The 2023 United Nations Secretary-General’s (UNSG) Progress Report on the SDGs (Sustainable Development Goals), released earlier this summer, makes for sobering reading. Over half of the 140 measurable SDGs show “moderate or severe deviations” from the expected or desired trajectories, with 30 percent actually having worsened from the 2015 baseline. The UNSG recommends that world leaders need to redouble efforts to eradicate poverty, reduce inequality, and improve the rights of women and the most vulnerable.

With the calamities of 2024, the SDGs have sadly fallen out of the headlines. But we have within reach a simple strategy that could deliver the double win of good for growth and good for people: digitalization of trade. Notably, this is possible without adding billions of dollars of new SDG funds but rather by investing small amounts in systems upgrades and capacity building to transform existing trade processes into digital ones.  

Previously, a host of challenges have held back the digital transformation of the trade ecosystem.

All of this is changing as we speak. Legal reform is happening: Economies accounting for over one-third of the global economy today have adopted the Model Law on Electronic Transferable Records, which provides the legal foundation for the use of electronic transferable records in place of paper-based legal instruments. Countries accounting for close to one-third of global gross domestic product have either partially aligned or are making efforts to achieve the same, and although it will take time, essential commitments have been made, according to Trade Finance Global.

Digital trade can achieve the double win of good for people and good for growth.

Second, over 60 organizations, including standards setters, industry bodies, and multilateral groups, have come together through the International Chamber of Commerce Digital Standards Initiative to map a path towards interoperability of data and electronic documents standards that connect all supply chain entities, including border authorities, together in a single framework. Any player can now implement the recommended electronic document and data standards for any part of the supply chain and digitalize without fearing that they will face interoperability issues down the line.

Third, the industry has mapped a vision for achieving digital trust at scale, allowing verified data to flow securely across networks and platforms. The first certification towards this is in development.

Digital trade brings significant rewards for businesses that trade internationally through faster processing times, labor savings, traceability, and compliance. These benefits, which have been documented in a growing number of case studies, should now be expanded to cover the whole ecosystem rather than just parts. 

This “entire ecosystem” approach is where digital trade can really deliver for the SDGs in three basic ways. 

First, converging the trade industry towards a finite set of easily accessible interoperable digital trade forms simplifies the process of implementing cross-border trade and transactions, particularly for small and medium-sized enterprises (SMEs) that may not have the resources to navigate multiple versions of the same forms or data points. Through digital standards with interoperable data, trade becomes more accessible.

Digitalization drives a reduction in the costs to process trade, particularly at borders and in financing, and therefore is associated with increasing trade overall. The Organisation for Economic Co-operation and Development has found that a 1 percent increase in digital connectivity between countries raises international trade by 1.5 percent and domestic trade by 2 percent. Over time, this creates more opportunities for more types of players to engage in trade, thus fueling growth and job creation.

Lastly, digital trade ecosystems create trusted, standardized, structured data, thus making it possible to aggregate these data into insights that can address key inclusivity challenges like the trade finance gap. The $2.5 trillion trade finance gap is largely driven by the difficulties faced by SMEs and emerging markets businesses in navigating through banks’ “know your customer” and “anti-money-laundering” assessments.

With better data about enterprises’ credit worthiness, new models for assessing robustness of a business are possible. This is how the Hong Kong Monetary Authority’s Commercial Data Interchange—which uses a wide variety of data to assess credit worthiness—has created a new path to trade finance for SMEs. More finance enables more trade, particularly for SMEs that are responsible for most of the jobs worldwide.

There is already wide acknowledgement that drastically improving the opportunities for SMEs to access finance, trade, and grow is essential to meeting the SDG goals of eradicating poverty, reducing inequality, and empowering women. Digitalizing trade offers a proven strategy to meet these aims and should be a part of every policymaker’s SDG agenda.