Supply chains get more attention in sustainable trade finance
Banks are taking a more proactive approach to sustainable trade finance, recognizing that their responsibilities extend beyond simply providing financially competitive products.
Sustainable trade finance involves enabling clients to support suppliers that meet pre-agreed criteria with access to off-balance sheet finance at attractive rates. But banks are increasingly aware that it is also important to engage with clients about the environmental impact of their supply chains to find out how they can be supported in their green transition or improve their sustainable supply chain credentials.
This is a topic that bankers say has increased in prominence since the start of the coronavirus pandemic. Parvaiz Dalal, head of supply chain finance at Citi, says he is having many more conversations with clients on the topic of sustainable working capital compared with before the pandemic.
“In some cases these discussions are about how we can help the client achieve their own targets, while in others we are looking at mechanisms to also include their customers and suppliers,” he explains.
Sourcing reliable data to make such assessments is a challenge
Societe Generale’s green trade finance offer’s eligibility framework integrates the ‘do no significant harm’ principle and the minimum social safeguards of the EU taxonomy, explains Sebastien Halley des Fontaines, head of structured trade finance.