Greening Aid for Trade and Sustainable Development: Financing a just and fair transition to sustainable trade

The report examines the role of Aid for Trade (A4T) in supporting the transition to a green global economy. It argues that while A4T has historically focused on infrastructure and productive capacity, it must now mainstream environmental considerations to help developing countries, particularly least developed countries (LDCs), adapt to climate change and seize green trade opportunities. The author proposes six complementary pathways to 'green' A4T, emphasizing developing country ownership and the need for additional financing, improved monitoring, and coherence with wider climate finance and debt relief mechanisms.

• The report proposes six complementary pathways to green Aid for Trade (A4T): mainstreaming environmental considerations in planning; securing new and additional financing for sustainable trade strategies; improving monitoring systems to capture environmental impacts; integrating trade into existing climate and environment funding; strengthening South–South cooperation; and fostering coherence between A4T and other financial mechanisms like climate finance and debt relief.
• Historically, A4T has been dominated by a few sectors; over three quarters of disbursements in its first decade went to transport and storage, energy generation and supply, agriculture, and banking and financial services.
• There is a significant discrepancy in how environment-related A4T is reported; while Rio marker data suggested a rise to 40% by 2014, a preliminary OECD review estimated that fewer than 2% of A4T projects have a clear environmental purpose.
• Developing countries, especially LDCs and Small Island Developing States (SIDS), face a 'double exposure' to economic and environmental risks, including commodity price volatility and climate change, which hinders their ability to transition to sustainable trade.
• The report highlights the importance of debt relief as a tool for sustainable trade, suggesting that debt-for-nature or debt-for-climate swaps could free up national resources for environmental protection and reduce the pressure to engage in unsustainable natural resource extraction to service debt.
• The International Trade Centre (ITC) has pioneered green A4T through its Green2Compete strategy and Trade for Sustainable Development (T4SD) Program, focusing on helping MSMEs in developing countries adopt circular economy and resource efficiency models.
• The Enhanced Integrated Framework (EIF) has increasingly integrated environmental sustainability as a core priority for LDCs, including using environmental considerations as criteria to assess the quality of national trade strategies.
• The report argues that the 'ecological debt' owed by developed countries, based on their historical responsibility for environmental damage and consumption-based footprints, justifies the need for enhanced A4T and financial support for developing nations.
• A critical gap exists in trade finance for developing countries, estimated to have grown to between USD 2.5 trillion and USD 5 trillion for the post-COVID recovery period up to 2025, which limits the ability of MSMEs to engage in green value chains.

APA

Birkbeck, C. D. (2022). Greening Aid for Trade and Sustainable Development: Financing a just and fair transition to sustainable trade. Forum on Trade, Environment, & the SDGs. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/greening-aid-trade-financing-just-transition.pdf?dm=1678453676

Chicago

Birkbeck, Carolyn Deere. Greening Aid for Trade and Sustainable Development: Financing a just and fair transition to sustainable trade. Forum on Trade, Environment, & the SDGs, 2022. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/greening-aid-trade-financing-just-transition.pdf?dm=1678453676.

Wikipedia

{{cite report |last1=Birkbeck |first1=Carolyn Deere |title=Greening Aid for Trade and Sustainable Development: Financing a just and fair transition to sustainable trade |publisher=Forum on Trade, Environment, & the SDGs |date=July 2022 |url=https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/greening-aid-trade-financing-just-transition.pdf?dm=1678453676 |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{birkbeck2022greening, author = {Birkbeck, Carolyn Deere}, title = {{Greening Aid for Trade and Sustainable Development: Financing a just and fair transition to sustainable trade}}, institution = {Forum on Trade, Environment, \& the SDGs}, year = {2022}, month = jul, url = {https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/greening-aid-trade-financing-just-transition.pdf?dm=1678453676}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }