04 August 2023

BBVA reinforces its commitment to Sustainability-Linked Supply Chain Finance

Financial institutions play a key role in the design of solutions that encourage a transition in the Supply Chains of large companies. For the BBVA Group, sustainability is a strategic priority. For this reason, going forward, the Global Transaction Banking area is going one step further by strengthening its Sustainability-Linked Supply Chain Finance product for corporate clients. The suppliers of BBVA clients will have better financing terms and conditions with the bank if they demonstrate their commitment to sustainability.

Supply Chain Finance is a financial product that has been used for years by financial institutions and companies as a solution to improve working capital between buyer and seller. Now, with the sustainability criterion, it also becomes a tool that allows suppliers to align with the buyer's sustainability goals. This improves competitiveness while positive impact actions and best sustainability practices are rewarded with more advantageous financing terms. BBVA aims to reward this sustainable awareness among its clients' suppliers.

BBVA, pioneer in the development of Sustainable Supply Chain Finance solutions for its corporate clients, has designed a new and more complete solution that transforms the client's value chain through a holistic approach where the supplier is as relevant as the buyer. To advance in this new path towards a fully integrated supply chain within sustainable criteria, BBVA has a team of dedicated specialists that offers information and solutions to buyers and suppliers on the sustainable actions they carry out; has tools that provide quantifiable indicators to assess each scenario; and assists the suppliers with their needs, shifting from its limited role to date.

BBVA's clients can access the bank's own unique methodological framework to establish segmentation criteria, in order to create a more complete and differential approach to the efforts towards a more sustainable, low-emissions value chain. In the case of BBVA CIB, these methodologies include, for example, a questionnaire with 20 key questions certified by a sustainability agency and developed internally, aimed at identifying the relevant information for the supplier segmentation process. A materiality matrix was developed, which uses the Supply Chain Finance data to identify those suppliers’ and clients’ sectors most in need of personalised advice on sustainability.

BBVA offers a diagnosis of the approximate total of supplier emissions through an inference algorithm that takes account of the average of sectoral emissions, the turnover and other aspects.

As a result, BBVA renders a differential service focused on building, together with the buyer, a Sustainable Supply Chain Finance program that makes sense for each client and contributes to their specific ESG targets. With this new milestone, BBVA reaffirms its commitment to the fight against climate change and the energy transition in the business world.

This is a global product that BBVA offers in all the countries where it operates. BBVA has already signed transactions of this type for some clients, such as Endesa; the port of Castellón; Euromed in Spain; Nestlé in Mexico; Holcim in Colombia; or Pesquera Diamante in Peru.

For years, companies have been increasingly aware of their responsibility to mitigate environmental impact and contribute to addressing this global challenge. However, according to a recent Morningstar Sustainalytics study of 5,000 companies worldwide, only 25% of them have set robust emissions reduction targets, despite more and more companies committing to achieving carbon neutrality. Thanks to innovative solutions like BBVA's, it will be possible to reduce this figure and increase corporate commitment to 100% sustainable environments and practices.