Deutsche Bank has created a sustainability-linked supply chain finance programme for German chemicals giant BASF in China.
The lender says it has converted an existing payables finance programme for BASF into a sustainability-linked facility for some of the company’s subsidiaries in China. The payables programme was launched in 2020 and converted to a sustainability-linked solution earlier this year.
BASF’s suppliers are encouraged to obtain a sustainability rating from agency EcoVadis and will qualify for preferential interest rates if they improve their score.
The EcoVadis rating method measures suppliers’ performance on environment, labour and human rights, ethics and sustainable procurement.
The programme does not claim to meet the Loan Market Associations’ Sustainability-Linked Loan Principles or a similar international classification, but a Deutsche Bank spokesperson says it is aligned with the lender’s own sustainable finance framework, which “follows generally accepted international standards and principles and has obtained a second-party opinion”.
Deutsche Bank says it is BASF’s first sustainability-linked payables finance programme in Asia. The lender declined to say how many suppliers are participating in the arrangement.
“We are strongly committed to our sustainability strategy and helping our clients find innovative new solutions that not only improve resilience of their supply chains, but also advance their sustainability footprint to future proof their operations,” says Ole Matthiessen, Deutsche Bank’s head of corporate bank for Asia Pacific, Middle East and Africa and global cash management head.
“We look forward to continuing to help BASF with its sustainable growth ambitions globally.”
Birka Benecke, senior vice-president of corporate treasury at BASF, says the programme will help the firm “deepen our collaboration with our suppliers and strengthen the partnership in the area of sustainability transformation. This also gives us the opportunity to further optimise our supply chains.”
