In recent years, ESG has been a hot topic across all industries. It is widely accepted that the world needs to adapt and change in order to reach a more sustainable future. But there is a creeping sense of uncertainty regarding how to implement these changes.

Trade finance no longer needs to discuss whether or not ESG is the future. Instead, the conversation needs to revolve around how the industry can realistically implement the ideas and strategies developed in recent months and years.

Recent innovations have provided potential solutions to these problems, but unless these innovations are utilised by individuals worldwide, true change will be difficult to achieve.

Yet, there have been efforts to move the ESG needle through cohesive actions, leading to some cautious optimism regarding realistic changes in 2023.

To learn more about sustainability approaches within the industry, Trade Finance Global (TFG) spoke to Eva Rubio, head of global transaction banking at BBVA at BAFT’s Europe Bank to Bank forum held in London this January.


A multidisciplinary approach to ESG

The world faces many hurdles in 2023, but working towards a more sustainable and equitable future is one of the most relevant challenges for society.

In order to conquer these challenges, Rubio said, “Everybody has to play a role, and of course, transactional banking is going to be relevant.

It means a huge amount of investment, a lot of political commitment, more incentive to push the innovation and to make all the investments that are required for getting this target.”

Though it can be difficult to understand new regulations and adapt to ever-changing environmental and geopolitical challenges, sticking with the status quo is not an option.

Some companies may fear making the initial move towards sustainability, but Rubio believes that “the biggest risk is just not to do anything about this.”

A successful sustainability movement starts with conversations involving parties across all industries. This ranges from the public and private sectors to transaction banking engaging in dialogue with their clients.

So far, BBVA has implemented a successful sustainability strategy. In April 2022, BBVA announced a carbon markets business line within their investment banking division, helping their customers manage regulations and establishing sustainable finance offerings.

A unified front is the best way to accomplish true change.


Growth after a black swan event

The devastating impacts of COVID-19 reminded the world that building a resilient foundation of a business, supply chain, or economy is a critical part of long-term success.

Though the pandemic halted the global economy and disrupted every aspect of day-to-day life, the international trade industry now has a chance to address foundational issues.

Rubio said, “A lot of thinking was made about how to be more resilient, how to look for a more balanced growth after what we suffered during that time.”

Importantly, COVID-19 spurred growth in technological innovation and adoption. Large corporates, regional suppliers, and individual clients were all forced to utilise new digital tools, taking yet another step towards a more globalised and connected market.

Rubio believes that “The utilisation [of the] data will help us in the traceability and the transparency to work on the ESG factors…and the analytics for massive information coming from the corporate environmental impacts our comprehensive approach.”

But growth is not always linear, and it rarely is easy. While blockchain and DLT technology have the potential to usher international trade into a new era, stakeholders must adopt the same systems, something that has yet to happen.

BBVA recognises these problems, which is why they are approaching the sustainability question from a grassroots perspective. Rubio says that BBVA is “working on improving our advisory capabilities in order to focus better on the sustainability issue and the transition plans of our client, and to understand better the investment required and to be able to finance [the transition].”

In 2022, BBVA put these statements into action, channelling €50 billion into sustainable business, totalling €136 billion since 2018.

A looming part of client transition plans remains incorporating Scope 3 regulations into business plans. According to Rubio, “Scope 3 is one of the most complex parts regarding the mission…because it’s very complex to measure the mission of the value chains…and there is a lack of alignment within the value chain.”

Though addressing the sustainability challenge is a daunting task, it also creates exciting growth opportunities within the transaction banking industry.

Young professionals looking to become involved in financial services should look at transaction banking because it is a “growing business full of innovation insights and is gaining relevance and weight within the wholesale banking industry.”