Hong Kong – Citi has launched its first Sustainability-linked Supply Chain Finance (SSCF) program in Asia Pacific with the aim of supporting clients as they advance their ESG priorities, improve the resilience of their supply chains and manage their working capital needs.
Supply Chain Finance (SCF) programs benefit companies and their suppliers as they prioritise their working capital positions respectively. In using Citi’s SCF program, for example, the bank would provide financing to a client’s suppliers from the date of collection of specific goods/provision of services to the date on which payment is owed to these suppliers. The cost of this financing is borne by suppliers at a rate lower than their usual cost of funds. As a result, suppliers benefit from cash flow acceleration, quicker payment and improved financing costs.
Citi’s first SSCF program has been implemented for German chemical and consumer goods company, Henkel. The program was first launched with suppliers in Australia and will be expanded to include suppliers in additional markets over the coming weeks.
The program is also a first for Henkel in Asia Pacific and is targeted at existing or new suppliers who demonstrate strong or improving sustainability performance. Qualifying suppliers can access Citi’s supply chain financing at preferential rates on a tiered basis with rates improving as a supplier’s sustainability score improves. Henkel, with the support of a global leading sustainability assessment agency, will assess the sustainability performance of suppliers.
“Sustainability is at the heart of Henkel’s strategic priorities. We are convinced that sustainability-linked supply chain financing can help improve sustainability across Henkel’s large supplier ecosystem in Asia Pacific,” said Christoph Wenner, Henkel Regional Head of Finance, Asia Pacific. “This program demonstrates Henkel’s commitment to creating a virtuous cycle of economic, environmental and social value.”
Citi’s SSCF program in Asia Pacific aligns with the bank’s ESG commitments. To help accelerate the transition to a global low-carbon economy, Citi launched its updated Sustainable Progress Strategy in July of last year, which includes its global US$500 Billion Environmental Finance Goal. Citi also recently established a commitment to US$1 trillion in sustainable finance by 2030, which includes the environmental finance goal and a US$500 Billion Social Finance Goal.
“We are proud to be collaborating with Henkel in this first for Citi in Asia Pacific. Like Henkel, our ESG commitments are an essential part of our firm’s strategy and these commitments are deeply integrated into our business and long-term priorities,” said Ernesto Pittaluga, Asia Pacific Corporate, Commercial and Public Sector Sales Head, Treasury and Trade Solutions, Citi. “We are committed to introducing new and innovative ESG-linked solutions for our clients in Asia Pacific and look forward to expanding the use of our SSCF program in the region.”