that women-dominated industries were more adversely affected by the pandemic compared to male-dominated industries and that gender pay has increased since 2020.

On the other, workplace flexibility is making it easier for women to balance a work-life balance. Mothers can now care for their children with less concern about interrupting their careers.

Yet, this may have a negative impact on women as well. Studies

have shown that women have increased their percentage of childcare since the onset of COVID-19.

However, the panel noted that this conversation changes when discussing women in developing countries.

One roundtable participant said, “COVID-19 did some really difficult things for women in developing countries, notably with the digital divide.

Kids who weren’t at school and so talented young girls didn’t have access to computers couldn’t just go to school virtually.”

According to UNICEF in January 2022, more than 616 million students remain affected by full or partial school closures. In lowand middle-income countries, learning losses to school closures have left up to 70 per cent of 10-year-olds unable to read or understand a simple text, up from 53 per cent pre-pandemic.

This type of discussion between industry experts in both developed and developing countries can help build sustainable and fruitful connections. While women face different challenges depending on their careers, family status and region, promoting women is a unified global effort.

Equity at large: how to involve all women

Empowering women is a task that involves every member of society; women, men, girls, and boys.

At TFG’s Women in TPP event 2023, “pass it along” was a unanimously agreed motto by the participants.

Figure 1. Estimated increase in weekly hours on childcare during COVID-19, by sex. Source: Ipsos poll fielded 22-25 October 2020. UN Women

For men, it starts with accountability.

One participant said, “We discussed gender partnerships with women and men. Men becoming allies. Men must step up and be brave enough to call out the behaviour of those around them. It shouldn’t be the women doing all that work; men need to come forward.”

Additionally, the TTP industry must actively reach out, support, and inject capital into women-led enterprises.

One roundtable attendee said that she had a client who worked for a sizeable export-oriented firm. In the ten years at this company, the client had never received a call from a male bank executive.

Proactive outreach is vital to making women feel welcomed and included in the workplace.

But to truly reach society as a whole, one participant said education is the biggest key. The attendee said that women in developed and developing countries all need access to better education.

The march towards gender parity starts with all of us, from CEOs of global institutions to local hospitality workers, to school teachers. Without a unified effort, gender parity might take another 132.

“The next generation needs to be the focus”

3.5

Marilyn

Blattner-Hoyle:

A conversation about how we can #EmbraceEquity

Marilyn Blattner-Hoyle interviews two Swiss Re leaders and gender-equity allies to get their perspectives on #EmbraceEquity and inclusion.

Marilyn Blattner-Hoyle is Global Head of Trade Finance at Swiss Re Corporate Solutions, EMEA lead for Swiss Re’s gender-equity network Level Up, a leader of diverse teams and a mum.

To mark International Women’s Day, Marilyn sat down with William and Andreas to get their perspective on gender equality and Swiss Re’s initiatives in this area. Open conversations and transparent perspectives from everyone are needed to drive an inclusive culture, manage bias, and bring people on the #EmbraceEquity journey – which is exactly what we wanted to achieve with this conversation.

WILL

William Trump is Head Customer Office for iptiQ at Swiss Re, the Global Lead for Swiss Re’s gender-equity network Level Up, a behavioural scientist and dad.

Marilyn: International Women’s Day is on 8 March and this year’s theme is #EmbraceEquity. What does that mean to you?

Andreas: Embracing equity starts with creating a nondiscriminatory culture, addressing unconscious bias and baking in diversity. Inclusion programmes are crucial to building understanding. In terms of lessons learned, a lack of diversity

in teams is a big business risk that can lead to questionable decisions and potential blind spots.

A practical example of this blind spot risk comes from one of my previous roles when I was based in Asia. We were about to announce a major restructuring as we integrated with another company. I was concerned about potential blind spots

MARILYN BLATTNER-HOYLE Global Head Trade Finance Swiss Re, Corporate Solutions

TRUMP Head Customer Office for iptiQ Swiss Re, Corporate Solutions

ANDREAS HILLETBRAND Global Head of Credit & Surety Swiss Re Corporate Solutions

Andreas Hillebrand is Global Head of Credit & Surety at Swiss Re Corporate Solutions, an experienced people manager and an active girl dad.

in our decision-making team (mostly foreign men, including myself). We risked unawareness of cultural norms, and I worried that our cultural communication barriers might lead to a lack of understanding of how the teams felt and how they might influence the restructuring process.

To address this, we appointed a local, female change agent, who helped us to remove these blind spots and challenge our assumptions. We further

diversified by appointing a woman with a very different cultural background and experience to the decisionmaking team. Their contributions have been consistent – they brought new perspectives and have strongly supported the cultural integration of the two companies.

Marilyn: Will, as a data-driven behavioural scientist, how do you reconcile the deep desire of organisations to close the gender

gap and achieve an equitable workforce with the reality of the data on gender imbalance?

Will: It’s good to be ambitious, but we also know a lot more now about how bias and stereotypes work – and how to tackle them – and that is an opportunity we need to seize. All we know about bias is that it’s deeply ingrained and often unconscious, so it can’t be fully addressed through training or education alone. We need to put effort into removing the bias from people – but also put more effort into removing the bias from systems.

Marilyn: Removing the bias; what does that mean with respect to Swiss Re?

Will: Let’s look at recruitment as an example. Following the evidence on what initiatives work – we’ve redesigned the recruitment process itself to make it less biased – specifically assessing all candidates against a set of competencies, using the same interview questions for each of those competencies and ensuring diverse interview panels. We implemented this at Swiss Re UK in mid-2022, and the data already shows that it’s had a positive impact on rebalancing the gender split in recruitment.

Marilyn: Andreas, from your experience as a senior leader do you believe targets for managers are part of the equity puzzle?

Andreas: In my view, tracked targets are necessary because unmeasured targets are also unmanaged targets. Once you reach a tipping point where diversity is self-sustaining, this will be less critical, but until then, clear ambitions can help reaching this balance. It’s only

one part of the puzzle to drive equity, though. For example, at Swiss Re we’re also paying close attention to building a strong female talent pipeline, we’re committed to ensuring equal pay for equal work, we rely on strong mentoring programs which aim supporting our ambition to attract and retain female talents and our flexible working practices benefit all employees. This all helps to really embrace equity.

Marilyn: Andreas, how do you ensure everyone in your team is on board to drive this change – and how do you avoid unintended consequences?

Andreas: To fully embrace equity we need to keep working on our culture and mindset. We can only be successful on this journey if we include everyone and if we encourage open and transparent discussions. It is natural to avoid change, so I also experience resistance. You have to allow people and teams to go through a cycle of change and manage it. You can do that by showing confidence in the recruitment and decision-making processes and providing avenues to raise concerns if someone feels something is not right. If I hear a comment suggesting that someone was “hired because of targets”, I have to immediately dispel the myth, and explain that we hire and promote the best person for the job.

Marilyn: You’ve mentioned the needed efforts of everyone; what can leaders do concretely to support colleagues in the workplace?

Andreas: I am a father of three girls myself and have the greatest respect for the herculean effort required to raise

kids while trying to advance a career, especially for female colleagues. There are many simple things that can be done that will make a huge difference.

Some examples are:

„ Offering flexibility in how and when business trips and even meetings are arranged

„ As a leader, enabling and facilitating open and transparent discussions in the team: e.g. how can we best support new parents as colleagues and as a team?

„ Advertising all vacancies at 80-100%, as we do in the UK and Switzerland, for example.

„ In Zurich, we built the Kids House, where Swiss Re colleagues can regularly bring their children up to the age of 18 months. Older children can be left in care in case of emergencies

„ Making sure there are flexible facilities available to enable breastfeeding and pumping in a work environment

„ Fully embracing “own the way you work”, which allows flexibility and enables parents to better balance children and career.

Marilyn: Andreas, your daughters are about to start their careers. What advice would you give them on navigating their professional lives in the context of gender bias and diversity?

Andreas: I encourage them to surround themselves with a diverse community, to fight for what they want, raise their hand, and take every opportunity for leadership roles they can, because they need to know that they can be a part of the change they want to see. Their future is in an inclusive workplace, but they still need to make sure they have a seat at the table. I am reminded of the quote by Shirley Chisholm, “If they don’t give you a seat at the table, bring a folding chair.”

