Home Finance EBRD and Citi launch sustainable supply chain finance program with Metso Outotec

EBRD and Citi launch sustainable supply chain finance program with Metso Outotec

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  • 25 million euros to support Metso Outotec suppliers in Türkiye

  • Suppliers will receive sustainability-related incentives and advisory support

  • This framework allows the EBRD to participate in supply chain financing programs extended to large companies, including multinationals.

The European Bank for Reconstruction and Development (EBRD) and Citi are jointly supporting the rollout of a sustainable supply chain finance program for Finnish technology and services company Metso Outotec and its suppliers in Türkiyethe majority of which are small and medium-sized enterprises (SMEs).

The EBRD-funded risk participation of €25 million in Metso Outotec’s Supply Chain Finance program in Turkey – administered by Citi – will support eligible suppliers based in the country, providing them with access to affordable working capital financing.

This program will benefit from a grant from the Turkey-EBRD Cooperation Fund, which will be used to integrate a results-based incentive that offers financial rewards to suppliers for achieving predefined emissions reduction targets.

This is expected to accelerate their transition to greener operating models, contributing to Metso Outotec’s ongoing efforts to decarbonize its supply chain. This model of incentivizing goal-driven, sustainability-related changes in a supply chain finance program is called “sustainable supply chain finance” and is increasingly being adopted by large companies to catalyze 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 allows the EBRD to participate, on a funded or unfunded basis, in supply chain financing programs that financial institutions extend to large companies, including multinationals, whose suppliers are based in EBRD regions .

Suppliers, many of whom are SMEs, will be able to access more affordable working capital financing more quickly. Suppliers can also benefit from advisory support, including through the EBRD’s long-running Small Business Advice programme, to help them align with best environmental, social and governance practices. The EBRD is also able to mobilize donor financing to support the deployment of sustainable supply chain finance programs offering results-based incentives to eligible and participating suppliers that meet pre-defined sustainability criteria.

Headquartered in Helsinki and present in more than 50 countries worldwide, Metso Outotec provides end-to-end technologies, solutions and services for the aggregates, minerals and metals processing industries. With sustainability at the center of Metso Outotec’s strategic priorities, the company has made concerted efforts to address and mitigate the climate impact of its core business. This involves setting science-based targets to reduce its scope 1 and 2 emissions, as well as committing to tackling scope 3 emissions attributable to its supply chain, which extends across more than 80 countries.

“Supply chain finance is a proven instrument to provide accessible liquidity to SME suppliers and improve the resilience and interconnectivity of regional and global supply chains,” said Arvid Tuerkner, EBRD Managing Director for Turkey. “We are pleased to partner with Citi and Metso Outotec on this project, which helps not only provide access to working capital financing for Metso Outotec’s Turkish suppliers, but also support their large-scale green transition.

Chris Cox, Global Head of Business and Working Capital Solutions at Citi, commented: “Working with Metso Outotec and the EBRD demonstrates the benefits of Citi Sustainable Supply Chain Finance in advancing ESG-related goals by incentivizing suppliers to achieve Metso-EBRD objectives. This collaborative effort enables improved working capital solutions and is a great example of customer partnership that drives us to build the future of commerce today.

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

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

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