Puma supports low-cost loans for ethical suppliers
The new financing programme will be rolled out to suppliers in Bangladesh, Cambodia, China, Indonesia, Pakistan and Vietnam
Sports brand Puma has launched a new programme to provide low cost loans to help its overseas suppliers in emerging markets improve their environmental performance.
Working with the World Bank Group's International Finance Corporation (IFC), suppliers who meet certain environmental, health, safety and social standards are rewarded with access to short-term working capital at attractive rates.
A tiered system means those suppliers that achieve a high score in Puma's supplier rating system will be offered the lowest terms. The ratings are assigned based on Puma's monitoring of suppliers' adherence to its social and environmental standards through an auditing process.
In its first phase, the programme will be rolled out in Bangladesh, Cambodia, China, Indonesia, Pakistan and Vietnam.
A similar initiative is already underway at US jeans giant Levi Strauss, but this is the first to be signed by IFC with a European brand.
Suppliers who take part benefit by improving conditions and are rewarded for demonstrating progress and commitment toward specific metrics set by Puma. In turn, Puma removes risk and friction from its supply chain by helping suppliers obtain access to capital faster and at more competitive rates.
"This financing programme enables our suppliers to leverage their relationship with us and benefit from Puma's strong reputation and financial position," explains said Lars Soerensen, Puma's chief operating officer.
"This is the first programme in our company that rewards a supplier's rating within Puma's environmental and sustainability program through related fees."
Ball Planet, a Chinese supplier of soccer balls, is the first to join the scheme. "We are keen to start using this financing facility, since access to affordable financing is always a challenge," says Ken Hong, Ball Planet general manager.
"This innovative programme will not only help us improve our cash flow, but will also provide us with a financial incentive to improve our environmental, health and safety and social standards, which will ultimately reduce our operating costs and enhance our performance."
Puma and IFC have launched the initiative in partnership with GT Nexus, a cloud-based global trade and supply chain management network that connects all parties and orchestrates the movement of goods, data and money.
Globally, the textile, clothing and footwear industry employs about 60m people, many of them young women, according to estimates by the International Labour Organization (ILO).
IFC invests in this sector because it is a provider of formal jobs for low-skilled workers that can make an important contribution to poverty reduction in developing countries. IFC's support to the industry includes its engagement through the Better Work joint-venture programme with the ILO, which aims to improve both compliance with labor standards and competitiveness in global supply chains.
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