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The European Bank for Reconstruction and Development (EBRD) and Citi are jointly supporting the rollout of a sustainable supply chain finance programme 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’s funded risk participation of up to €25 million in Metso Outotec’s supply chain finance programme in Türkiye – administered by Citi – will support eligible suppliers based in the country, providing them with access to affordable working capital finance.
This programme will benefit from grant funding from the Türkiye-EBRD Cooperation Fund, which will be used to incorporate an outcome-based incentive that delivers financial rewards to suppliers for meeting pre-defined emissions reduction targets.
This is expected to accelerate their transition to greener operating models, contributing to Metso Outotec’s ongoing efforts to decarbonise its supply chain. This model of incentivising target-driven, sustainability-linked changes in a supply chain finance programme is called “sustainable supply chain finance” and has been increasingly adopted by large corporates to catalyse climate and social action throughout their supply chains.
The Supply Chain Solutions Framework is the EBRD’s latest product innovation and contributes to the development of more sustainable and resilient supply chains. It enables the EBRD to participate on a funded or unfunded basis in the supply chain finance programmes that financial institutions extend to larger corporates, including multinationals, whose suppliers are based in the EBRD regions.
Suppliers, many of them SMEs, will be able to gain timelier access to more affordable working capital finance. Suppliers may also receive advisory support, including through the EBRD’s longstanding Advice for Small Businesses programme, to help them align with best-practice environmental, social and governance standards.
The EBRD is also in a position to leverage donor funding to support the rollout of sustainable supply chain finance programmes delivering outcome-based incentives to eligible and participating suppliers that meet pre-defined sustainability criteria.
Headquartered in Helsinki and with a presence in more than 50 countries globally, Metso Outotec provides technology, end-to-end solutions and services for the aggregates, minerals processing, and metals processing industries.
With sustainability at the centre of Metso Outotec’s strategic priorities, the company has made concerted efforts to address and mitigate the impact of its core business on the climate. This includes setting science-based targets for reducing scope 1 and 2 emissions, as well as committing to addressing scope 3 emissions attributable to its supply chain, which runs across more than 80 countries.
Arvid Tuerkner, EBRD Managing Director for Türkiye said, “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.
“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.