Trade is an underutilized tool in climate action. Better aligning trade policies with environmental and climate goals is key to creating better opportunities for all.
As UN Trade and Development (UNCTAD) celebrates its 60th anniversary, it’s crucial to examine issues that will shape the future of trade and development.
The "Forward together" series explores pivotal topics for developing countries, such as aligning trade policies with environmental and climate goals.
The global production and distribution of goods contribute to about a quarter of all carbon dioxide emissions and to a significant share of biodiversity loss and global pollution. UN estimates show that agricultural expansion alone drives 88% of global deforestation.
In 2021, about 17% of global exports were biologically based products, rising to 40% for low-income economies. Global exports of plastics have more than doubled in value since 2005, reaching nearly $1.2 trillion in 2021.
The fast-growing digital economy adds to the impact on the environment, increasing waste, energy consumption and emissions. Global e-waste surpassed 53 million metric tons in 2019, and data centers consume 6% to 12% of global energy.
An underutilized tool in climate action
Trade remains an underutilized or misused tool in climate action. It can enhance access to energy-efficient goods and the technologies needed for the energy transition and climate change adaptation and mitigation. Aligning trade more with climate and environmental objectives can create new, sustainable opportunities.
The stakes are particularly high for developing countries, where environmental degradation and climate change exacerbate poverty and undermine development gains.
“We find ourselves at a critical juncture,” UN Trade and Development Secretary-General Rebeca Grynspan says. “As the world is coping with the devastating effects of global warming, it’s time for trade to play its role in shaping climate action that fosters inclusive and sustainable development.”
Unlocking sustainable trade opportunities
Sustainable trade practices can open new markets, create decent jobs and drive innovation. For instance, transitioning to a circular economy could create over 7 million jobs and add $4.5 trillion in growth by 2030.
Promoting sustainability across entire value chains of biodiversity-based goods using UN Trade and Development’s BioTrade principles and criteria and related schemes has increased the sales of companies, associations and projects from $40 million in 2003 to $31 billion in 2022.
The ocean economy, worth $3 trillion to $6 trillion, offers vast sustainable opportunities in fisheries, aquaculture, tourism, shipping and marine biotechnology.
Seaweed is an environmentally friendly crop that can be used in many industries. With a global market work $17 billion in 2021, it can support sustainable livelihoods for small-scale farmers and empower women in coastal communities, particularly in Asia and Africa. Developing countries are also home to many sustainable alternatives to plastics, such as bamboo, coconut husks and banana plants.
The energy transition will also boost demand for critical minerals like lithium, cobalt, and copper, which many developing countries have in abundance. Many of them also have untapped potential for renewables like solar and wind.
Navigating complex challenges across sectors
Aligning trade with climate and environmental goals requires breaking the historical link between growth and emissions and resources use. This involves investing significantly in new, sustainable sectors, acquiring new skills, accessing new technologies and navigating complex international sustainability standards.
Climate change, pollution and overfishing threaten the fisheries sector, crucial for the livelihoods of more than 40 million people worldwide. The risks are particularly high for developing countries, where small-scale fishing prevails.
The global shipping industry, carrying over 80% of traded goods, has seen its greenhouse gas emissions increase by 20% over the last decade. Ships, including fishing fleets, need to transition to carbon-neutral technologies. Although solutions exist, such as biogas, biodiesel, solar powered hybrid engines, green ammonia, and green hydrogen, they are not yet fully mature. More climate-resilient port infrastructure is also needed for storing and delivery future renewable energy fuels.
While critical minerals offer many opportunities, they need to be mined, processed and traded sustainably and fairly to avoid deepening commodity dependencies in developing countries, exacerbating economic vulnerabilities and worsening inequalities.
As countries increase their climate ambitions to meet Paris Agreement goals, stronger climate policies are reshaping trade flows and comparative advantages. Efforts to reduce emissions while addressing potential competitiveness concerns can affect trading partners, particularly developing and vulnerable economies.
UN Trade and Development’s role in promoting sustainable trade
Through research, technical cooperation, and consensus-building, UN Trade and Development helps developing countries align trade with climate and environmental goals.
Research and analysis
We conduct rigorous research, collect robust data and provide policy analysis on the links betwen trade, climate change and the environment.
For example, our analysis ahead of the latest UN climate summit (COP28) and Conference of the Parties to the UN Convention on Biological Diversity (COP16) highlighted trade's significant yet underutilized potential in climate action and biodiversity conservation.
Key publication series include:
- The Trade and Environment Review: Provides in-depth analysis and policy recommendations on integrating environmental considerations into trade policies.
- The Review of Maritime Transport: Offers insight and analysis on reducing the environmental impact of the industry.
- The Trade and Development Report: Sections examine funding options and strategies for aligning trade and global production networks with climate action.
