The transition to a green economy is recognised by a variety of organizations and experts as a ground-breaking way forward, combining economic development, social welfare and environmental protection. In order to shift to a green economy, changes in production and consumption practices, and therefore also in trade patterns, are crucial. This makes the leverage power of leading export credit agencies, which totalled an exposure of USD 1.7 trillion in 2011, colossal.

This paper investigates the potential to harness trade finance to foster the development of a green economy in developing countriesThe objectives of the paper are twofold. First, it investigates the current state of play in trade finance. We show a double centralisation of flows - sectoral and geographical - fuelled by the undermining of institutions’ original mandates. It also highlights the shortcomings of the recent ‘do no harm’ regulations implemented in the sector. Secondly, building on the ever-increasing interest in green trade, it formulates recommendations for public agencies to ‘do good’ by bridging the financing gap and being a driving force of the shift to a sustainable world.

In order to tackle these questions, this research conducts a quantitative and qualitative analysis of trade finance flows from the world’s leading trade finance institutions over the last decade. Data is taken from the International Union of Credit & Investment Insurers and the Organisation for Economic Co-operation and Development. The theoretical analysis builds on an extensive literature review and the examination of reforms undertaken in the public and private trade finance sectors.