Some of the world’s largest telecoms suppliers are now able to access preferential supply chain financing rates for disclosing emissions data and operating their businesses more sustainably.
CDP, a global not-for-profit organisation that runs the global environmental disclosure system helping financial institutions, companies, cities, states and regions to measure and manage their environmental impact, has joined forces with Vodafone by developing a framework to encourage suppliers to reduce their own carbon emissions.
Vodafone already asks suppliers to agree to achieving various environmental, social and governance (ESG) targets across areas like health and safety, diversity and the environment as part of its responsible supply chain commitments. In addition, some suppliers also complete an annual CDP survey that scores them on environmental performance.
CDP and Vodafone have jointly developed a framework consisting of 12 criteria from that survey – relating specifically to greenhouse gas emissions in the supply chain – as the basis for a new environmentally-linked supply chain finance programme. Vodafone suppliers will be invited to share their environmental performance score with their supply chain financing provider, and in doing so will have the opportunity to receive preferential financing rates based on their ranking.
The framework will initially be offered to suppliers, taking advantage of Vodafone’s supply chain finance programme through Citi, and Vodafone will open the framework to a wider variety of suppliers and their supply chain financing providers later this year.
“We are delighted that Vodafone has collaborated with Citi to deliver this sustainability-linked solution for its suppliers. As a firm, we are committed to reaching net zero greenhouse gas emissions by 2050 and are pleased to be supporting Vodafone with its own important efforts to meet its broader emissions reduction goals,” commented Chris Cox, global head of trade and working capital solutions, Treasury and Trade Solutions.
“With this launch, Citi is happy to strengthen its long-standing relationship with Vodafone, having supported their Supply Chain Finance programme for over a decade and continuing to serve them in more than 40 countries across a wide product offering”, commented Erik Arveschoug, global head of tech & comms, Corporate Banking.
Vodafone believes the preferential supply chain financing rates will encourage suppliers to submit data on their environmental performance, reduce their carbon emissions overall, and ultimately contribute towards the Group’s Scope 3 emissions targets (reducing emissions that are not directly produced by the company, but are linked to its business activity).
In future, CDP plans to make a template of the framework available to other players in the telecoms sector, with a view to driving industry-wide adoption of the model.