To help develop sustainable supply chain finance (SCF) programs for small and midsize enterprises (SMEs) in emerging markets, the International Finance Corporation (IFC), part of the World Bank, is funding working capital-management platform provider Taulia.
The IFC will provide funding from its $1 billion Global Trade Supplier Finance Program. At the same time, Taulia’s Sustainable Supplier Finance offering can enable companies to embed environmental, social and governance (ESG) programs within their supply chains to encourage more sustainable practices.
“The IFC and Taulia collaboration helps deliver capital in supply chain finance transactions to suppliers in emerging markets,” states Wasif Raza, managing director, global head of distribution, Taulia. “A lot of these suppliers are SMEs where capital is in short supply, and this collaboration would help provide liquidity to these SMEs and will be an alternative to what they may have already in place (i.e., bank loans, trade credit).”
German enterprise software giant SAP acquired the majority of Taulia in March 2022 and is now fully integrated into the SAP Business Network. On this B2B platform, companies connect and transact using shared processes and information. Small suppliers can use the platform to demonstrate to all their suppliers that they meet environmental regulatory reporting and compliance requirements.
While freeing up working capital runs at the heart of supply chain finance, ESG factors are just as important. By linking pricing to independently verified ESG criteria, treasurers can use supply chain finance to promote their ESG goals internally and throughout their supplier networks. Since implementing Taulia’s supply chain finance solution in 2020, Bridgestone Europe has improved its EcoVadis sustainability ratings. By using Taulia’s onboarding process, the company could extend the platform to direct material suppliers and SMEs. Using ESG-linked pricing, the mobility supplier could provide preferential discounts to suppliers demonstrating high ESG ratings—boosting their working capital while bringing ESG improvements
