Photo of Suchismita Das, HSBC and Shania Ren, Saint-Gobain Asia Pacific.
Shania Ren
Senior Treasury Manager
Saint-Gobain designs, produces and distributes materials and services for the housing and industry markets, the renovation of buildings and the decarbonisation of the construction and industrial sectors. The group is present in 76 countries with more than 160,000 employees.
in partnership with
The challenge
As the worldwide leader in light and sustainable construction, Saint-Gobain is fully aware and takes strong responsibility for the critical role it plays in the decarbonisation of the construction industry. This commitment is not only about enhancing its own sustainable manufacturing and operations, but also urging and supporting its supply chain, mainly extending to the procurement side in its suppliers’ sustainability journey.
From Saint-Gobain China’s treasury perspective, its challenge was how to encourage suppliers in the region to actively participate in sustainability performance improvement, aligned with its ESG goal which is an essential commitment of the company.
Given the diversified portfolio, some of its suppliers may be less aware than Saint-Gobain in this area, not fully realising the benefits and opportunities in this initiative, so the main challenges stem from the following questions:
How does Saint-Gobain segment targeted suppliers for engagement of sustainability/ESG content education and further adoption?
How does Saint-Gobain maximise the incentive to suppliers in terms of a tailor-made sustainable supply chain finance (SSCF) solution with appropriate KPIs defined and competitive pricing provided?
How does Saint-Gobain select a trusted banking partner with a strong regional footprint, extensive experience and dedicated resources to support the intended SSCF programme, quickly implement in stages and smooth running going forward?
The solution
HSBC has developed an enduring relationship with Saint-Gobain across the globe and is one of its core banks in Asia Pacific.
In China, HSBC provides various trade finance solutions to Saint-Gobain’s local entities, including a traditional SCF programme launched in 2021.
With Saint-Gobain’s long-term ESG ambitions, and upon in-depth communication and collaboration, in April 2024, HSBC successfully converted their SCF programme for Saint-Gobain China into a SSCF solution.
The programme is based on traditional SCF, according to the rating of the authoritative third-party rating agency on the sustainable development performance of Saint-Gobain China’s suppliers. This looks at the environmental, labour and human rights, sustainable procurement and ethics, and HSBC China will adjust the financing interest rate of these enterprises accordingly. If the supplier improves its sustainable development and reaches a certain range, it will be able to obtain corresponding financing interest rate concessions, thus saving financing costs. By contrast, if the supplier’s sustainability performance declines, the interest rate will rise to a certain extent; if the relevant score is below the minimum standard, the supplier will not be able to participate in the SSCF programme, thereby incentivising these suppliers to continuously improve their sustainability performance associated with Saint-Gobain’s procurement business.
Sustainable supply chain finance
Solution highlights
Sustainable supply chain finance (SSCF) – HSBC structured the deal to fulfil Saint-Gobain’s ESG targets based on their procurement practices. In the deal suppliers are assessed by a third-party sustainability rating agency with rating scorecard covering environment, labour and human rights, sustainable procurement and ethics, which strengthens accountability of ESG rating and reduce green-wash risk.
Customised tiered price based on the supplier’s sustainability rating score under SSCF, to determine the varying margin adjustment, includes financial incentive and penalty depending on suppliers’ tier and sustainability KPI.
Supporting Saint-Gobain’s ambition in ESG – the subject deal marks the pilot SSCF deal in HSBC China. A step further made by HSBC to support business in deploying their ESG strategies. This deal also strengthens HSBC’s position as one of leading banks in sustainable finance area and demonstrates our “net zero transition” commitment.
Best practice and innovation
This is the first SSCF solution launched within Saint-Gobain and HSBC in China. The strategic innovation made a milestone for both parties to demonstrate the capabilities and expertise in structuring a bespoke sustainability-linked financing solution and better integrate a sustainability lens into the supply chain.
“This enhanced SSCF solution is an exciting extension of our ESG initiative, expanding beyond our own organisation to our commercial suppliers and the financial partners. It is a meaningful collaboration and aligns with and reinforces Saint-Gobain’s group strategy.”
Shania Ren, Senior Treasury Manager
Key benefits
Link cost and sustainability.
Process efficiencies.
Improved key performance indicator (KPI) metrics.
Enhanced automation.
Risk mitigated.
Improved visibility.
Errors reduced.
Increased system connectivity.
Future-proof solution.
Quality accreditation achieved.
Eric Yuan
Managing Director, Head of Global Trade Solutions, China, HSBC
The road to sustainability is a collective effort and requires engagement between buyers and suppliers. We’re delighted to implement Saint-Gobain’s first sustainable supply chain finance programme in China, supporting not only Saint-Gobain but its entire supply chain ecosystem on their sustainability journey.
in partnership with
The Adam Smith Awards Asia are the industry benchmark for best practice and innovation in corporate treasury. The 2024 awards attracted 406 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia
Please enter the email that you signed up with below. If your email is
connected to a member account, we will send you a reset link.
This website uses cookies and asks for your personal data to enhance your browsing experience. We are committed to protecting your privacy and ensuring your data is handled in compliance with the General Data Protection Regulation (GDPR).
