In a professional setting, originality takes a backseat to insights and practicality. This concept holds true for both norms and institutions such as the Environment, Social and Governance (ESG) norms, which are not new and untested. However, their complementary nature with the value-proposition of Export Credit Agencies (ECAs) is not fully explored. Unfortunately, there is often limited policy consensus on ECAs due to their mandate for promoting exports. As such, they are viewed as institutions that have an indirect role in catalyzing capital formation and filling gaps in credit support.

Consequently, these state-owned/funded agencies lack a firm mandate to prioritize climate-focused sustainability. However, with the evolution of the sustainability notion into an ESG framework, ECAs have an opportunity to move toward sustainable operations. They can incentivize ESG benchmarks that align with the overall socio-political preferences and policies of the state. This includes the impact on demographics, job creation, responsible practices and disclosures, among others.

The business model of ECAs is based on public finance incentivizing export credit and insurance where the private sector is unwilling to engage. This means that ECAs need to deal with adverse selection issues. While other financial institutions align their operations with sustainability-centric commitments, ECAs must also adopt the ESG framework to avoid holding an unsustainable portfolio.

The point is that millennials are more engaged, and their changing values are influencing the end-consumer choices in high-value markets. Thus, ESG- based evaluation of products, businesses, and related disclosures are increasingly influencing these markets. Adoption of an ESG framework by ECAs will strengthen their existing credit and risk evaluation process for effectively assessing the viability of export ventures in response to dynamic global demand.

Trade data from India shows that the infusion of international food safety standards has triggered growth in primary sector exports and income levels, led by high-value processed food industry. This validates the need for deeper integration of globally recognized standards with domestic business practices.

Indian policymakers embrace export-led growth as a mechanism for transitioning to a developed economy. Export promotion initiatives are visible across the geography and demography of India. Thus, a sustainable ECA built with ESG norms can propagate sustainable practices and solutions across a broader socio-economic spectrum. With global acceptance of unified ESG norms and increasing demand, this is an institution poised to catalyze behavioral changes among stakeholders to adopt global standards.

Nevertheless, building a sustainable ECA that balances ease of doing business with environmental regulations is a complex process. Sustainability performance or disclosures were not emphasized during the underwriting and appraising of creditworthiness and viability of export ventures. Moreover, ECA business practices focused mostly on earnings, volume, and continuity of export trade. Incentivizing inclusive benefits in domestic economies from export transactions was not the priority. Additionally, ECA business practices mostly relied on the principle of "dealing in documents and not in goods." This limits the ability to conduct stringent monitoring of the end-use of export credit finance. Furthermore, the changes in global demand are triggering multilateral supply chains that insist upon ESG standards at every stage of value-addition, and to investors, non-compliance is a political risk. Thus, ECAs face challenges in sustaining their business viability from re-insurance and investment perspectives. ESG norms provide a sophisticated framework for building a sustainable ECA to support export-led growth envisioned by policymakers.

Export promotion activities overseen by the ECA have the potential to address socio-ecological parameters, but their impact hinges on intent rather than mere compliance. Business ethics and organizational culture both play essential roles in this regard. Therefore, engaging with civil society can help to ensure that such criteria are fully met. For instance, India's recent pollution challenges and how the private sector responded to them offer a useful case in point. With pollution levels escalating, businesses and corporations have rallied to address the problem through innovative solutions focused on waste management, green energy, and pollution control. This has resulted in a reservoir of intellectual capital that continues to advance the field. By working closely with civil society, the ECA can significantly benefit from this experience.

Additionally, the ECA can act as an information-sharing platform by actively involving various sectors of society and spreading awareness on the benefits of adopting ESG guidelines. This will enhance the integration of sustainable practices into the global supply chain, while also helping to achieve greater inclusivity. In summary, building a sustainable ECA that adheres to ESG principles can play a crucial role in improving India's overall ESG performance by promoting its adoption throughout the socio-economic landscape and driving exports towards more prosperous, innovative, and sustainable ventures.