3.6

Equity for all women, everywhere

In honour of International Women’s Day 2023, Trade Finance Global hosted a dinner event with 30 influential female leaders in the trade, treasury and payments industries.

Lynette Thorstensen, Chair of the Board, Fairtrade International, delivered a keynote speech to the dinner attendees, highlighting gender equity success stories while pointing out the need for further growth.

As the chair of the board for Fairtrade International, Lynette has first-hand experience with initiatives that help lift people out of poverty and increase gender equity across the globe. She reminded us that fingerpointing is useless, as we can all do more to increase female empowerment.

One the single most important steps to removing inequity – enabling women to become financially independent - and that is true for all women, everywhere from New York to Bamako, London to Hanoi, Sydney to Lima.

LYNETTE THORSTENSEN Chair of Board Fairtrade International

“Another way to think about inequity versus inequality is that most inequities are avoidable. The Least Developed Countries should not be expected to maintain unequal status forever. It is, of course, impossible to achieve total equality across the globe but dealing with inequities removes avoidable barriers.

One of these in a trade context is the so-called pink tariff which continues to mean that imported women’s clothing, particularly in the USA carries higher tariffs than equivalent men’s clothing, and so women consumers bear a higher cost burden. If you want to know more about this, I recommend Miranda Hatch’s excellent paper entitled: Is Trade Sexist? How “Pink” Tariff Policies’ Harmful Effects Can Be Curtailed Through Litigation and Legislation.

And that’s just the consumer end - let’s now look at the supply side; An Oxfam 2019 report found that 0% of Bangladeshi garment workers and 1% of Vietnamese garment workers earned a living wage. This prevents workers from saving money for a safety net while looking for alternative employment.

Often, women start their daughters working in the factory as young as age ten to help feed their family because one wage is inadequate. Being trapped in this cycle causes women to be more susceptible to sexual abuse because they can’t risk the loss of income by reporting misconduct.

The main drivers of inequity remain poverty, exposure to violence, unemployment, low educational attainment, inadequate housing, lack of public transport and community

deterioration.

The United Nations Development Program has told us again and again that: one of the most effective strategies to improve women’s lives is to put money directly into the hands of women.

The statistic is that for every one woman lifted out of poverty, she will bring seven other people over the poverty line alongside her. We at Fairtrade International recognise that women in developing countries don’t necessarily have knowledge or skills shortages; they primarily have a cash shortage.

Garment factories that offer a liveable wage and the flexibility to balance a personal life outside of work can go a long way in improving the status of women to meet the United Nations’ Sustainable Development Goals –especially SDG One – elimination of poverty in all its forms.”

To emphasise the message of equity and successful initiatives, Lynette told the story of Fairtrade coffee farmers in Peru.

Lynette said, “I wanted to leave you on an uplifting note with this wonderful story relating to all of

this – as told to me by Bill Barrett, who is a Canadian member on our Board, a coffee roaster, and has a Fairtrade and organic café in Guelph, Canada.

And this is the story of Café Femenino in Peru:

The Cafe Femenino story begins with indigenous women growing coffee in the Andes of Northern Peru.

Co-operatives that participate in our system must meet the Fairtrade standards that ensure women are engaged in the organisation and participate in its governance. This means that women in remote mountainous regions are brought together by their co-ops, often for the first time.

This gives them an opportunity to share their challenges and in the case of a group of indigenous women in the Andes of Northern Peru, create a remarkable initiative. They created their own coffee brand, Cafe Femenino.

Coffee farming is hard work, and often women do most of it, but they don’t always benefit financially. The men of the families typically collect payment at the coffee market. The money

rarely makes it back into the household economy. Without their own economic power, women struggle to keep themselves and their children safe and well.

Women in these mountainside communities were found to have a 70% risk of experiencing physical and sexual violence. Young women rarely made it past primary school, many becoming mothers in their teenage years.

These women had an idea. An innovative and entrepreneurial idea. Indigenous women from 60 communities became involved in a Fairtrade coffee co-operative. They shared the stories of their difficult lives. They decided that together they could change their lives by selling their coffee separately from the men.

They get a higher price because of the Fairtrade standards, plus a premium to support community projects. Now, they no longer cook over open fires because they can afford energy-efficient stoves that keep the smoke from infecting their eyes and lungs. They nurture the local ecology by growing the coffee organically and have learned to grow more nutritious food.

The farmers govern and manage this project themselves. They’ve developed leadership skills so that they can participate in government and nongovernmental organizations.

They have built local infrastructure including roads, classrooms, warehouses and irrigation systems. Girls now go further in school, excelling, and even gaining higher degrees.

Amazingly one of the daughters of a founder of Cafe Femenino not only made it through high school but has now attained a PhD. There has also been a significant decrease in violence against women.

It began with 8 women in 2004, now there are more than 700 women involved.

Their idea has flourished, bringing security to their families. The program has been so successful that it has been replicated in nine countries around the world. And, Bill tells me, the coffee these women produce is excellent.

Their success is not only about helping their own families. When they learned that some women in North America also experience gender-based violence, they insisted that any coffee company roasting their coffee, the coffee exported all the way from Peru .. that coffee company should take steps to support women in their own community.

So, here is an inspiring example of one the single most important steps to removing inequity –enabling women to become financially independent - and that is true for all women, everywhere from New York to Bamako, London to Hanoi, Sydney to Lima.

I want to wish you all the very best in your own journeys as women leaders, and in embracing equity as women working in global trade.”

CHAIR RETA JO LEWIS President & Chair US EXIM Bank

3.7

Powering up women in trade, treasury & payments

More than nine million Americans are employed by women-owned businesses, which are generating an estimated $1.9 trillion in revenue.

To kick off Trade Finance Global’s Women in Trade, Treasury & Payments roundtable event and dinner, President and Chair of US EXIM Bank, Reta Jo Lewis gave a keynote address to the audience.

Multilateral organisations have the power to create strong and long-lasting partnerships to empower women and alter social and economic norms.

Chair Lewis’ experience at US EXIM Bank has provided her with a global perspective on the empowerment of women and the positive impact of investing in women-owned businesses.

“Good afternoon, everyone. It is a privilege to be with you and especially on this day as we celebrate Women’s History Month across the United States and International Women’s Day, which will be celebrated around the world.

My name is Reta Jo Lewis, and I am the second woman and first Black person to serve as the President and Chair of the ExportImport Bank of the United States (EXIM) –America’s Official Export Credit Agency.

Our convening today means a great deal to me because gender equity concerns us all and remains a priority for both developed and developing nations.

And as multilateral organisations take strides towards improving on the economic welfare of societies, leaders must do their part to recognise that advancing gender equity must be a top priority as we work to achieve the sustainable development goals set by the United Nations.

In the Biden-Harris Administration, women’s empowerment is recognised as an essential component of achieving gender equity. This is because gender equity is not just a matter of fairness but also a marker of both economic and social progress.

For instance, the United Nations Development Program has implemented various programs to promote gender equity and women’s empowerment, such as increasing women’s political participation, reducing genderbased violence, and promoting equal access to education and employment.

International organisations can also support capacity-building initiatives that enable women to participate fully in the economy. These initiatives include training programmes, access to finance, and promoting entrepreneurship. I believe that by empowering women and women-owned businesses, we can contribute to economic growth, reduce poverty, and promote sustainable development.

EXIM Bank recognises its responsibility to promote gender equity in trade finance.

At EXIM, we are able to invest with our values, and international organisations play a similar role in setting the tone for where our attention should be paid and where we invest effort and funding.

More than nine million Americans are employed by women-owned

In the U.S., there are approximately 13 million women-owned businesses, and they are growing at more than double the rate of all other businesses.

Even though female entrepreneurship is growing exponentially in the U.S. and globally, one of the largest obstacles for women-owned firms is a lack of access to capital and/or funding.

EXIM has a statutory mandate to provide financing when privatesector lenders are unable or unwilling. We step in to fill in that gap for American businesses by offering financing programs.

I am a firm believer that EXIM cannot achieve our mission to fully support U.S. businesses without expanding financing opportunities for women to grow their businesses with exports.

To close the equity gap between women-owned and male-owned businesses, we must address financing constraints. Small business trends have found that only 25% of women seek financing for their businesses.

