IFC has partnered with the Banking Environment Initiative (BEI), a group of banks working with their clients to direct capital toward environmentally and socially sustainable economic development, to develop a new financing solution to expand the global trade of sustainably sourced commodities and encourage the growth of sustainable global supply chains. The BEI is convened by the University of Cambridge Institute for Sustainability Leadership (CISL), which provides the BEI's Secretariat.
As a first step in this effort, the Sustainable Shipment Letter of Credit (LC) was launched at the World Economic Forum in January 2014. This new LC designation allows for preferential treatment for trade in agricultural goods that meet internationally-recognized sustainability standards. (Read the BEI paper on this effort.)
Similar to the successful and industry-recognized model of IFC Climate Smart Trade, IFC may provide a price incentive for commodities guaranteed under the Global Trade Finance Program (GTFP) and shipped with a Sustainable Shipment LC. Participating banks could therefore choose to share some or all of these economic benefits with their clients. To qualify, evidence of the appropriate sustainability stamp must included as part of the LC documents.
Eligible goods: Palm oil with an RSPO (Roundtable on Sustainable Palm Oil) certificate is the first commodity eligible for this program. More commodities are expected to be included at a later stage.