Puma is offering its suppliers financial incentives to help improve environmental, health and safety and social standards

Puma is offering its suppliers financial incentives to help improve environmental, health and safety and social standards

German sportswear brand Puma has launched a new supply chain programme that offers financial incentives to help its suppliers improve environmental, health and safety and social standards.

Under the scheme, which has been debeloped in collaboration with French banking giant BNP Paribas, the International Finance Corporation (IFC), and IT platform provider GT Nexus, supplier invoices will be discounted based on Puma's credit standing and their score in Puma's rating system.

The supplier rating is applied after Puma has monitored the supplier's adherence to its social and environmental standards through an auditing process.

Lars Sørensen, Puma's chief operating officer, says the initiative is the first industry programme that takes into consideration a supplier's score in the company's environmental and sustainability rating as a bonus or malus on related fees. 

"Thus our supplier's investments in sustainability are rewarded, which is an additional incentive for them to improve their environmental and social standards," Sørensen explains.

Frank Waechter, senior director for treasury and insurance at Puma, adds: "With the help of BNP Paribas and their global presence we can offer this innovative programme to Puma suppliers worldwide. This is not only an outstanding cooperation with BNP Paribas but also a great example of cross-functional internal collaboration of Puma's finance functions and operations, which underlines our ambition to implement fast and efficient processes."

Puma works with around 300 external manufacturing partners, located primarily in Asia, and distributes its products across around 120 countries. The company says it had aimed to set up a supplier financing programme to support its suppliers as part of its social and environmental standards.

BNP Paribas says the initiative highlights the growing importance of sustainability matters across industries.

"As ethical standards, sustainability policies and compliance continue to climb up the priority list of an investor's decision making process, there is a crucial need for corporates to seek and integrate more advanced sustainable financing products and solutions," it says.

A similar initiative launched by the sportswear firm earlier this year offers suppliers in Bangladesh, Cambodia, China, Indonesia, Pakistan and Vietnam access to short-term working capital at attractive rates, with a tiered system offering the lowest terms to those that achieve a high score in Puma's supplier rating system.

Puma supports low-cost loans for ethical suppliers

US jeans giant Levi Strauss also offers better terms on loans to its most sustainable suppliers.

Levi Strauss offers cheaper loans to ethical suppliers