Standard Chartered on Future of Trade Finance

Trade finance is being reshaped by three intertwined pressures: sustainability, digitalisation, and geopolitical turbulence. As emerging markets push for economic growth, banks face the difficult task of balancing development needs with global demands for environmental, social, and governance (ESG) standards.

At the same time, the transition to digital trade is underway, but is hampered by questions of interoperability; all the while, a volatile tariff environment is prompting businesses to reconfigure their supply chains.

At the 2025 Sibos conference in Frankfurt, Germany, senior figures from global banks gathered to grapple with how to navigate this era of uncertainty. For Samuel Mathew, Global Head – Documentary Trade, Standard Chartered, these realities are rewiring how banks support their clients across markets, demanding uniform standards.

From “tough calls” regarding ESG objectives, to the technological hurdles slowing trade digitalisation, and the rerouting demanded by tariff-driven supply chain shifts, the future of trade finance depends on the industry aligning on frameworks and collaboration. 

ESG initiatives and emerging economies

Prioritising ESG – the measure of a business’ environmental and social impact, as well as the transparency and accountability of its corporate governance – is no longer optional. With the climate clock ticking, sustainable business practices, particularly commitments to renewable energy and net-zero targets, are not discretionary. 

According to a 2025 analysis by the Principles for Responsible Investment (PRI), based on responses from over 3,000 signatories, 65% now take action to address sustainability outcomes – explicitly considering the impact of their investments on people and the planet. This reflects how ESG, once viewed as an optional add-on, has become embedded in mainstream investment practice.

As Mathew explained, “The ICC (International Chamber of Commerce) has come up with the International Sustainable Trade Finance Framework (ISTFF). So we, as a bank, have adopted it. Many banks are working on it. And the corporates would have their own framework which hopefully aligns to these standards as well.” 

Mathew emphasised how frameworks are inherently collaborative. They say “it takes a village”, or in this case, representation from multiple banks, corporations, and industry bodies. It’s important for them to come together to develop a common taxonomy of what qualifies as sustainable.

The ISTFF has become a key reference point in this effort, offering banks and corporates a common language for assessing transactions against ESG criteria. By setting out clear guidelines such as nuanced sustainability assessments, recognised conventions and ESG scores, and acceptable forms of evidence to demonstrate sustainable practices, the ISTFF aims to standardise what ‘sustainable trade’ looks like across markets.  

This global framework does not exist in isolation. In fact, it offers the integration of any regional taxonomies as well, allowing for its application across diverse markets. Regional initiatives – such as the EU Taxonomy for Sustainable Activities, which provides a regulatory classification system for environmentally sustainable economic activity, and Singapore’s Green Finance Industry Taskforce (GFIT) taxonomy, designed for Asia’s financial sector – both inform and reinforce the ICC’s approach. 

Together, these frameworks aim to create a more consistent system for sustainability in trade finance, while still reflecting regional realities.

However, banks are also facing tension between the development needs in emerging markets and their own net-zero commitments. Although it is the most carbon-intensive fossil fuel, coal still supplies over a third of global electricity generation and global consumption reached a record high of 8.8 billion tonnes in 2024 – a 1.5% increase on the previous year – driven by rising use in China, India, Indonesia, and other emerging economies, which more than offset declines across Europe, North America, and northeast Asia. Therefore, transition plans and transition finance is key in the longer run.

The digitalisation divide

Just as sustainability frameworks are informing financing decisions, the digitalisation of trade is transforming how transactions themselves take place. Yet, as Mathew pointed out, progress has been uneven.

“There’s a fundamental difference between digital trade and digital trade finance,” he explained. “85% of the world’s trade happens on an open account supply chain basis… Why is that not getting digitalised? The challenge there is the real physical logistics involved and the title documents involved in that flow.”

In areas where banks already rely on clients’ own data systems, digitalisation has advanced much further. “More than 70–80% of the supply chain finance that we do as a bank is already fully digital,” Mathew noted. But in cases where banks act as intermediaries – often when buyers and sellers lack trust – physical documents like bills of lading still dominate.

Noting that standards are beginning to emerge, Mathew pointed to the adoption of the UNCITRAL Model Law on Electronic Transferable Records (MLETR) in countries such as Singapore, the UK, Abu Dhabi, France, and, most recently, Mauritius. 

Even so, interoperability (the ability of different platforms to work together and recognise each other’s documents) remains the biggest hurdle. “The standards are there, the technology is there, the intent is there,” said Mathew, raising the question: why would platforms start interoperating with each other in the first place?

For Mathew, the answer lies in incentives. What is absent is the business rationale. Platform providers are reluctant to open their systems to competitors, fearing a loss of control or market share. 

“Either there has to be consolidation between the various platforms, or there has to be a stand taken where people look at the greater good and start opening up to actually doing those handshakes,” noted Mathew. 

For emerging markets, these challenges are especially stark. While advanced economies are already reforming laws to recognise electronic trade documents, many developing countries still lack the infrastructure and investment needed to make digital trade viable. 

According to the United Nations Trade and Development (UNCTAD), in 2024, only $9 billion went into information and communications technology (ICT) infrastructure in developing countries, which is “a fraction of the $62 billion needed globally each year.” 

This uneven investment goes to show that without targeted support, digitisation risks being a system that enables wealthier markets to accelerate toward efficiency, while leaving emerging economies to remain in paper-based processes — potentially widening global trade inequalities and the wealth gap. 

Tariff turbulence 

Tariffs and geopolitical tensions have added another significant layer of uncertainty to global trade. Mathew pointed out that his uncertainty has made clients more cautious, delaying investment decisions and increasing overall risk aversion. 

Simultaneously, there are also opportunities for a bank like Standard Chartered as supply chains have been reconfigured, with increased flows between China and the Association of Southeast Asian Nations (ASEAN), as well as between ASEAN and the Middle East. 

For emerging markets, this turbulence creates both challenges and openings; while heightened uncertainty can discourage investment, new and diversified trade corridors also present opportunities for deeper integration into global supply chains.

However, Mathew noted that despite these shifts, the dollar remains the primary currency of trade settlement, which he doesn’t see changing in the near future.