Your customers are under increasing pressure from their investors, governments and their own customers to tackle the climate crisis.
The companies you sell to may have made their own climate commitment, likely including their supply chain, meaning that your climate footprint is relevant to them. Accordingly, many companies have been integrating sustainability requirements into supplier contracts and audits. Strong buyer–supplier collaboration and innovation is required to scale sustainable business practices to together reach climate goals by 2030.
This may translate into financial support and training for your business, such as preferential contract terms if you too are taking action to reduce your emissions. One example is climate-linked supply chain finance
What is supply chain finance and how can it help support your net zero journey?
Supply chain finance is a mechanism whereby a company, often working with banks, offers their suppliers the option of a loan using invoices as collateral. Supply chain finance is often at a lower interest rate than suppliers could get directly from their bank, therefore enabling you, as the supplier, to access more affordable finance while waiting for the buyer to finalise payment.
Sustainable supply chain finance takes regular supply chain finance and integrates considerations such as the carbon footprint of the supplier. Based on the carbon footprint of the supplier, further interest rate discounts could be provided.
Training and advisory support
Even if your buyer does not offer direct access to supply chain financing, they might be able to help support in other ways – like calculating your greenhouse gas footprint – which can save costs you may have otherwise incurred.
Microsoft is helping their suppliers with GHG measurement, training, renewable energy transitions and advisory.
Who to speak with at your customer organisation
Your entry point is the procurement team, or your usual contact at the organisation. They may need to connect with their finance or sustainability colleagues before getting back to you with the financial support they might be able to offer.
What you could ask
Not all buyers offer financial support, so the aim is to understand if your buyer can offer to support or value your commitment to reduce your emissions and, if so, how. Questions you could ask include:
- Do you offer any financial support – either directly or with your bank – that could support our emission reduction efforts? Reference the specific actions to reduce your emissions that you plan to take if possible.
- Do you offer improved payment terms for suppliers of yours that are actively working to reduce emissions?
- Will you be factoring the emission reductions of your suppliers into your future procurement contracts?
- Do you offer any in-kind support that can support our emission reduction efforts, such as help with calculating our emissions, public recognition as a green supplier, or similar?
- Can you offer any non-financial support, such as constructive feedback on our plan to reduce emissions?
Sample text that you can use when contacting your customer (buyer)
“We at [ company ] are working to reduce our emissions, with an ultimate goal of reaching net zero ([ link to a press release of your net zero commitment if you have one ]).
We understand that [ name of buyer ] has made a net zero emissions commitment and are aware that other buyers who have done the same are offering support for suppliers, such as ourselves, looking to reduce our emissions. We are keen to learn what support or recognition you might be able to provide to help us on our journey, so would appreciate connecting with you about this soon.”
Read about businesses who have successfully found financial support
Potential sources of financial support – summary table
| Stakeholder | Motivation for providing financial support | Examples of what financial support might be available | Examples of who you could speak with to learn if support offered |
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Customers (buyers)
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Banks
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Grants and other forms of government support
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Balance sheet and investors
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