Puma and IFC reward suppliers in emerging markets for environmental and social performance

IFC, a member of the World Bank Group, and sports fashion brand Puma, have entered into a partnership to provide financing to Puma’s suppliers in emerging markets. This will offer financial incentives for suppliers to improve environmental, health and safety and social standards.

In its first phase, the program will be rolled out in Bangladesh, Cambodia, China, Indonesia, Pakistan and Vietnam; it is the first to be signed by IFC with a European brand

IFC will adopt a financing structure with tiered pricing of short-term working capital, offering lower costs for those suppliers that achieve a high score in Puma's supplier rating system. The ratings are assigned based on PUMA’s monitoring of suppliers’ adherence to its social and environmental standards through an auditing process.

Lars Soerensen, Puma's Chief Operating Officer said: “This financing program enables our suppliers to leverage their relationship with us and benefit from Puma's strong reputation and financial position. This is the first program in our company that rewards a supplier’s rating within Puma's environmental and sustainability program through related fees."

Sergio Pimenta, IFC Director of Manufacturing, Agribusiness and Services said: “This agreement with PUMA advances IFC’s efforts to encourage small and medium companies such as PUMA’s suppliers to improve environmental and social sustainability while achieving strong financial results.”

RELATED: The future of the manufacturing supply chain - Q&A with GT Nexus

Ball Planet, a SME with facilities in China, is the first supplier to join the program. “We are keen to start using this financing facility, since access to affordable financing is always a challenge. This innovative program will not only help us improve our cash flow, but will also provide us with a financial incentive to improve our environmental, health and safety and social standards, which will ultimately reduce our operating costs and enhance our performance”, said Ken Hong, Ball Planet General Manager.

Puma and IFC launched this initiative in partnership with GT Nexus, a cloud-based business network and platform for global trade and supply chain management. The platform enables participants to operate against a core, real-time set of information across multiple supply chain functions. This optimises the flow of goods, funds and trade information.

IFC provides financing to ready-made garment and footwear suppliers through its Global Trade Supplier Finance (GTSF) program, which provides working capital to suppliers backed by receivables from international buyers.

Supplier finance is a scalable way for suppliers in emerging markets to access affordable financing for their receivables over a period defined by the terms of credit. Established in 2010, IFC’s GTSF program is a $500 million multicurrency investment and advisory program that provides short-term finance to emerging-market suppliers and small and midsized exporters.

Supply Chain Digital’s April issue is live.

Follow @SupplyChainD and @MrNLon on Twitter.

Supply Chain Digital is also on Facebook. 

tanuha2001 / Shutterstock.com