That is why one of the first things I did at EXIM was to establish the Council on Advancing Women in Business, a subcommittee to our Advisory Council that works to provide recommendations on ways EXIM can reach more women in business and better consider equity goals set in the agency’s strategy.

Supporting women, and womenowned businesses, must be seen as necessary to our economic prosperity.”

Multilateral organisations also have the ability to establish norms and, most importantly, use their financing and programming to create incentives for nations to adhere or inch closer to these norms.

businesses, which are generating an estimated $1.9 trillion in revenue.

3.8

Moving beyond gender: challenging stereotypes and biases in the workplace

The 30% threshold refers to the percentage of representation needed in a group to address the problem of tokenism and bias.

Prejudice, stereotypes and other barriers have prevented women from fully participating and advancing in many industries. Overcoming these barriers and enhancing women’s social, economic, cultural, and political advancement will require complex and uncomfortable conversations from leaders across these industries.

As part of our Women in Trade Campaign, Trade Finance Global’s Natasha Roston spoke with Catherine Lang-Anderson, partner at Allen & Overy, to hear about her personal experiences and lessons learned as a female leader in the legal industry.

A leaky pipeline

Despite efforts to promote diversity, equity, and inclusion, women still encounter challenges in advancing up the promotion ranks at many firms worldwide. Women tend to face the “leaky pipeline” phenomenon, where they are well-represented at the entry-level but underrepresented in leadership positions.

This can be due to gender bias, lack of mentorship and sponsorship, family responsibilities, and inflexible work arrangements.

CATHERLINE LANG-ANDERSON Partner Allen & Overy

CARTER HOFFMAN Research Associate Trade Finance Global (TFG)

Finding mentors and role models who can guide career aspirations cannot be overstated and is crucial in promoting gender equality at the firm level.

Having female role models within the company or industry can be game-changing for aspiring women who can learn from their experiences and develop strategies for approaching their careers and overcoming barriers.

Lang-Anderson said, “The important thing to remember is you don’t have to find somebody who fits exactly what you want to be in every aspect. You can look to various senior leaders and

cherry-pick the aspects of how they approach their career that is aligned to what you want things to look like.”

Male colleagues can also be great role models, allies, and advocates for gender equity in the workplace. Promoting gender equality at the firm level requires concerted efforts from leaders, managers, and employees - male and female alike.

Equality is still a work in progress

Over the past decade, there has been progress towards gender equality in law firms, but there is still work to be done to address the barriers facing women in advancing their careers.

However, on many metrics, patience and intentional monitoring are critical. It takes time to develop lawyers, from graduates to partners and that progress needs to be tracked across the entire pipeline.

Creating a more diverse, inclusive, and supportive workplace culture, providing mentorship and sponsorship opportunities, and flexible work arrangements can help promote gender equality and support women’s career advancement.

Law firms must continue to focus on diversity, equity, and inclusion and not shy away from having conversations about it.

Lang-Anderson said, “We used to talk about just diversity. Then it was diversity and inclusion. Now it’s diversity, equity, and inclusion - which is such an important recognition that levelling the playing field is key. I think the ‘E’ is actually so fundamental to it all. We need to build an equitable platform for diversity and inclusion to flourish.”

However, it is not just gender imbalances that plague many firms today; they need to improve in every aspect, including gender, race and ethnicity, LGBTQ+, disability, and social mobility. To improve equity, these firms

must focus on creating a level playing field, removing barriers, and acknowledging that not everyone comes from the same place. Also, law firms need to focus on the intersectionality of all aspects of diversity and not further divide people into subboxes.

One social phenomenon that can help with this is the 30% threshold.

The 30% threshold

The 30% threshold refers to the percentage of representation needed in a group to address the problem of tokenism and bias.

Research has shown that when a particular group is underrepresented, such as women in leadership positions, the presence of only one or two individuals can lead to them being perceived as representatives of the entire group.

This puts a heavy burden on the individuals and can also perpetuate stereotypes and biases.

However, once a group reaches a critical mass of 30%, the problem of tokenism begins to dissipate.

At this threshold, the group becomes more normalised, and individuals are no longer perceived as tokens or representatives of their entire group because there are enough individuals to showcase the

diversity and individuality of the members.

Reaching this threshold can also positively impact the group as a whole, as it provides a more supportive environment for all members to thrive and be recognised for their individual contributions.

Lang-Anderson said, “The ultimate goal is still to strive towards full representation and diversity, but once you get to 30%, progress towards achieving

that goal of a more inclusive and supportive environment will happen more naturally.”

This progress is also contingent on incumbent senior leaders being comfortable challenging the status quo and continually redrawing their own personal maps of understanding.

Personal maps of understanding

Personal maps of understanding are the mental frameworks that individuals use to make sense of the world around them. These maps are built over time and are shaped by a person’s experiences, beliefs, values, and cultural background.

Like physical maps, personal maps of understanding can only be broadened if regularly updated and expanded. By sharing our stories and experiences with others, we can challenge preconceived notions and biases and help others create a more accurate and nuanced map of the world.

For example, in the context of gender equity in the workplace, personal maps of understanding can play a crucial role in breaking down gender stereotypes and biases. By acknowledging that everyone has a unique perspective and journey, we can begin to recognise and challenge our assumptions about people based on their gender.

Updating and expanding our maps of understanding requires us to be open to learning and willing to embrace discomfort. It involves recognising that what we know about the world may not be complete or accurate, and being ready to challenge our assumptions and beliefs.

Ultimately, by expanding our maps of understanding, we can create a more equitable and inclusive society where everyone’s experiences and perspectives are valued and respected.

Benefits of a new perspective

The value of seeing the world differently is that it allows individuals to challenge their assumptions and biases and to consider alternative perspectives. This can lead to personal growth and development, as well as positive changes in society.

The overarching zeitgeist surrounding race and gender has evolved and is prompting many firms to take concrete steps towards addressing issues of equity and representation in their industry.

By recognising that there is still work to be done and setting targets for improvement, firms can demonstrate a willingness to listen, learn, and take action. Ultimately, seeing the world differently can help us build more inclusive and equitable communities where everyone can thrive.

“With that springboard, who knows what kind of change we can achieve next,” LangAnderson said. 

3.9

Natalia Clements on challenges in the workplace and equitable company policies

However, ensuring equity in the workplace goes beyond flexible working hours. This very commitment must be engrained in the culture of the company.

Trade Finance Global is happy to be championing International Women’s Day for the fourth straight year.

While it is important to work towards gender parity and equal opportunities year-round, we want to take today to highlight some of the women leaders in Trade, Treasury and Payments.

The theme for International Women’s Day 2023 is ‘Embracing Equity’. What is the difference between equity and equality?

Equality means each individual or group of people is given the same resources or opportunities.

Equity recognises that each person has different circumstances, and allocates the exact resources and opportunities needed to reach an equal outcome.

Understanding and implementing equitable actions requires a holistic approach from companies and individuals.

To better understand the larger picture of ‘Embracing Equity’, TFG’s Brian Canup spoke to Natalia Clements, senior trade finance specialist at Swiss Re Corporate Solutions, who shares her experiences as a woman in the insurance industry, the challenges she has faced, and the importance of embracing equity in the workplace.

Changing challenges and embracing versatility

Confidence is key. But some women struggle to feel like they fit in at the start of their careers.

Natalia recalls, “The challenges that I have faced have certainly evolved over time…when I first started out in my legal career, it was really a lack of confidence.

Because I was a woman, I think I naturally just took up less space. I was a bit quieter, I lacked confidence. I almost felt like I had a kind of imposter syndrome. Was I good enough to be in this international law firm?”

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

NATALIA CLEMENTS Senior Trade Finance Specialist Swiss Re Corporate Solutions

The feeling that Natalia had is not a unique experience, a KPMG study showed that 75% of women in executive positions have experience imposter syndrome at some point during their careers.

But as Natalia gained experience and confidence, a new challenge arose in her life. “Not everybody fits into static boxes. And over the course of their experience, life will change, and events will occur.”

The biggest challenge she ultimately faced was becoming a mother. Like many women, she became the primary caregiver for her children, which required a significant shift in how she worked.

To promote equity within the workplace, Natalia says that companies need to be more

flexible and provide more support for working parents. This could include offering flexible working hours, remote work options, and support for childcare.

