ESG will be front and foremost in 2023. From climate change, Fairtrade incentives, supplier’s sustainability credentials vs corporate ESG Index, ESG Investment KPI’s and sustainability bonds, Supply chain ESG is firmly embedded and set to grow as well as become more complex.
Increasingly, ESG will also play a growing role in attracting both investment and talent. Businesses failing to live up to their ESG responsibilities, increasingly risk causing their reputations, and consequently their bottom lines, considerable harm. At the moment, ESG is being perceived as a reporting issue that evolves around the availability of specific sustainability relevant data – not the integrated use of it, which has to be the next step.
Initially an investor-led movement, the rapid ascent of ESG goals has also been driven by a realisation that sustainable companies are able to command a higher price for their products. But you can’t just sub-contract away the less sustainable parts of your business when there is now a growing need to demonstrate not only that your business is sustainable but your supply base is also. If a modern slavery story hits a supplier, even though you may be 2 tiers down the supply chain, you will be held responsible.
For corporates it is easy to raise cheaper ESG funding through issuing Sustainability Bonds and using it for internal ESG projects like solar panels and water recycling but it’s much harder for their suppliers and vendors to do the same when they need expensive filtration systems or more eco-friendly manufacturing equipment to maintain their ESG credentials and remain a supplier.
Crossflow have stepped forward and initiated ESG Funding Programme to corporates to help their suppliers achieve their ESG responsibilities. What this means for most corporates is that you tie the finance terms to the supplier’s sustainability credentials which you can then benchmark against your own sustainability or ESG Index. We also help to facilitate critical ESG capital investment opportunities at the manufacturing site, where new equipment for ESG compliance is urgently needed. Unlike a standard purchase order and invoice early settlement, this situation involves stage payments based on delivery, activity and payments triggered by the approved receipt of transaction data documents.
The programme is limited in its availability, so contact us today to find out more.
Kevin Hayden is an executive level professional with over 35 years of Fintech, Investment & Commercial banking, and software sales & services industry experience, managing key major business and transformation change teams. With an economics and banking background he is driven by challenge and excellence at all levels, he is committed to delivering a long-term partnership with clients that foster trust and build reputations, focused on the transformation of supply chain finance that helps and assists everyone along the journey.