- The Least Developed Countries Report: Provides detailed socioeconomic analysis on the world's most impoverished countries. Editions consider the implications of a just low-carbon transition, while considering LDCs’ development needs and capacities to address climate change.
Technical cooperation
We promote sustainable trade, transport and production methods through various programmes and projects.
A key programme is the BioTrade Initiative. It supports sustainable practices in agriculture, forestry, fisheries and marine resources, helping countries harness the economic potential of their natural resources while preserving biodiversity. For example, in South Africa it helped create over 3,700 jobs and increase BioTrade exports by 178%.
Other examples of technical cooperation in the area of trade and the environment include:
- Oceans economy and fisheries programme: Collaborates with countries and partners to conserve marine resources and support their sustainable use, including implementing the WTO Agreement on Fisheries Subsidies.
- Sustainable manufacturing and environment programme: Helps policymakers monitor and address the environmental impacts of manufacturing. This includes studies and a data dashboard that examines pollution linked to exports from African and South Asian countries.
- Empretec programme: Works with entrepreneurs in the circular economy to tackle waste and redefine economic models, driving innovations in circular design, product life extension and waste management.
- Port management programme: Collaborates with ports and the shipping industry to help developing countries adapt port infrastructure and operations to climate change and enhance sustainability.
- National Green Export Reviews: Helps developing countries identify and promote green sectors with export potential, providing tailored policy advice and capacity building.
- Automated System for Customs Data (ASYCUDA): Reduces physical trips and printed documents related to customs clearance processes. This not only streamlines trade procedures but also reduces CO2 emissions
Consensus-building
We convene government and industries leaders, sector experts and civil society representatives to share best practices and build consensus on strategies policies and initiatives.
For example, at the most recent UN climate summit (COP28), UN Trade and Development and partners organized the first-ever Trade House and participated in the summit’s inaugural Trade Day. Similar initiatives are planned for the 2024 Conference of the Parties (COP) to the UN Convention on Biological Diversity.
Examples of series of meetings and forums include:
- UN Trade Forum: Sessions focus on how trade can power climate action and environmental sustainability.
- Oceans Forum: Discusses trade-related aspects of Sustainable Development Goals 14.
- Panel on Critical Energy Transitions Minerals: Supports the work of the panel set up by UN Secretary-General António Guterrres to provide common principles on how to manage these minerals in a way that is fair and supports the energy transition and Sustainable Development Goals.
- Global Commodities Forum: Its 2024 edition focuses on “Commodities amid the Climate Emergency: Sustainable Trade and Value Addition”.
- BioTrade Congress: Discusses the pivotal role of trade and trade policy to halt and reverse biodiversity loss and support the implementation of The Biodiversity Plan.
- Global Supply Chain Forum: Showcases practical solutions and best practices to make supply chains and transport networks more sustainable.
Key recommendations
UN Trade and Development calls for comprehensive reform of the global trade system to align it with climate and other environmental objectives, while also advancing socio-economic Sustainable Development Goals (SDGs). Key recommendations include:
Cooperation and policy design
- Designing climate policies in a way that minimizes the impact on trading partners, especially least developed countries, and avoids increasing trade costs and access barriers.
- Enhancing global cooperation to improve access to affordable technology, financial assistance and capacity building needed for low-carbon growth in developing countries.
- Improving coordination between government agencies and involving trade stakeholders more in the preparation of Nationally Determined Contributions under the Paris Agreement as well as National Biodiversity Strategies and Action Plans to implement The Biodiversity Plan.
- Enhancing women’s ability to contribute to sustainable sectors and implementing gender-responsive approaches to meeting climate and environmental objectives.
Oceans economy
- Implementing a global “Blue Deal” for sustainable ocean resource use, protecting fish stocks and marine biodiversity, and driving investment into sectors like seaweed farming and plastic substitutes.
- Supporting the research and commercialization of non-plastic substitutes through policies and investments.
- Accelerating the transition to low-carbon shipping with a universal regulatory framework applicable to all ships to ensure fairness.
- Introducing a fuel levy or carbon price to make alternative fuels competitive and fund low-carbon transitions for smaller economies.
Production, distribution and consumption
- Enhancing data collection and transparency of ICT companies' energy use and implementing energy efficiency policies in data networks.
- Promoting circularity and sustainable product design, longer lifespans and the “right to repair.”
- Establishing principles for the fair and sustainable production and trade of critical energy transition minerals.
- Strengthening sustainable agricultural value chains, including food, for export in developing countries.
- Improving supply chains and delivery logistics.
Forward together towards a more sustainable trading system
As we look to the future, aligning trade with environmental and climate goals in line with socio-economic SDGs will be a defining challenge. However, this journey is full of opportunities.
As we celebrate UN Trade and Development’s 60th anniversary, we reaffirm our commitment to helping all nations to trade sustainably.