So far at Swiss Re Corporate Solutions, Natalia has had an overwhelmingly positive experience, as she has been hired into a senior role working flexibly at 60% across four days a week, and Swiss Re Corporate Solutions continues to “adapt and help facilitate a working environment that actually allows someone like me to continue to contribute to this industry.”

However, ensuring equity in the workplace goes beyond flexible working hours. This very commitment must be engrained in the culture of the company. Natalia sees this at her company,

and says that Swiss Re Corporate Solutions is “strongly committed to diverse candidate selection and a diverse panel and recruitment process, and support this through various initiatives such as female mentoring programs… and Swiss Re is committed to ensuring equal pay for equal work.”

But as life changes, companies need to evolve as well. While one policy might work for one year, it may not be effective in the next year.

“Companies need to be really careful to monitor their working policies.”

How can men support women in the workplace?

Empowering women in the workplace is an effort that needs to be tackled by everyone in a company, men included. Natalia said, “How men fit into the equation is actually really important because they’re very much a part of driving the culture within a company.”

If leaders can create an environment where employees feel a sense of belonging, it will show in the company’s diversity, equity, and inclusion. It’s deep within the culture of a company, and you can sense it at the very first stages of interaction with the company.

At Swiss Re Corporate Solutions, Natalia felt this commitment immediately as she interviewed for her position. The male executives listened and adapted the role based on Natalia’s needs for a flexible work environment.

In terms of whether men should play active roles in the fight for gender parity, or sit back and listen, Natalia believes that it’s a balancing act. Men need to step up as allies and recognise that all individuals face different challenges at different times. To create equity, senior male leaders need to observe the challenges that women are facing and identify areas where it’s possible to level the playing field.

But there is nuance to this idea, as Natalia believes that men shouldn’t just “jump in and simply make changes before women are given a chance to stand

up and try to push for change themselves and make change happen themselves.”

It’s important for men and women to work together to achieve gender equality in the workplace, as it’s critical to attracting and retaining female talent and expertise.

Equitable growth requires collective action

Ultimately, having an inclusive environment is crucial for creating a strong company culture. Men play an important role in driving this culture, especially as part of the senior leadership team.

Natalia sees this as a collective problem, stating: “I think actually, if men and women work together… there will be change. And ultimately, achieving gender equality in the workplace has significant benefits for everyone.”

Companies that prioritise diversity, equity, and inclusion will ultimately have stronger performances and better decision-making, leading to more optimal business outcomes.

Once the world understands that the problems women face in the workplace are problems for all of us, we can move the needle and truly Embrace Equity. 

2023: THE YEAR OF FACING CHALLENGES AND PUSHING BOUNDARIES

4.1

The outlook for trade and investment in 2023 - how the market is changing for trade assets

SEAN EDWARDS Chairman ITFA

MICHAEL BICKERS Managing Director BCR

This past week, Trade Finance Global (TFG) stopped by the inaugural ITFA and BCR: Trade & Investment Forum 2023 to learn more about making trade an investible asset class.

In mid-2022, ITFA released their “Whitepaper on developing a Practitioners Guide to making Trade an Investible Asset Class”. ITFA’s whitepaper discusses five key points around trade as an asset class:

ƒ Lack of Standardisation

ƒ Legal and Regulatory Landscape

ƒ Lack of Market Infrastructure / Industry Standard Practices

ƒ Speaking the Same Language

ƒ Supporting Sustainable Trade Finance

ƒ Reputation of the Trade Finance Asset Class

ƒ Other Barriers to Entry

At the Trade & Investment Forum, Michael Bickers, managing director of BCR, and Sean Edwards, chairman of ITFA, sat down to discuss making trade an invesrtible asset, the move to digitisation, and the legal and regulatory frameworks behind all of this.

A new asset for a new class of investors

Interest in making trade an investible asset is at an all-time high, and not just from traditional banks, funds and investors. The 2023 economic environment is becoming increasingly difficult, with rapidly rising interest rates, supply chain issues, and the collapse of we.trade, Marco Polo, and SVB.

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

Now, ITFA and BCR have partnered to break down the confusion and misconceptions on these topics.

This challenging economic period has led to a demand for new investments. As the number of new players enter the market, there needs to be a coordinated effort to educate everyone.

Breaking down these barriers was a major reason for creating the first ITFA and BCR Trade & Investment Forum. Defining and demystifying trade finance instruments, specifically newer trade technology, is the first step to wide spread use and adoption.

Edwards said, “What we find today is a lot of people who are trade curious. Some know a lot about it, some know very little. Today was about explaining what trade assets are, what the opportunities are and what needs to be done to actually make that attractive for those investors.”

Importantly, there needs to be dialogue between the traditional players in trade finance, like larger banks and corporates, and the new entries. To facilitate real progress, Edwards says that “we need to have a translator” between the two groups.

Simplification and standardisation: moving in the right direction

Trade finance tools are some of the most important, and most used instruments in the world. The WTO estimates that 80% of international trade uses trade finance and the global trade finance market is valued at $8 trillion.

However, there is still a perceived barrier to entry because of the complexity of the tools. Edwards talks about this idea, saying, “I think a lot of the investors are being put off by the apparent complexity of trade. Anybody who’s been in trade for a long time will say, well, actually, it’s really quite simple.”

Breaking down these barriers was a major reason for creating the first ITFA and BCR Trade & Investment Forum. Defining and demystifying trade finance instruments, specifically newer trade technology, is the first step to wide spread use and adoption.

A uniform set of rules is also a major catalyst and the next step for further adoption. The UK is going in the right direction, as the Electronic Trade Documents Bill has passed Parliament. It is important to remember, as Edwards points out, laws don’t create markets, they simply provide a framework and enables the market to be created.

But there is progress in more widespread adoption. According to Edwards, Lloyds and Metcor are just two examples of ITFA members who are currently issuing digital negotiable instruments (DNIs) or electronic payment instruments (EPUs).

“One of the lessons we’ve seen with the current problems of digitalisation is that there is not resistance but there’s inertia to adopting digitalisation.

It’s not going to [happen] overnight. But, I’ve spoken to major banks in France, for example, they said they love these types of [digital] instruments.”

Edwards is optimistic about the changes happening in electronic trade, and believes that the ITFA guides will be instrumental in creating a more simplified understanding of these new tools.

Digital progress? Only time will tell

As the past few years have shown, the world changes rapidly, and flexibility is key. While there is no telling what state the global economy, or trade industry will be in by 2024, Edwards believes that the world will have more digital legislation and increased usage of digital tools.

Since 2019, Bahrain, Singapore and the Abu Dhabi Global Markets have adopted MLETR, and Edwards thinks that more countries will start drafting digital legislation. As the legislation becomes more permissive, more banks will start to use all of the tools available to them.

For many years, there has been endless discussion about the move to digitisation, but there finally is tangible movement in the trade finance industry.

As these tools become more popular, Edwards believes that it will create a snowball effect. Edwards said, “The technology itself is there, it exists, it’s pretty generic. And as soon as people see that market, I think we’ll get a lot more competition in the offering of the tech providers.

So I think by twelve months we’ll have got really way beyond the proof of concept. We’ll have got to real use cases and it will have got to huge scale.” 

4.2

Lord Holmes - the enactment of the Electronic Trade Documents Bill, what next?

Trade finance might not be the most common topic you hear discussed while out at a pub, but Lord Holmes and Trade Finance Global (TFG) agree; trade finance is cool.

Trade finance affects most of our everyday lives, it plays a role in almost every aspect of the modern economy. The vegetables in the supermarket that you buy, the device you are using to read this, and the clothes you are wearing all likely were part of a trade finance transaction.

That’s why transitioning to a more digitised system is such an essential topic in the trade world. How the industry transitions from paper to an online system is a multi-trillion-dollar question.

While at the ITFA and BCR: Trade & Investment Forum 2023, Trade Finance Global’s Deepesh Patel was happy to sit down and talk to Lord Holmes of Richmond MBE to discuss what the UK government is doing to support this digital transition.

For trade to stay relevant into the future, the industry needs to modernise. The current system is far too bogged down by endless paper, creating inefficiencies throughout the process.

LORD CHRIS HOLMES Lord of Richmond MBE House of Lords

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

DEEPESH PATEL Editorial Director Trade Finance Global (TFG)

Electronic Trade Documents Bill: moving trade into the 21st century

Lord Holmes gave an excellent overview of why we at TFG think trade finance is cool.

