One of history’s most successful environmental agreements is the Montreal Protocol, an international treaty designed to protect the ozone layer by phasing out ozone-depleting substances. Starting in the 1990s, chlorofluorocarbons (CFCs) were the first to be banned, followed by the current phase-down of hydrochlorofluorocarbons (HFCs). Directed by the Environmental Protection Agency (EPA) and enforced by the American Innovation and Manufacturing (AIM) Act, HFC production and consumption as a refrigerant are to be phased down 85% by 2036. Encouragingly, reports suggest that the ozone layer is now on track to fully recover by 2040.

However, as with the CFC ban, a black market has emerged for HFCs. In the U.S., HFC smuggling is already a significant problem. In the 2024 fiscal year alone roughly 25 illegal shipments of HFCs were stopped, accounting for more than 211,000 metric tons of carbon dioxide. This highlights both the scale of the issue and the importance of innovative platforms like TradeSun, which offers comprehensive risk identification to safeguard against supply chain disruptions and financial losses.

According to Bloomberg, while enforcement agencies are relying on some of the old tactics used during the CFC ban—like the development of human resources on the ground—they’re also turning to AI. Smugglers use tactics such as relabeling tanks or falsifying import documentation —often claiming that shipments are only passing through the U.S. before slipping them into commerce. AI is presenting itself as a powerful tool, with trade experts emphasizing the importance of catching illegal shipments before they cross the border. TradeSun’s environmental, social, and governance (ESG) insights is a one-stop platform for this type of challenge:

AI Digitization for Smarter Enforcement

Enforcement agencies are utilizing AI to process large volumes of data, allowing targets to be identified quicker for enforcement and environmental compliance assurance activities.

The TradeSun Intelligence Platform harnesses comprehensive and intelligent rules-enhanced AI algorithms to check complex trade documents against a growing number of global regulations, helping banks and financial institutions mitigate the risks associated with cross-border transactions and accelerates document turnaround times for banks’ clients from days to minutes.

Streamlining AI in Trade Compliance

Andrew Farrelly, a former director at the U.S. Customs and Border Patrol Protection (CBP), told Bloomberg about the role AI plays in identifying smugglers. “One of the primary ways AI can help catch smugglers is by looking beyond the regular paperwork shippers must file — which essentially declares what’s in their containers — and peering into databases owned by intelligence agencies, local law enforcement or even other nations to spot potential bad actors.”

As the financial and environmental landscapes continue to evolve, so too must compliance strategies. TradeSun is committed to remaining at the forefront of innovation, continuously enhancing our solutions to meet the demands of tomorrow’s regulatory environment. TradeSun’s CoriolisESG product leverages independent data sources to analyze risks associated with businesses, supply chains, and transactions.

Deep-Tier Supply Chain ESG Insights

The Executive Assistant Commissioner at CBP’s Office of Trade, Anna Highsmith, highlights just how cutting-edge TradeSun’s technologies are. “The agency is also investing in the development of digital supply chain technologies, which could enhance officials’ ability to trace and verify the origin, composition and environmental impact of many types of products,” Highsmith told Bloomberg

In our ESG ratings, we use the interaction between a global product classification system, trade regulations, and the Sustainable Development Goals (SDGs) to assess the sustainability of companies’ operations. By examining trade data, we can identify companies importing or trading in HFCs (or with the potential to do so) and assess their environmental impact, regulatory compliance, and risks related to climate change and international agreements like the Montreal Protocol. We base our scoring on traceable economic activity, removing human error and self-reported bias. This analysis enhances our ability to evaluate how companies address environmental challenges associated with benchmarks such as SDG 13 (Climate Action).

Regulatory requirements for ESG matters are rapidly changing across jurisdictions. With TradeSun, you can navigate the shifting landscape more efficiently while removing costly business hurdles. We streamline compliance and provide a strategic advantage by linking insights to incentives such as green finance. The phase-out of ozone depleting substances has proven its environmental benefits, but it has also created new risks for supply chains and compliance. TradeSun helps businesses stay ahead of these changes, ensuring smooth operations in a world where climate challenges and trade complexities are intertwined.