Photo of Julle Pedersen, Treasury Director for Europe, Middle East India & Africa (EMIA).
Julle Pedersen
Treasury Director for Europe, Middle East India & Africa (EMIA)
Bridgestone is a global leader in advanced solutions and sustainable mobility, operations in 150 countries and 140,000 employees. As Bridgestone continues to implement its vision to become a sustainable solutions company, it requires innovative trade finance and ESG solutions that can meet its ambitions.
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Sustainable SCF solution incorporates ESG-linked pricing and ratings at Bridgestone
The challenge
Bridgestone has a highly ambitious ESG and sustainability agenda and expects to achieve more than merely meeting standard key performance indicators (KPIs). The company wanted a supply chain finance programme where sustainability was placed front and centre; not just as a bolt-on, but as an integral driver of the solution.
Furthermore, this solution had to empower all suppliers, from the largest to the smallest, to be able to accelerate their own ESG progress and strengthen their relationship with Bridgestone. Building strong, sustainable, and collaborative relationships with suppliers was imperative to support and cultivate partnerships and drive value.
The company partnered with J.P. Morgan, creating a bespoke, first of its kind supply chain finance programme that integrated and delivered ESG improvements into every single level of the company’s supply chain, which would deliver long-term results.
The solution
The innovative solution was the Bridgestone Sustainable Supply Chain Finance (SSCF) programme, which utilises ESG-linked pricing to provide preferential discounts to suppliers who can demonstrate high ESG ratings via sustainability benchmarking platform EcoVadis.
This sustainable solution is available to all the company’s suppliers via the Early Payment Programme from J.P. Morgan and Taulia.
Best practice and innovation
Creating a streamlined, simple solution that could be swiftly implemented was vital. J.P. Morgan together with Taulia developed and delivered the Early Payment Programme in under six months, with the first supplier going live on 31st December 2020.
An easy on-boarding process was essential, as Bridgestone wanted to extend the solution not only to direct material suppliers, but also to the middle and smaller suppliers. Technology provider Taulia was chosen to provide its market-leading platform and software that made it simple to capture, access and onboard suppliers and quickly integrate them into the programme. It takes just 90 seconds for a supplier to register and join via the platform.
Bringing EcoVadis into the collaboration was also essential. The inclusion of an external ratings system is an integral part of the solution.
“We wanted to remove subjectivity from ESG rating calculations and by shifting away from internal KPIs to a proven and reliable third-party ratings methodology, far higher levels of transparency and objectivity are achieved,” explains Julle Pedersen, Treasury Director for Europe, Middle East India & Africa (EMIA).
Furthermore, many small and medium-sized companies do not have the time, knowledge, and resources to implement effective ESG solutions. Bridgestone’s collaboration with EcoVadis equips even the smallest of suppliers with leading external ESG benchmarking and advice. This approach of ‘bringing everyone into the fold’ makes for a flexible, comprehensive, and egalitarian supply chain financing model.
In turn, J.P. Morgan is furthering the reach of Bridgestone’s ESG efforts by donating to meaningful projects that contribute to the public good.
Key benefits
- Long-term, sustained drive towards ESG improvements.
- Tiered pricing methodology linked to the supplier’s ESG scorecard.
- Working capital released for both Bridgestone as well as for the suppliers strengthening the supply chain.
- Uptake of the programme has been high, with suppliers from wide range of countries and continents participating.
“We’ve had a really positive response, both from our suppliers and our own procurement team. It has also led to much higher engagement with our supply chain. We think this is a very natural application of ESG financing impacting sustainability efforts directly. We wish others to join the movement,” concludes Pedersen.
The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2021 Awards attracted a record-breaking 309 nominations spanning 40 countries. To find out more please visit: https://treasurytoday.com/adam-smith-awards.
David Perron
Head of Trade Finance Sales France, Italy, Belgium & Luxembourg
J. P. Morgan
Together with Bridgestone, we built a multidisciplinary team to create a sustainable supply chain finance solution that met ambitious working capital objectives and importantly, supported an ESG agenda as well. This innovative solution required strong collaboration between all parties and leveraged our strategic alliance with Taulia and an external ESG ratings company.
We always appreciate when our clients challenge us to push the boundaries, it helps us to stay at the forefront of developing state-of-the-art working capital solutions. We are delighted that Julle and the Bridgestone team’s spirit of innovation has been recognised by Treasury Today with this Adam Smith Award.
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