Lord Holmes said, “[Trade finance is] cool because it enables potential. Sure, economic potential, but social, individual, community, city, country, global potential is enabled through trade finance.”

But in order for trade to stay relevant into the future, the

industry needs to modernise. The current system is far too bogged down by endless paper, creating inefficiencies throughout the process.

The pervasive use of paper creates inefficiencies in the process and leaves a negative environmental footprint. The UK government estimated that the trade industry uses 28.5 billion paper documents a year. The same report noted that the UK emitted roughly 2.5 million tonnes of carbon dioxide in 2018 simply from paper and printing in international trade.

This is precisely why the Electronic Trade Document Bill (ETDB) is so important to the industry, and the world at large.

Lord Holmes said the bill is “incredibly succinct, it’s incredibly simple, but it’s an incredibly powerful bill because it will enable trade documents to be held and transacted in electronic format.”

Possessibility: a key to electronic trade law

One of the most challenging aspects of moving towards the digitisation of trade is the possession of documents.

The University of Oxford Law Faculty said, “Possession of certain trade documents is relevant to determining who may exercise certain rights at law. Transfer of the possession of a document can also transfer the right or obligation on its face. However, under the current law, a trade document in electronic form is not possessible, because it is intangible. This is the result of two decisions: OBG v Allan and Your Response v Datateam.”

The current laws do not account for digital trade documents and possessibility, but the new ETDB aims to fix this.

Lord Holmes said, “We have an even better opportunity through the common law principle of possession, which means that all those centuries of English law precedent can be brought to bear for the benefit of electronic trade documents.”

Applying centuries of common law precedent to the ETDB will help clarify the questions regarding the transfer or liabilities of goods. Without this legal clarity, the digital transition would struggle to gain widespread traction. After many detailed rounds of debate to ensure the ETDB covers all aspects of electronic trade, the bill is ready to be adopted in the near future.

Lord Holmes sits on the Special Bill Committee and has been instrumental in the development of the ETDB, reporting that the bill has “one final stage, a third reading in the House of Lords, which should be a formality. It then goes to the House of Commons. It should go through the Commons relatively speedily and we should have it enacted on the statute book, spring this year.”

Adaptability within the trade community

Though the ETDB represents a great step towards digitisation in the UK, the work has just begun. The UK government must educate everyone in the trade finance ecosystem, including bankers, insurers, traders and producers. This is the first step of making them comfortable with using the permissive legislation.

However, international trade requires two parties, so the UK must help other countries adopt similar bills. Lord Holmes said that the second step includes connecting with “key jurisdictions right around the world… to help to enable to support their legislatures to bring in similar acts so we can have electronic trade enabled right across the planet.”

As more individuals become comfortable with using electronic trade documents and more governments pass modernised legislation, trade digitisation will start seeing exponential growth in the coming years.

The personal side of international trade

Lord Holmes knows that international trade is more than just passing papers back and

forth in some faraway office. Before moving to a career in the House of Lords, Lord Holmes spent 15 years as an athlete, representing Great Britain in the 1988 and 2000 Paralympic Games.

Spending much of his life travelling to compete in different countries, Lord Holmes developed an international perspective on everything in life, including trade and technology.

Lord Holmes said, “International trade and technology has always been an interesting place for me to operate, to bring about that potential, to enable, to empower, to unleash economic, social, individual potential.”

The very nature of international trade creates endless possibilities for expansion. Both for the industry and for the actors who operate in the space, which is especially exciting for young people looking to join the industry. Lord Holes said, “[International trade] will open more doors than not, and you can plot your own path. And crucially, more than anything else, dream your dreams, make them a reality in the daylight and never, never let anybody tell you that you can’t.”

ANDRÉ CASTERMAN Founder & Managing Director Casterman Advisory

4.3

Is DLT the new foundation for interoperable transactions in banking?

DLT offers the financial services industry a new piece of infrastructure to push the boundaries of Open Banking. But it doesn’t come without its challenges. TFG heard from tradetech expert André Casterman on future use cases for blockchain in assets, trade and transaction banking.

DLT enables financial institutions to share a common understanding of assets and transactions with their clients and counterparties, embedding interoperability in any transactional process whilst complying with data privacy regulations.

I first heard about the new disruptive technologies (DLT and blockchains) in 2015, and I was not convinced by all the hype back then.

Neither did I understand the need for a new database technology, nor could I accept the need for financial institutions to communicate differently.

The use of the Internet and encryption technologies was established, the use of cloud applications was growing, and application programming

interfaces (APIs) started to make their mark, particularly in payments following ambitious open banking regulations (e.g., the second payment services directive). See my previous TFG article on the evolving payments landscape.

How could DLT help?

Was building trade consortia the right step forward?

When banks set up the initial trade-focused consortia in 2016/2017, I wondered why such excitement would only be used as a new messaging infrastructure, albeit decentralised.

It appeared as if those consortia applied a 21st-century technology (i.e., DLT and blockchains) on a 20th-century business idea (i.e., to build closed platforms).

The consortia got it right when it came to embracing DLT, but the latter, using the new technology to build proprietary ecosystems, has been the main issue the industry has seen.

Using DLT to support new closed ecosystems is shortsighted, as DLT offers us the opportunity to push the boundaries of open banking and engage with interoperable transactions.

Lesson learned #1 – DLT is a 21st-century innovation that needs to be embraced with a 21st-century open banking mindset; that’s where most trade-focused consortia have failed so far (not only the bankrupt ones).

DLT extends open banking to risk mitigation

The value of DLT lies far beyond acting as a decentralized communications infrastructure.

DLT introduces a set of advanced risk mitigation features that is outlined in the diagram below in order of increasing importance:

ƒ 1. Feature 1: On-chain data exchange

ƒ 2. Feature 2: Tracking of assets and transactions

ƒ 3. Feature 3: Instant payments using the on-chain value

ƒ 4. Feature 4: On-chain investment products

The first two features (1 & 2) are not expected to be regulated whilst the next 2 (3 and 4) are subject to regulatory approval.

Using DLT purely as a communications infrastructure (feature 1) is quite limiting and unimaginative, as the technology offers several advanced features (features 2 to 4) that legacy technologies (e.g., including SaaS platforms) cannot offer in the same open and interoperable way, at least not on their own.

The benefits of those 4 features – when compared to traditional rails – include reduced cost, increased traceability, visibility and control, embedded automation and programmability which reduce operational, fraud and settlement risks.

Lesson learned #2 – The trade industry will benefit from DLT through the adoption of its most differentiating features embedding risk mitigation (i.e., features 2 to 4).

DLT supports major industry innovations

In 2019, as part of the tradefocused Fintech Committee that I chair, the committee set up two collaborative initiatives to drive technology-driven market innovations.

Both initiatives are taking advantage of DLT in very targeted ways, and aim to increase interoperability and foster open banking in trade finance.

Whilst DNI Initiative concentrates on digital origination, TFD Initiative addresses gaps in expanding distribution to institutional, and retail, investors.

ƒ DNI Initiative – The initial goal of DNI Initiative is to help financial institutions adopt MLETR-compatible laws and leverage DLT as a trusted registry of electronic trade documents and negotiable instruments. This is why DNI Initiative takes advantage of features 1 & 2. Over time, there will be room for expanding

Figure 1. DLT extends open banking to risk mitigation. Regulated and non-regulated on-chain DLT features. Source: Casterman Advisory.

the DNI Initiative to onchain automated payments (feature 3). It could also take advantage of on-chain liquidity and therefore expand to feature 4.

ƒ TFD Initiative – The TFD Initiative has opened up the trade investment class to institutional investors. As we achieved this goal already in 2020, we embarked on applying DLT to expand our reach to retail investors. This was achieved in 2022 when the Trada token was launched. Trada is a Security Token Offering (STO) regulated by the Liechtenstein Financial Market Authority. This is why TFD Initiative takes advantage of DLT up to feature 4.

Lesson learned #3 – DLT will have far-reaching impacts in financial services – new asset classes will be accessible to retail investors (e.g., illiquid ones such as trade finance and instant global payments will be the norm and almost free to use).

