The green transformation process in banks and corporates
A look into the future: is everything going green? This year’s edition of “Update Factoring” focused on #transformation and #sustainability in the #supply chain and their impact on #businesses. Markus Wohlgeschaffen, Head of Product Traxpay, and Tanja Reilly, Senior Business Development Manager D-A-CH, EcoVadis scored on the topic of “Practical implementation of ESG criteria in the supply chain”.
The event “Update Factoring” brought renowned guests such as Robert Bosch (Head of Division Current Supervision 3, Deutsche Bundesbank, Munich), Wolfgang Reiser (Chairman of the Management Board, BNP Paribas Factor GmbH, Düsseldorf), Tanja Reilly (Senior Business Development Manager D-A-CH, EcoVadis D-A-CH – Business Sustainability Ratings, Düsseldorf) and Markus Wohlgeschaffen (Head of Product, Traxpay GmbH, Frankfurt) on stage. Conference chair: Thorsten König (Managing Partner, CBS Finance GmbH, Essen) led through the program.
First and foremost, the topic “Practical implementation of ESG criteria in the supply chain”. Is ESG fully in vogue and what should we understand by it? Seven years ago, company CEOs or CFOs would have referred journalists to the marketing department. Today, journalists end up talking directly with those company CEOs and CFOs. We are seeing a new dynamic and the framework has changed. One is the regulatory requirements and the other is the new supply chain laws. The EU taxonomy is moving the financial world. In Europe, the human rights issue is dominating our news with the current war in Ukraine. And investors have now increased their focus on sustainable investments.
Do we need sustainability in the supply chain and if so, can we control it?
75 percent of supply chains have already been disrupted during the pandemic. The resilience of supply chains is therefore increasingly becoming the focus of companies. Customer awareness is strongly attached to the brand and the green factor is becoming increasingly important. It is the same with investors who prefer ESG Linked Loans. Banks like to invest in credit risks of companies that are sustainable, such as green promissory bills. 90% of our carbon footprint is at the supplier – thus in the supply chain – or in CO² emissions. So SCF is coming more and more into focus. Especially in terms of taxonomy, bank advisors need to advise clients on sustainability. The transformation process on the part of banks and customers has begun!
“A very important prerequisite for measuring and controlling sustainability is a meaningful and uniform database to ensure comparability and transparency. Supply chain finance instruments such as reverse factoring, dynamic discounting and digital sale of receivables fulfill this requirement in an ideal manner. On the one hand, these forms of transactional liquidity generation collect and use data to determine and evaluate sustainability. On the other hand, they can be used to incentivize sustainability with pinpoint accuracy,” says Markus Wohlgeschaffen, Head of Product, at Traxpay.
Companies that cause or accept damage to people and the environment in their supply chains must be held liable. Unscrupulous business practices must no longer remain without consequences. Respect for human rights and the environment should thus also be anchored at the European level in all global value chains.
A look into the future: is everything going green? Environmental goals and compliance with labor and human rights, but also the issue of securing liquidity, are at the top of companies’ agendas.