(19 August 2022 – United States) American nutrition corporation ADM and Standard Chartered announced the successful execution of a US$500 million Sustainable Export Letter of Credit (LC) program.
The initiative implements and expands sustainability practices across ADM’s global supply chains. It is the first green focussed transaction of its type for the Bank and is linked to ADM’s utilisation of soft commodities such as soybeans, oilseeds and cotton.
The ADM sustainability LC transaction concept was first conceived in Q4 2021 however as a “trail blazing” deal specific information such as flow, detailed sustainability certifications and other items took time to be ironed out and implemented into the operational process. After this process was completed the soy crop procurement season was winding down.
The LC program demonstrates a commitment by both enterprises to sustainable practices including farming and production processes, supply chain transparency and “trackability”, the promotion of resource efficiency, energy use and social impact. The LC program structure was executed under StanChart’s Sustainable Trade and Working capital finance framework, which was introduced in Q2 2021. For deals under its purview, suppliers are mandated to present eligible sustainability certificates issued by third parties with accredited programs and these must relate directly to the underlying transaction financed.
“As a longstanding trade bank, we have an incredibly important role to play in helping to make global supply chain activities more sustainable. The successful execution of this Export LC programme is testament to the significant opportunity we have in catalysing finance to scale impact,” commented Standard Chartered Global Head of Trade and Working Capital, Kai Fehr.
“Not only are the bank’s clients increasingly prioritising sustainability across their supply chains to make improvements to their own business agendas, but they are doing so to ensure a more resilient growth for the wider economy” Fehr added.
East & Partners latest Global Insight Report “Digitising and Greening Global Supply Chains” details the critical importance of getting on the front foot with supply chain sustainability as CFOs “vote with their feet” when it comes to progress. The report not only details the level of progress by country but also key barriers to implementation across internal and external factors, ranking each response among those corporates currently implementing ESG policies: http://eastandpartners.com/publications/banking-news/greening-global-supply-chains-go-green-or-get-left-behind