Lesson learned #4 –Specialisation on specific segments and features has been the approach used when setting up the ITFA DNI Initiative and TFD Initiative. Both focus on inserting new Tradetech components in the trade ecosystem. The recipe works very well as we introduce superior open banking / interoperability features.

Consortia are dead, long live consortia!

Bank consortia are critical as they enable the industry to own and govern a market infrastructure.

This approach has been very successful in European payments (e.g., EBA Clearing which is owned by 48 banks) and the trade market could also take advantage of such ownership and governance models.

Over the last 5 decades, banks have successfully set up a series of financial market infrastructures (FMIs) to address collaborative ambitions. Examples include

Euroclear, SWIFT, EBA Clearing, P27, most Automatic Clearing Houses (ACHs).

However, in trade finance, the approach has not delivered the expected result as banks took the development risks on their own shoulders by designing new value propositions and building new technologies from scratch.

A lower risk approach suggests scaling proven technologies (e.g., those demonstrated by the DNI and TFD initiatives) through a bank-owned and bank-governed scheme.

Effectively wrapping existing technology solutions by expanding the delivery scope to the one a financial market infrastructure can offer (e.g., embedding more regulated functions). This way, banks avoid taking the initial delivery and market adoption risks, whilst focusing on expanding the value propositions beyond technology.

Lesson learned #5 – Bank consortia are not dead, they have been relevant mainly in payments and securities so far; trade banks just need to embrace proven (i.e., delivered and adopted) technology innovations when building consortia, thereby eliminating the delivery and market adoption risks.

From pitfall to promise

I, therefore, believe that consortia offer a strategic option to banks to pursue strategic trade innovations.

Figure 2. An overview of the DNI Initiative and the TFD Initiative. Source: Casterman Advisory.

They just need to be re-imagined based on partnerships with hand-picked technologies and vendors.

The hard lessons learned throughout 2016-2023 will help banks avoid some pitfalls. 

4.4

Digital assets and private law: UNIDROIT’s response to a changing landscape

Digital assets, in all their variety of technologies

Background of the project

The digital economy has seen tremendous growth over the past decade for several reasons. This has given rise to a large number of digital assets that are commonly used as part of transactions in digital environments and beyond.

The development of distributed ledger technologies (DLT) with sophisticated cryptographic techniques has led to a plethora of new digital assets known as crypto-assets, among which Bitcoin and Ethereum are the best-known examples.

These innovations are disrupting the functioning of economic and financial markets in various areas, including payments and settlements, trade finance, capital markets, and lending. Digital assets, in all their variety of technologies and applications, present significant legal and regulatory challenges for the actors and institutions involved in the smooth functioning of commercial transactions and markets.

Thus, there is an urgent need to reduce legal uncertainty and enhance predictability in dealing with digital assets, especially from a private law perspective.

In this context, following proposals from Hungary and the Czech Republic, and extensive exploratory work, the General Assembly of the International Institute for the Unification of Private Law (Unidroit) approved the inclusion of a project on Digital Assets and Private Law Project in the Institute’s its 20202022 Work Programme.

and applications, present significant legal and regulatory challenges for the actors and institutions involved in the smooth functioning of commercial transactions and markets.

KATERYNA BOVSUNOVSKA Lawyer

HAMZA HAMEED Legal Consultant UNIDROIT

The goal of the project was to develop a set of legislative principles relating to digital assets and private law. These Principles provide legislative guidance with best practices and international standards regarding a wide range of private law issues. This includes control of digital assets, transfer, conflict of laws, custody, secured transactions, insolvency, and enforcement.

The Principles have been drafted in an inclusive, technologically and jurisdictionally neutral manner. For this purpose, Unidroit has engaged with experts and observers from over 40 countries throughout the project, representing civil law and common law systems in all their varieties.

The Principles are accompanied by an introduction and a commentary to explain their content, guide interpretation, provide examples and assist parties, judges and states in using and adjusting them according to their own needs.

Relationship with existing instruments and projects

Some sections of the Digital Assets and Private Law Principles Project are naturally linked to other Unidroit instruments in capital markets. Notably, the Principles on secured transactions in digital assets draw inspiration from the UNIDROIT Convention on Substantive Rules for Intermediated Securities (2013) and the UNIDROIT Legislative Guide on Intermediated Securities (2017). Coordination has also been ensured with the ongoing UNIDROIT Project on Best Practices for Effective Enforcement and its work relating to the enforcement of digital assets.

Apart from Unidroit, the Hague Conference on Private International Law (HCCH) and the United Nations Commission on International Trade Law (UNCITRAL) are also working on the unification of specific legal matters related to the digital economy and DLT innovations.

Therefore, the Unidroit Principles are closely coordinated with these other initiatives to avoid overlap. Due consideration

has been given to the already developed guidance on particular issues, such as those in the UNCITRAL Model Law on Secured Transactions (2016).

Additionally, experts from all organisations are engaged in ongoing projects to improve the consistency of approaches taken to address issues related to the digital economy and digital assets.

The Principles in the making

The Draft Principles are the result of work carried out by an Exploratory Working Group, 7 Sessions of a full Working Group, four Sub-Groups, more than 12 Drafting Committee sessions, and a Steering Committee especially set up for this Project to solicit comments from Unidroit Member States, as well as several ad hoc workshops.

During the past three years, a wide range of legal aspects relating to digital assets have been considered. The Principles define a digital asset as “an electronic record which is capable of being subject to control.” This follows the

technologically neutral approach adopted by the project and ensures that the Principles apply to a majority of the digital assets which are commercially transacted in the digital economy.

According to Principle 6(1)(a), a person has ‘control’ of a digital asset if the digital asset, or the relevant protocol or system, confers on that person: (i) the exclusive ability to prevent others from obtaining substantially all of the benefits from the digital asset; (ii) the ability to obtain substantially all the benefit from the digital asset; and (iii) the exclusive ability to transfer the

abilities in (i), (ii), and (iii) to another person (a ‘change of control’).

Additionally, the digital asset, or the relevant protocols or system, should allow that person to identify themselves as having the abilities set out in Principle 6(1) (a). The exclusivity requirements are caveated to include exceptions for rules embedded within the digital asset or system and for situations where a person has agreed, consented, or acquiesced to sharing control with one or more other persons.

These requirements contemplate that ‘control’ assumes a role

that is a functional equivalent to that of ‘possession’ of movables. However, ‘possession’ in this context is a purely factual matter and not a legal concept.

The Principles expressly recognise that a digital asset can be the subject of proprietary rights. Guidance is also provided on issues related to secured transactions that identifies control as the primary method for achieving third-party effectiveness for a security right in a digital asset.

Principle 16 further recognises that a security right perfected by control has priority over other

security rights perfected using other methods.

Alongside these items, the Principles also offer guidance on issues related to conflicts of law, transfers of digital assets (including innocent acquisition and the rights of a transferee), issues related to custody (including the rights of clients, the obligations of custodians, the insolvency of a custodian, and the definition of a custody agreement), as well as procedural law including enforcement. Finally, the Principles also contain provisions related to the effect of insolvency on proprietary rights in digital assets.

Final Remarks: Principles on Digital Assets and Private Law

The Principles are open for a Public Consultation to be concluded in February 2023. The Principles aim to facilitate transactions in digital assets which move a significant share of the global economy these days.

The Principles will serve as a guide for parties, their advisors, judges, and legislators in handling digital asset transactions. Adopting national laws based on these Principles will promote legal certainty and predictability in domestic and cross-border transactions.

As the Principles and Commentary on Digital Assets and Private Law are anticipated to be completed in 2023, the Unidroit Secretariat welcomes any states, industry actors and other interested parties for further inquiries. 

PAUL SEBASTIEN Co-Founder & Director Carbon Offset Certification

4.5

Carbon neutrality in commodity trading: A need for standardisation

There has been a considerable shift in the financial industries’ mid-to-long-term sustainability roadmap, even with the nonharmonised or non-standardised regulatory framework.

“Many companies are gearing towards net zero ambitions. Being able to provide carbon neutral LNG to customers will create a competitive advantage over time.”

Rogier Beaumont, former Head Global LNG Portfolio and Environmental Solutions, Pavilion Energy

Whereas the commodity and shipping industry contributes the most to global greenhouse gas emissions (i.e. agriculture: 24%, oil and gas: 15%, mining: 7%, maritime industry: 3%, etc.), the demand for low carbon or even carbon neutral commodity supply chains, is driven by end-buyers targeting net zero in procurement (to mitigate their scope 3 emissions) and financiers.

