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Greening Global Trade

If you are an SME interested in learning how you can embrace sustainability principles and make impactful changes in your global trade practices, Global Trade Department can help

Global net zero emissions by 2050

Globally, coordinated change is paramount

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Action targets

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Sustainable Development Goals (SDGs)

Global trade pivotal in achieving change

Practical, low risk, phased approach

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Overview

There can be no doubt that climate awareness and pressure is mounting, at least amongst developed nations; the Paris Agreement and latest COP summit have served to raise the topic amongst environmentally conscious businesses and consumers. Companies involved in global trade and for whom sustainability is a core part of their ethos, are also becoming more educated as to the scale of carbon emissions in international trade and how that impacts the climate crisis. 

Carbon emissions are often considered the most obvious damaging impact of international trade, leaving many businesses and policymakers considering several important questions, like: 

  • Is there a way that trade and trade policy can support decarbonisation of production domestically and overseas?
  • Can trade policy serve to address carbon leakage and ensure that domestic businesses following more stringent national climate policies do not lose market share to more carbon intensive international competitors?
  • Can trade policy help domestic industries and communities transition towards a decarbonised environment whilst bolstering green jobs and promoting transparency, fairness, and openness in global trade?
  • Can trade policy prevent countries from ‘offshoring’ their carbon footprint through consumption of unsustainable imported goods?
  • How can international trade transportation reduce its carbon footprint?
  • Can trade policy enforce transparency, fairness, and use of climate related standards/labelling of imported and exported goods?
  • How to effectively balance the need for climate friendly trade with the potential economic consequences for developing countries?
  • How to mitigate the risks of climate change impacting on global trade i.e. building resilience into supply chains, infrastructure, etc. to minimise the impact of natural disasters?

However, sustainable global trade is about much more than decarbonisation. Greening trade requires a widescale review of trade and environmental objectives and a concerted effort to closely align them and implement governance on a global scale. 

Impact of global trade on the environment

1 %

of energy used by global transport supplied by Petroleum

1 %

of all transport-related CO2 emissions are from freight

1 %

increase in CO2 emissions in Africa predicted by ITF

1 %

of energy-related CO2 emissions in the transport sector comes from road transport with another 12% from air transport

1 %

of global merchandise trade by volume is transported by sea

0 %

rise in fossil fuel subsidies as a percentage of GDP between 2020 and 2025 despite 2050 carbon neutral goal

Greening trade needs strong environmental laws, regulations, globally shared targets, and institutions empowered to implement change. 

Trade policy can prioritise sustainability through environmental chapters in trade agreements; and said policy can then be enforced both ‘at the border’ (liberalisation of climate-friendly goods and services; Border carbon adjustments; Quotas or bans on ‘high emissions intensity’ products; International cooperation on emission trading systems) and ‘behind the border’ (Climate related standards, labels and due diligence requirements – government and voluntary; Trade disciplines on fossil fuel subsidies; Greening trade rules e.g. on subsidies, government procurement, investment, to support climate action; Investor-state dispute settlement provisions that safeguard space for climate action; Technology transfer and intellectual property rules that spur innovation and affordable access to climate technologies). 

Global intergovernmental cooperation can then be fostered through bodies such as green Aid for Trade, trade finance initiatives, green trade classifications and sustainability impact assessments. Whilst global education as to the importance of green trade and sustainable supply chains is also imperative. 

"Greening International Trade has emphasised the importance of strong, enforceable domestic environmental laws, regulations and standards as the basis for green trade, and the need for international cooperation to raise shared environmental ambition."
Carolyn Deere BirkbeckDirector of the Forum on Trade, Environment and the SDGs
"The Climate Change Committee estimates that the UK will need to invest £1.4 trillion between 2020 and 2050 to reach net zero. This includes an average of £50 billion per year between 2025 and 2050—an amount broadly comparable to the government’s annual spending on schools."
Andrew P Goodwin:Oxford Economics
"So, the financial case for green trade is very clear: The global market for low-carbon exports is growing rapidly. By 2030, it’s projected to be worth almost £2 trillion. While a potent combination of ambitious entrepreneurs, high ambitions and steadfast and determined government backing, the UK is now in a leading position to take a first mover advantage. This translates into some exciting opportunities for us: Because quite simply green trade, spells green jobs."
The Rt Hon Anne-Marie Trevelyan MPUK International Trade Secretary
"Public and private actors are showing great interest in green trade topics. The urgency of environmental challenges is driving a re-think of our production and consumption networks. Supply chain sustainability is gathering mainstream attention, the circular economy needs to be delivered across value chains, while trade and climate topics are increasingly intersecting."
AuthorWorld Economic Forum
"International trade plays a substantial role in global warming; it has been estimated that 25 percent of the total carbon emissions could be associated with the expansive cross-border production process and distribution (WTO, 2021). Meanwhile, “greening” trade would provide an impetus to sustainable production and restrain carbon emissions."
S. K. MohantyG20 Insights
"Green trade presents a major opportunity for the UK, creating high-value jobs in the low-carbon economy, driving sustainable growth in all corners of the nation, and fuelling technological innovations that can be exported to the world. Free trade can be a lean, green, value-creating machine that is good for developed and developing nations alike."
The Rt Hon Elizabeth Truss MP UK Secretary of State for International Trade
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If building sustainability into your international trade objectives and activity, you may want to consider Global Trade Department’s Trade Sustainability Assessment as a means of understanding your business’ current impact and uncovering tangible changes you can make to reduce any negative impacts, boost competitive advantage, and increase your brand perception amongst a growing number of sustainably conscious customers. 

Global Trade Sustainability Assessment

Obtain an impartial, outside-in assessment of your current global trading processes and practices, with practical recommendations of how you can incorporate sustainability values and targets to meet future regulatory requirements and drive long-term growth.

Learn more

What our clients say

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