Canadian governments and corporations tap into green trade financing to create a more sustainable world after COVID-19

HSBC-SB-August

Canada is embracing green trade financing as it looks to recover from the global pandemic and new funding instruments will help support sustainable economic growth.

HSBC is at the forefront of this change by supporting companies, entrepreneurs and communities that are looking to source sustainably extracted/produced raw materials, develop or procure green products and trade in sustainable commodities.

"We are continuing to support the trade finance requirements of our clients who are transforming the way they do business," says Dana Krechowicz, Senior Sustainable Finance Manager at HSBC Bank Canada. "Together with our clients, we are working towards the common goal of creating a more sustainable future."

In order to become eligible for green and sustainable trade financing, companies must adhere to the Green Loan Principles (GLP) that has four key tenets, which are:

  • Use of proceeds (funds must exclusively facilitate environmentally and/or socially sustainable economic activities)
  • Process for project evaluation and its selection
  • Management of proceeds
  • Reporting

Environmentally and/or socially sustainable trade activities must also demonstrate alignment with the UN Sustainable Development Goals (UN SDGs).

Milestone Green Trade Transaction

A sign of what's ahead for Canada can be seen halfway across the world.

This year, HSBC concluded the first sustainable trade finance facility in the Middle East, North Africa and Turkey (MENAT) with Dubai-based Lamprell Plc, a major engineering and contracting services company with decades of experience in the renewables and oil and gas markets. HSBC also provided Lamprell Plc US$48 million to finance the Seagreen Offshore Wind Farm project off the coast of Scotland.

A More Resilient Economy

Scaling up green trade finance can help Canadian companies promote the positive international environmental and social impacts of their business, including their contribution towards achieving the UN SDGs.

In 2018, the Canadian government pledged nearly $110 million in new funding to back SDG efforts over 13 years. Nearly $50 million was committed to establish a Sustainable Development Goals Unit and fund monitoring and reporting by Statistics Canada to measure progress. This investment was supported by $59.8 million ($4.6 million annually) for a funding program designed to bolster the government's commitment to delivering a whole-of-society approach to implementing the SDGs across Canada.

But government funding alone won't help Canada reach its SDG targets.

According to the Public Policy Forum, rising debt and stagnating growth as a result of the COVID-19 pandemic is constraining sustainable investment and creating intergenerational inequity as a result. In order to build a green and resilient economy, domestic resources and private sector investment must be geared towards achieving the SDGs — not just within Canada, but around the world. 

This article, submitted by HSBC, first appeared in the August edition of Sounding Board magazine. 

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