Joining the Paris Agreement’s objective to limit global warming at 1.5°c, a growing number of companies and financial institutions publicly announced their own objectives

and roadmap to net zero (e.g. TheClimatePledge). Nicolas Tamari, CEO of Sucafina, said, “The time is right for all companies to measure their supply chain’s carbon footprint and take action to reduce.”

Nestlé CEO, Mark Schneider gave a sustainability roadmap, saying, “Tackling climate change can’t wait and neither can we. It is imperative to the long-term success of our business. We will work together with farmers, industry partners, governments, non-governmental organisations and our consumers to reduce our environmental footprint.”

Financiers and banks are meeting pressure from regulators and shareholders to stop financing carbon-intensive industries that conflict with their own corporate commitments to net-zero targets. During the COP26 meetings in November 2021, the Glasgow Financial Alliance for Net Zero (GFANZ) was launched by most of the leading financial institutions committed to accelerating the decarbonisation of the global economy, in collaboration with the UN Net Zero Banking Alliance. Unsurprisingly, numerous criticisms are raised from environmental third parties highlighting the slow

implementation of sustainable financing strategies in light of the urgent climate crisis.

There is valid criticism that most financiers are only now initiating sustainable investment policies. But critics, even if well-founded, often overlook from where we came.

There has been a considerable shift in the financial industries’ mid-to-long-term sustainability roadmap, even with the nonharmonised or non-standardised regulatory framework.

Laurence Fink, CEO of BlackRock recognised this paradigm change, saying, “Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance. Our investment conviction is that sustainability- and climateintegrated portfolios can provide better risk-adjusted returns to investors.”

Laurence Fink, BlackRock CEO

This paradigm shift can lead to new avenues for the financial industry as well. Sam Matthew, Standard Chartered’s global head of trade sees these developments in a positive light, saying, “Sustainable financing

presents a real opportunity for banks to finance projects that commit to sustainable trade.”

GHG footprint calculations

To be carbon neutral, or to achieve net zero emission targets on a specific scope, (e.g. corporate, product, service) requires calculating GHG (greenhouse gas) footprint, reducing, and finally offsetting residual emissions. Simply summarised, it is not as simple as only implementing in alignment with best standards and practices. Here are four examples of what is needed for GHG calculations.

ƒ GHG calculation shall cover clear scopes and boundaries based on recognised carbon accounting standards (eg: GHG protocol, PAS 2050, ISO14064).

ƒ Corporate GHG inventory shall not only cover direct emissions of companies (scope 1), but also emissions related to energy use (scope 2), and indirect emissions related to the companies’ value chains (scope 3).

ƒ Each commodity transaction must report all direct emissions for each cradleto-gate or cradle-to-grave

life cycle (i.e. extraction, processing, shipping up to delivery or en-use) with justified data and/ or emissions factors from recognised data providers.

ƒ Carbon reduction programs shall be implemented as per a long-term reduction plan before offsetting residual emissions via the retirement of quality carbon credits.

Lack of standardised practices in the voluntary carbon markets

While consensus and recognised standards exist for carbon

footprint measurement and reporting, carbon offsetting and the quality of underlying projects are still subject to debate. Various press articles in recent weeks highlighted the lack of standardisation of the voluntary carbon markets (VCM).

Indeed, VCM are not harmonised, with credits issued from diverse types of projects that enable to avoid, reduce (e.g. forest preservation, renewable energy, energy efficiency programs) or sequestrate carbon (e.g. reforestation or direct air capture solutions).

“Transparent reporting and accounting on progress against net zero transition plan” is one of the five core principles of the Glasgow Financial Alliance for Net Zero.

Standardisation methodologies and transparency are key values to ensure credible financing policies. Weak environmental (and more broadly ESG) claims may generate both reputational and financial risks. In recent months, several financial institutions have been investigated and fined due to miscommunication on ESG strategies.

Therefore, many decisionmakers are concerned about implementing business conduct consistent with their own corporate environmental policies.

At Carbon Offset Certification initiative, a number of energy firms (producers, national oil companies, traders) approached us to help them implement ‘green’ commodity transactions and/or carbon reduction projects to respond to their financier’s funding prerequisites.

Carbon Offset Certification is a Swiss initiative that developed the first independent certification standard for commodity transactions, products or services (e.g. shipping) where emissions have been measured (based on recognised GHG accounting standards), verified by a thirdparty assurance provider, and offset with quality carbon credits.

Previously named Climate Neutral Commodity, it has been rebranded as Carbon Offset Certification, precisely to respond to new experts’ consensus on ‘carbon neutral’ and ‘climate neutral’ terminologies that shall be reserved for an achieved status reached after a long-term reduction plan.

Carbon Offset Certification labels enable companies to claim adherence to regulations based on a transparent, publicly available protocol. These protocols are developed by commodity, maritime, and carbon markets professionals with the contribution of diverse institutions and experts in carbon accounting and verification standards.

4.6

Commodity trade finance in the new normal: The way forward

The UN estimates that achieving the Sustainable Development Goals (SDGs) will require $5-7 trillion per year in investment, with a significant portion of this investment likely to go towards sustainable commodity production and trade.

After COVID-19, the Commodity Trade Finance Industry experienced a period of great recovery. Trade finance covers a broad range of financing arrangements for the production, exporting and selling of commodities.

In structured trade finance, this includes pre-export finance facilities, prepayment arrangements, borrowing base facilities and other structures, all of which aim to provide finance to produce goods.

However, the new normal / post-COVID-19 environment raises some common issues for borrowers across most types of trade finance facilities. A number of these issues are also relevant to corporate loans.

According to the International Chamber of Commerce (ICC), the total value of global trade finance in was more than $20 trillion. Commodity trade finance accounts for a significant portion of global trade finance, particularly in emerging markets. In some countries, such as

Brazil and Russia, commodities represent over 50% of total trade finance. The use of blockchain technology in commodity trade finance is on the rise.

According to a survey by Trade Finance Global, over 60% of respondents said they were either using or exploring blockchain solutions for trade finance. Additionally, the Global Sustainable Investment Alliance reports that the global market for sustainable finance, including green finance and sustainable finance, is expected to reach $53 trillion by 2025.

The UN estimates that achieving the Sustainable Development Goals (SDGs) will require $5-7 trillion per year in investment, with a significant portion of this investment likely to go towards sustainable commodity production and trade.

The COVID-19 pandemic had a significant impact on commodity trade finance, with disruptions to supply chains, reduced demand for commodities, and increased financial risks leading to a decline

DR. SADAR ABDUL RASHEED Director Commodity Risk Control, Savola Group

DR. SAMNA MEHAR Assist. Professor of Finance University of Kerala

in trade finance volumes in 2020. However, the industry is expected to recover in the coming years as the global economy recovers.

Challenges faced by the commodity industry

Though trade finance products historically are safe deals, commodity trade finance has faced several challenges in recent years, including:

ƒ Volatility: Commodity prices can fluctuate significantly, which can create financial risks for traders and lenders. These risks include credit, market, and operational risks.

ƒ Counterparty risk: In commodity trade finance, there is always the risk that one party may fail to fulfil its contractual obligations. This risk can be particularly acute in emerging markets where legal and regulatory frameworks may be weak.

ƒ Documentation and compliance: Commodity trade finance transactions involve a significant amount of documentation, including bills of lading, warehouse receipts, and insurance policies. Ensuring that all documentation is accurate and up to date is essential to minimising risk. Additionally, there are often complex compliance requirements related to sanctions, antimoney laundering, and other regulations.

ƒ Access to finance: Many traders and producers in emerging markets struggle to access financing, particularly from traditional banks. This can make it difficult for them to invest in their operations or expand their businesses.

ƒ Infrastructure: Commodity trade often depends on reliable infrastructure, including ports, rail networks, and storage facilities. However, in many emerging markets, this infrastructure is inadequate or underdeveloped, which can lead to delays and increased costs.

ƒ Environmental and social risks: There is growing concern about the environmental and social risks associated with commodity production and trade, particularly in sectors such as agriculture, forestry, and mining. Lenders and investors need to be mindful of these risks and ensure that their financing is aligned with best practices and international standards.

Lessons learned from COVID-19

The post-COVID new normal brought some positive changes in commodity trade finance, most of them providing better and enhanced solutions. Rapidly advancing technology and digitisation showed the most promise, and the pandemic taught the world the value of IoT and remote working. Some of the post-COVID lessons and key trends include:

ƒ Risk management: Effective risk management is essential to minimising the risks associated with commodity trade finance. This includes careful analysis of market conditions, credit risk assessment, and hedging strategies to mitigate price volatility.

ƒ Digitalisation: The use of digital platforms can help streamline documentation and compliance processes, reducing the risk of errors and delays. Digital platforms can also improve transparency and enable better communication between parties in the supply chain.

ƒ Collaboration: Collaboration between different stakeholders in the supply chain, including producers, traders, and financiers, can help to reduce counterparty risk and improve efficiency. This can involve the use of supply chain finance solutions, which provide financing based on the creditworthiness of the buyer rather than the seller.

ƒ Access to finance: Increased access to finance can help

to support the growth and development of commodity producers and traders, particularly in emerging markets. This can involve the use of alternative financing models, such as crowdfunding, peer-to-peer lending, or impact investing.

ƒ Infrastructure investment: Investment in infrastructure, including ports, railways, and storage facilities, can help to improve the efficiency and reliability of commodity trade. This can involve publicprivate partnerships or other forms of collaboration between the government and the private sector.

ƒ ESG considerations: Environmental, social, and governance (ESG) considerations are increasingly important in commodity trade finance. Lenders and investors should incorporate ESG factors into their risk assessments and financing decisions, ensuring that they support sustainable and responsible production and trade practices.

Key trends going forward

All these positive changes represent a great way forward for the commodity trading industry. The key trends in new normal commodity trade finance are following:

ƒ Sustainability: There is a growing demand for sustainable and responsible commodity production and trade, driven by consumer and investor preferences. This is leading to an increased focus on ESG factors in commodity trade finance, including the development of green finance and sustainable finance products.

ƒ Supply chain finance: Supply chain finance is becoming an increasingly popular financing solution in commodity trade finance. This involves providing financing based on the creditworthiness of the buyer rather than the seller, which can help to reduce counterparty risk and improve efficiency.

ƒ Trade finance as an asset class: Trade finance is increasingly being recognized as an asset class, with investors seeking to access the stable returns and low default rates offered by the industry. This is leading to the development of new trade finance investment products, such as trade finance funds and securitized trade finance assets.

ƒ Alternative financing models: Alternative financing models, such as crowdfunding, peerto-peer lending, and impact investing, are becoming increasingly important in commodity trade finance. These models provide new sources of financing for commodity producers and traders, particularly in emerging markets where traditional financing may be limited.

ƒ Regulation: Commodity trade finance is subject to a complex and evolving regulatory landscape, with new regulations and standards being introduced to address issues such as money laundering, sanctions, and ESG considerations. This is leading to increased compliance costs and the need for greater transparency and reporting.

3 pillars for the new normal

In 2023, the commodity trade finance industry will likely continue to evolve and adapt to changing market conditions and emerging technologies. Based on our research and understanding, the following areas have great potential and may act as a pillar for the new normal.

ƒ Digitalisation: The use of blockchain technology and other digital platforms to facilitate commodity trade finance transactions will likely continue to grow. This will enable faster and more secure transactions, as well as greater transparency and traceability throughout the supply chain.

ƒ ESG considerations: Investors and lenders increasingly focus on ESG issues, including sustainability and responsible sourcing. Commodity trade finance providers will need to incorporate ESG criteria into their lending and investment decisions, as well as ensure compliance with relevant regulations.

ƒ Shifts in global supply and demand: Changes in commodity prices, production, and consumption patterns will continue to impact the commodity trade finance industry. For example, the shift towards renewable energy sources may reduce demand for certain commodities, while increasing demand for others.

Overall, the commodity trade finance industry will likely remain an important component of the global trade ecosystem in 2023 and beyond, supporting the movement of goods and resources across borders and facilitating economic growth and development.

4.7

Details and implications of the Silicon Valley Bank collapse

In the largest banking collapse since the 2008 financial crisis, US regulators were forced on Friday to take over control of Silicon Valley Bank (SVB) - a prominent lender to tech startups, providing financing for almost half of US venture-backed technology and healthcare companies.

Despite being generally unknown to most consumers before last week’s events, SVB was the 16th largest bank in the USA, with $209 billion in total assets at the end of last year, according to the Federal Deposit Insurance Corporation (FDIC).

This collapse, however, did not come out of nowhere. Rising interest rates and the general downturn in the technology sector had been making it difficult for technology companies - SVB’s primary clients - to raise new funds, forcing them to draw down funds held by the bank.

High interest rates had also been causing the bank’s many longterm bonds to be performing

well below market value, leaving it with a mountain of unrealised losses just as customer withdrawals were escalating.

When SVB announced that it had sold a series of bonds at a loss, it caused concern for many venture capital firms, some of which advised their clients to withdraw funds from the bank, further exacerbating the situation.

In due course, it became clear that the bank did not have the cash on hand to pay out the mounting number of withdrawal requests, forcing lawmakers in California to intervene, shutting the bank down and placing it under the control of the FDIC.

The collapse of SVB has already impacted other companies in the financial sector. Signature Bank, a New York based commercial bank that worked heavily in the digital assets arena also collapsed late Sunday afternoon. As of late 2022, almost a quarter of Signature’s deposits came from cryptocurrencies.

The collapse of SVB and Signature Bank prompted worldwide concern for systematic failures due to the banks’ widespread connections to many global institutions.

BRIAN CANUP Editorial & Research Assistant Trade Finance Global (TFG)

CARTER HOFFMAN Research Associate Trade Finance Global (TFG)

Both SVB and Signature Bank were deeply connected to many institutions across the world, prompting concern of widespread, systematic failures.

Impact on transaction banking

In general, the collapse of a single bank can have significant implications on the broader transaction banking industry, as it can affect the confidence and stability of the financial system as a whole.

Many of the theoretical symptoms have already been realised over the course of the past week. These include:

ƒ Loss of trust and confidence: A bank collapse can lead to a loss of trust and confidence in the broader banking system, as customers and investors may become more hesitant to engage in transactions with other banks.

ƒ Systemic risk: A bank collapse can potentially trigger a domino effect on other banks

and financial institutions, leading to a broader systemic risk. This is especially true if the failed bank had significant interbank connections and exposure to other financial institutions.

ƒ Market volatility: The collapse of a bank can lead to market volatility and uncertainty, as investors may react to the news and sell off their shares in other banks or financial institutions.

ƒ Regulatory response: Regulators may need to step in to address the fallout from a bank collapse, which can lead to increased regulatory oversight and stricter rules and regulations for the industry as a whole.

ƒ Disruption to transaction banking: Customers who have accounts or transactions with the failed bank may experience disruption to their services, which can impact their ability to conduct business and engage in transactions with other banks.

What happens next?

To prevent widespread panic and cull the risk of widespread bank runs in response, the FDIC and the Biden Administration have assured the SVB’s clients that they would be protected and have access to their funds.

Treasury Secretary Janet L. Yellen said that taxpayers would bear none of the burden of protecting depositors. Their funds will be backstopped by a pool of money that is regularly paid into by US banks and which now holds more than $100 billion.

The Bank Term Funding Program (BTFP) offers loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral.

US president, Joe Biden, has signalled that his administration will put forward new regulations in the wake of the banking

collapse. However, strict financial regulations will be difficult to be adopted by a divided congress.

Over the weekend, the UK government and the Bank of England organised a deal with HSBC to acquire Silicon Valley Bank’s British subsidiary for £1 in an effort to prevent a deep spillover to the UK economy.

As of Monday morning, the UK government has not announced further action to address liquidity problems in the market.

Investors will keep an eye on any potential spillover in the market on Monday morning, as the extent of the collapse is not yet known. Additionally, analysts believe that the SVB collapse will make the Federal Reserve rethink a large rate hike, which is set to be announced next week.

The fallout from SVB and Signature, the second and third-largest banks to collapse in United States history, will be exceptionally large. The only remaining question is, will the contagion spread to other global markets, and are the financial systems resilient enough to withstand this banking collapse?

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