Standard Chartered Bangladesh says it has executed the country's first sustainable trade finance transaction.

The bank provided sustainable trade finance support to Square Textiles, a subsidiary of Square Group, in supplying yarn made from sustainably sourced cotton to its local buyer Echotex under a letter of credit (L/C) transaction.

Supply chain sustainability

Sustainable yarn manufacturer Square Textiles sources sustainably produced cotton from members of the Better Cotton Initiative (BCI), the largest cotton sustainability programme in the world.

It was formed to register and recognise members that actively promote soil health, water stewardship, emissions reduction as well as social factors like decent working conditions and diversity.

Capital for sustainability

Standard Chartered's sustainable trade finance framework enables the identification of sustainable activities in the physical supply chain or manufacturing process and enables capital to be directed towards these to encourage and enable such activities.

One of the pillars in that framework is that goods have to be certified as sustainable by certain approved bodies, such as BCI.

Growing network

In June HSBC Bangladesh said it had arranged the country's first ever sustainability linked loan for Square Group, with a total facility of US$118 million

Echotex is a 100 per cent export-oriented ready-made garments company and is also a member of BCI, producing apparel from fabric made with sustainable yarn, and selling to global buyers who also want to sell goods produced under sustainable practices.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.