EBRD and Citi Roll Out Sustainable Supply Chain Finance Program for Metso Outotec and its Türkiye-based SME Suppliers

EBRD and Citi Roll Out Sustainable Supply Chain Finance Program for Metso Outotec and its Türkiye-based SME Suppliers

(IN BRIEF) The European Bank for Reconstruction and Development (EBRD) and Citi have partnered to implement a sustainable supply chain finance program for Finnish technology and services company Metso Outotec and its suppliers in Türkiye, the majority of which are small and medium-sized enterprises (SMEs). The EBRD will provide risk participation of up to €25 million to support eligible suppliers based in Türkiye, providing them with access to affordable working capital finance. This program will receive grant funding from the Türkiye-EBRD Cooperation Fund and will incorporate outcome-based incentives that reward suppliers for meeting pre-defined emissions reduction targets, accelerating their transition to greener operating models. The EBRD’s Supply Chain Solutions Framework will provide advisory support to align suppliers with best-practice environmental, social, and governance standards.

(PRESS RELEASE) LONDON, 17-Apr-2023 — /EuropaWire/ — The European Bank for Reconstruction and Development (EBRD), a multilateral developmental investment bank and Citi are partnering to implement a sustainable supply chain finance program for Finnish technology and services company Metso Outotec and its Türkiye-based suppliers, most of which are small and medium-sized enterprises (SMEs).

The EBRD will fund risk participation of up to €25 million in Metso Outotec’s supply chain finance program, administered by Citi, to provide eligible Türkiye-based suppliers with access to affordable working capital finance. The program will also benefit from grant funding from the Türkiye-EBRD Cooperation Fund, which will offer an outcome-based incentive providing financial rewards to suppliers for meeting pre-defined emissions reduction targets.

This incentive model aims to expedite the transition of suppliers to greener operating models and contribute to Metso Outotec’s ongoing efforts to decarbonize its supply chain. This model is referred to as “sustainable supply chain finance,” and is being increasingly adopted by large corporates to drive climate and social action in their supply chains.

The EBRD’s Supply Chain Solutions Framework is a product innovation that supports the development of sustainable and resilient supply chains. It enables the EBRD to participate, funded or unfunded, in the supply chain finance programs that financial institutions offer to larger corporates, including multinationals, whose suppliers are based in EBRD regions.

Through this program, SMEs will have access to more affordable and timely working capital finance, and may also receive advisory support from the EBRD’s Advice for Small Businesses program to align with best-practice environmental, social, and governance standards. The EBRD can also leverage donor funding to support the rollout of sustainable supply chain finance programs that deliver outcome-based incentives to eligible and participating suppliers who meet pre-defined sustainability criteria.

Metso Outotec is a Helsinki-based company with a global presence in over 50 countries that provides technology, end-to-end solutions, and services for the aggregates, minerals processing, and metals processing industries. The company has prioritized sustainability, setting science-based targets to reduce its scope 1 and 2 emissions, as well as committing to addressing scope 3 emissions related to its supply chain, which spans over 80 countries.

“Supply chain finance is a proven instrument for delivering accessible liquidity to SME suppliers and improving the resilience and interconnectivity of regional and global supply chains,” said Arvid Tuerkner, EBRD Managing Director for Türkiye. “We are happy to be partnering with Citi and Metso Outotec on this project, which contributes not only to providing access to working capital finance for Metso Outotec’s Turkish suppliers, but also to supporting their green transition at scale.”

Chris Cox, Citi Global Head of Trade and Working Capital Solutions, commented: “Working with Metso Outotec and the EBRD demonstrates the benefits Citi Sustainable Supply Chain Finance has in advancing ESG-related objectives by incentivising suppliers for delivering Metso-EBRD targets. This collaborative effort enables improved working capital solutions and is a great example of a client partnership which drives us to build the future of commerce today.”

Marius Verwoerd, Metso Outotec Vice President Sustainability, said: “Innovative financing solutions like this will make a significant contribution to Metso Outotec’s efforts to manage emissions across its supply chain. The collaboration with Citi and the EBRD is a great example of what is possible when companies partner up to support the energy transition.”

To date, the EBRD has invested nearly €17.2 billion in 398 projects in Türkiye. In 2022 alone, the EBRD invested more than €1.6 billion in the country, mainly in the private sector.

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SOURCE: EBRD