Cocoa manufacturer Barry Callebaut has partnered with the International Finance Corporation (IFC) to roll out a sustainability-linked supply chain finance programme for its ingredient supply base.
The programme will initially be launched among the multinational firm’s sugar suppliers in Mexico, and will see participating firms earn discounted rates on short-term working capital financing if they meet certain social and environmental sustainability goals.
Barry Callebaut has put in place labour, health, safety and environmental standards as part of the agreement, with the size of a supplier’s savings directly tied to its performance on these criteria.
The programme will be run on a digital platform provided by tech-based working capital solutions provider Demica, an investee company of the IFC.
Demica’s head of origination for the Americas, Andrew Holmes, says the platform will allow for supplier onboarding, facilitate early payments from the IFC and allow Barry Callebaut to share its enterprise resource planning data with the lender.
“The suppliers in Mexico will use the Demica platform to elect early payment on specific invoices or for specific amounts. The sugar producers will also submit their information to the IFC through the platform, ensuring that the IFC can conduct due diligence on the suppliers,” says Holmes tells GTR.
Financing will be provided as part of IFC’s global trade supplier finance programme, a US$500mn multicurrency investment and advisory initiative.
The programme provides short-term financing to small and mid-sized suppliers in emerging markets, supporting sales to either large domestic or international buyers by discounting invoices once they are approved.
While the programme has initially been launched among Barry Callebaut’s Mexican suppliers, IFC expects the initiative will later expand to other countries and to a wider range of ingredient providers.
IFC launched a similar sustainability-linked supply chain finance programme alongside Citi and McCormick in August, offering financing incentives to the company’s herb and spice suppliers in Indonesia and Vietnam.
A spokesperson for the World Bank Group member told GTR at the time that the programme would use Citi’s supplier finance platform to provide financing to a select group of McCormick’s suppliers.
The IFC spokesperson added that an annual amount of approximately US$100mn would be provided as part of that agreement.