Sustainability linked Supply Chain Finance Program Introduced by Citi for APAC Region

US investment bank Citi (NYSE: C) has introduced its first sustainability-linked supply chain finance (SSCF) program in the Asia-Pacific region.

Via the SCCF program, Citi intends to support customers as they work on their ESG priorities, enhance supply chain resilience, and effectively manage working capital requirements.

Citi’s management noted that supply chain finance may benefit both firms and their suppliers as they focus on prioritizing their respective working capital positions.

When using supply chain finance, for instance, Citi may offer financing to a customer’s suppliers from the date of the collection of certain products, or the date of the provision of certain services, to the date on which payment is owed to those suppliers.

The cost of this type of financing is then covered by suppliers at a rate that is significantly lower than their average cost of funds, and as a result, suppliers are able to benefit from cash flow improvements, faster transactions, and more affordable financing costs.

Citi’s SSCF program has been implemented for German chemical and consumer goods firm Henkel.

The program was first introduced with suppliers in Australia, and will be expanded to include suppliers in other markets during the coming weeks.

The program is reportedly a first for Henkel in the APAC region, and is intended for existing or new suppliers who can demonstrate strong or improving sustainability performance.

Qualifying or eligible suppliers may access Citi’s supply chain financing at reasonable rates on a tiered basis, with rates improving as a supplier’s sustainability score gets better.

Henkel, with the support of an international sustainability assessment agency, will be assessing the sustainability performance of suppliers.

Christoph Wenner, Regional head of Finance for Asia-Pacific at Henkel, stated:

“We are convinced that sustainability-linked supply chain financing can help improve sustainability across Henkel’s large supplier ecosystem in Asia-Pacific.”

Citi’s management also noted that its SSCF program in Asia-Pacific aligns or is consistent with its own ESG commitments.

In order to help accelerate the transition to a global low-carbon economy, Citi introduced its updated Sustainable Progress Strategy in July of last year, which includes a $500 billion Environmental finance goal.

Additionally, Citi has made a commitment to offer $1 trillion in sustainable finance, and a $500-billion Social Finance Goal as well

Ernesto Pittaluga, Head of Corporate, Commercial, and Public Sector Sales for Treasury and Trade Solutions in Asia-Pacific at Citi, remarked:

“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. 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.”

With business in more tan 160 countries and jurisdictions, Citi has around 200 million customer accounts globally, servicing consumers, corporations, governments, as well as institutions.

Citi’s range of financial products and services includes consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

Citi’s Treasury and Trade Solutions provides a suite of cash management and trade finance services, and is used by multinational corporations, financial institutions, and public sector organizations in more than 90 countries.

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