SYNTHESIS’ policy is to maintain the highest moral and ethical standards in its dealings with all stakeholders including investors, shareholders, borrowers, employees and the community.
SYNTHESIS aims to achieve this by:
ensuring that all transactions financed by it are compliant with its ESG policy throughout the supply chain;
actively encouraging its borrowers to improve their ESG performance;
working with organisations such as the International Chamber of Commerce (ICC) to promote visibility and transparency in international trade and to assist in formulating globally accepted standards for the trade and trade finance industry; and
investigating the possibility of joining or supporting other relevant organisations including becoming a signatory to the United Nations Principles for Responsible Investment
Sustainable Trade Finance – The Current Position
There is currently no industry-wide accepted definition of ‘sustainable trade’. The ICC established a programme in September 2021 to begin ‘defining and setting the standards for sustainable trade finance in a manner that is practical, comprehensive and provides sufficient transparency into the sustainability of a transaction’. The ICC has brought together stakeholders from numerous trade banks, corporates, infrastructural players and Boston Consulting Group and published a position paper in November 2021 ‘Standards for Sustainable Trade and Sustainable Trade Finance – A roadmap and vision for industry, policymakers and traders worldwide.’ (ICC Position Paper). The ICC project marks the start of a journey of defining, recognising and setting the standards for sustainable trade and trade finance, while acknowledging that this is a complex task:
‘Although existing definitions and standards may exist for other forms of sustainable finance, these rarely capture the complexities of trade. For example, a single trade transaction can involve as many as 20 different parties, involve different types of goods, services and raw materials, cross multiple jurisdictions, require different forms of transport – and, crucially, represent one step in a much larger supply chain. In addition, while specific goods may not in themselves be sustainable, they can often be used for purposes such as sustainable infrastructure. And the same applies in reverse – the trade of sustainable goods for non-sustainable purposes. Breaking through such complexity to provide visibility and transparency on genuine sustainable trade, in a way that is implementable at scale, is a substantial challenge that requires collaboration across the industry.’
John Denton, Secretary General, ICC. November 2021.
The ICC Position Paper states that ‘The standards will be inspired by the UN’s Sustainable Development Goals (SDGs) as a taxonomy of reference to enable a comprehensive framework for sustainability. However, SDGs will not be assessed on an individual basis, considering underlying targets are not always applicable to goods, transactions and organisations. Rather they will be collapsed into more relatable dimensions of sustainability.’
SYNTHESIS and ESG
As a provider of trade finance, SYNTHESIS conducts its business, using as a reference framework the SDGs that are relevant to the transaction to be financed. Not all SDGs listed below will necessarily be applicable to every transaction financed by us.
The SDGs listed below are set out in the ICC Position Paper.
Environmental
UN’s Sustainable Development Goals (SDGs 7,8,12,14,15)
‘Promote environmentally responsible production and consumption patterns’
‘Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss’
‘Conserve and sustainably use the oceans, seas and marine resources’
SYNTHESIS’ environmental policy
to carry out due diligence on every transaction throughout the supply chain, tracking the goods back to their source and seeking to ensure that we do not finance transactions that contravene the relevant SDGs
to carry out checks to ensure that methods of transport are conducted in accordance with appropriate regulations including the rules of the International Maritime Association
Social
UN’s Sustainable Development Goals (SDGs 7,8,12,14,15)
‘Assure fair wages and distribution of wealth to support reduction in poverty’
‘Support eradication of hunger through improving food security and nutrition, and promoting sustainable agriculture’
‘Promote health, wellbeing, and quality education for all’
‘Achieve inclusiveness and equality for all, and the protection of human rights’
‘Promote peaceful and inclusive societies, provide access to justice for all, and build effective, accountable and inclusive institutions at all levels’
‘Empower individuals, SMEs and emerging sectors in their access to trade and commerce’
SYNTHESIS’ social policy
to carry out due diligence on every transaction throughout the supply chain, tracking the goods back to their source and seeking to ensure that we do not finance transactions that contravene the relevant SDGs
Governance
SYNTHESIS’ code of conduct is contained in its Policy Handbook and Staff Register and includes, among other things, policies on credit, delegation of authority, rating model, loan pricing, compliance, anti-money laundering, Investment Committee, Independent Advisory Committee, Valuation Committee, FX / market risk management, HR, document retention, financial systems and reporting, equal opportunity, discrimination, anti-harassment and bullying, anti-corruption and bribery and whistleblowing. SYNTHESIS’ Chief Risk Officer acts as Compliance Officer
SYNTHESIS’ investment decisions and business performance are monitored by an external advisory board and its internal and/or external legal advisers will be involved at every stage of its investment process and will provide support for its business decisions
SYNTHESIS carries out due diligence and Know Your Customer checks (KYC) on its customers to ensure that they have acceptable ESG policies in place