TRADE SUSTAINABILITY The approach taken here is developed
from the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) matching of SDGs to the HS codes first published in 2019, and the subsequently released ‘R’ code that provides a schema for matching SDGs to Non Tariff Measures (NTMs). The research conducted by the UN ESCAP both highlights the materiality of trade to the broader sustainability agenda, and similarly provides an excellent baseline for improving the matching. In particular, Coriolis Technologies has taken this paper and added to the number of products, as represented by their HS code, by undertaking an analysis for each product not covered in the paper, and using a global discourse analysis of how these products are reported in relation to the key words contained in the SDGs, positively or negatively. In other words, the data looks at products
only, and uses a country’s product-based profile of trade using refined UN Comtrade data at a six-digit HS code level. It matches a country’s imports and exports to the 17 SDGs in terms of their negative or positive contribution. Products are then weighted for the value of trade in each SDG from the trade profile of the country concerned. Because some products count against
several SDGs, the total annual values are higher than the value of trade in a country. For simplicity of comparison, the score is normalised on a ranking of -1 (where everything is negative) to +1 (where everything is positive). A score of 0 means that trade is neither negative nor positive.
So how sustainable is world trade? The analysis concludes that world trade is negatively contributing to the SDGs. Overall, the score for trade across the world is -0.58. Nearly 80% of world trade contributes negatively to SDGs. In other words, in 2020 the negative impact was some US$122.7trn that undermined the achievement of SDGs. The equivalent value of positive contributions was just US$19.3trn, or 17%. The five factors contributing to SDGs most negatively (in value terms) are summarised in Figure 2. If these figures were not worrying enough
in their own right, the trade profiles of developed economies with heavy manufacturing bases are generally less sustainable than emerging economies. For example, intra-EU trade scored -0.68 in 2020, while imports into the EU as a whole scored 0.67, and exports -0.71. This can be explained by a simple look at the EU’s trade profile. The top five sectors that the bloc of 27 EU countries imports from and exports to
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the rest of the world are oil and gas, electricity, machinery, automotives and pharmaceuticals. As a result, adding these together, some US$4.7trn of trade in 2020 contributed negatively towards the elimination of hunger, US$2.2trn of trade contributed negatively towards responsible consumption and production, and a further US$1.6trn made negative contributions towards affordable and clean energy. In contrast, only US$2.3trn contributed positively towards decent work and only US$257.5bn went towards good health and wellbeing, even in a year where health was a primary public policy concern. Intra-European trade has a similar
profile – all of which reflects the fact that the EU’s regional supply chains that fuel its exports to the rest of the world are equally unsustainable. Some of the eastern European nations within the EU score worst – in 2020, Hungary’s exports to the rest of the EU were at -0.75 on the ranking of -1 to +1, for example. The reason was the country’s heavy reliance on imports and exports of plastic components to automotive and electronic supply chains. Romania and Slovakia have similar trade profiles in terms of ESG. While all improved during
Oil and gas alone contribute some 10% to the value of world trade
2020 compared with an average score since 2011, this was largely due to an overall drop in trade in automotives and oil and gas, rather than an intrinsic improvement in the sustainability of trade. Two aspects of this scoring system are really interesting, however, and both are positive. The first is that, for many countries, 2020 was better in terms of sustainability than an average for the past five years. This is unsurprising, since 2020 was the year when pandemic-induced reductions in global trade meant that for a few months the amount of fossil fuels, manufactured items and consumer goods was considerably lower (see Figure 3).
Figure 1: The 17 SDGs
Source: United Nations
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