Having rolled out innovative financing solutions for the likes of Puma, Siemens Gamesa and ENGIE España, BNP Paribas is at the forefront of sustainable trade and supply chain finance efforts. Rodolphe Vergeaud, the bank’s Head of CIB EMEA Trade and Working Capital Solutions, outlines the ways in which it is reinforcing its leadership position.


Q: Earlier this year, BNP Paribas Group launched its 2025 strategic plan. How do the ambitions of the plan further boost the bank’s commitment to important trade and supply chain initiatives such as sustainability and digitalisation?

Vergeaud: The three ambitions of BNP Paribas’ ‘GTS’ 2025 strategic plan are growth, technology and sustainability.

In short, the bank has strong objectives to continue to develop profitable growth, while harnessing technology for optimised client experiences and operating efficiency, and simultaneously accelerating the mobilisation of the Group’s businesses on sustainable finance issues.

In terms of sustainability, as outlined in the plan, the bank has committed to mobilise €350bn by 2025 through sustainable loans and bonds related to environmental and social criteria.

Our trade and working capital activities are strongly aligned with these ambitions and we are dedicated to our role as a responsible player that supports companies which are committed to sustainability. Our focus is on designing and delivering sustainable trade finance and working capital solutions aimed at supporting clients in their journey towards more sustainable business models.

As such, we have identified three strategic pillars: one, to align our lending portfolio with our carbon neutrality commitments; two, to engage with clients to support them in their transitions; and three, to strengthen our sustainability capabilities and processes.

There is a constant stream of public announcements by corporates and financial institutions in terms of sustainability pledges. It is not a new mindset, but it has definitely become a lot more concrete since the pandemic. What is important now is that momentum is maintained, and BNP Paribas is committed to continuing its development at the service of its clients, the economy and society.

Q: What are your clients’ needs around sustainable trade and supply chain finance?

Vergeaud: Various recent macroeconomic and geopolitical events have raised the importance of supply chain resilience, and there is unprecedented pressure on all players, from large corporate buyers to the smallest of suppliers, to ensure good ESG practice as they work to achieve this.

What we are seeing consistently in our discussions with our trade and working capital corporate clients is a clear need for solutions that support their own sustainability strategies, as well as those of their entire supply chain ecosystem.

Across the trade and working capital finance space, we are delivering financing solutions to those different actors in such a way that incentivises responsible and ethical behaviour so that they may really engage in a sustainable transformation.

A prime example was the pioneering deal we did a few years ago with Puma, which involved providing incentives to suppliers to improve their environmental, health and safety and social standards.

Elsewhere, we have worked with the likes of Siemens Gamesa, including on a guarantee facility that incorporated a dual environmental and social sustainability purpose. The deal covered the construction of components for an offshore wind farm, but ultimately raised funds for an entirely separate project for cancer research in Spain.

More recently, the bank provided ENGIE España with a green guarantee line that is being used for the issuance of trade-related guarantees linked to projects that provide environmental benefits.

Q: How does the end-to-end digitalisation of trade facilitate where the industry is trying to get to with sustainability in supply chain finance?

Vergeaud: A McKinsey study at the height of the Covid-19 pandemic in mid-2020 found that 73% of supply chain leaders had encountered problems in their supplier footprints that required changes in the future. The percentage of respondents that felt that way peaked at 91% in the food and consumer goods industries.

Studies like this confirm that companies are seeking better control of their supply chains, and technology that digitalises processes and facilitates better transparency is a key enabling tool.
Banks’ digitalisation efforts have clearly been boosted by the pandemic over the last two to three years, and clients in turn are looking to grow their investments into the digitisation of their financial supply chains.

Given that the world of digital trade and supply chain finance is still very fragmented, with multiple different players operating in the space, we have a responsibility as a bank to identify the most promising financial technology companies and consortia with which we see good potential for collaboration. For example, we have chosen to work in partnership with players like Marco Polo Network for supply chain finance and Contour for traditional trade.

Q: BNP Paribas has been a forerunner on rolling out technology solutions that focus on traceability in supply chains. What recent developments and/or new initiatives have there been?

Vergeaud: A few years ago, BNP Paribas was part of the banking consortium involved in the Trado project, which used blockchain technology and smart contracts to improve supply chain sustainability and transparency and facilitate access to trade and working capital finance. Since then, there has been a wave of innovation to increase traceability and enable visibility along the full length of the supply chain.

Today, the market is in a situation where there has been a boost in ESG standards but few tools to measure how those standards are being satisfied accurately and objectively.

In response to this, BNP Paribas actively surveys for innovative solution providers, partnering with those with credible rating and reporting capabilities and comprehensive datasets that can help our clients monitor threats and identify opportunities in their supply chains.
We are working on the rollout of some very exciting programmes that positively influence suppliers in order to accelerate net-zero targets and ESG transitions and reduce ESG risks in corporate supply chains.

The importance of collaborating with an independent partner to set and achieve science-based targets cannot be underestimated.

No doubt we will see more game-changing technology-based initiatives that look at supply chains in a holistic way, and BNP Paribas stands ready to team up with them.

Q: What are your hopes for sustainable supply chain finance in the next few years? What can we expect from BNP Paribas in this regard?

Vergeaud: Over the last few years we have seen a number of corporate leaders across various industries at the vanguard of sustainability choose to align their financial decision-making around ESG, whether it be their own lending or the financing of their supply chains. My hope for the future is that this is a trend that will be followed firstly by the entire supply chain ecosystem within each of those industries, and then will extend to sectors where sustainability is a less obvious ambition. Think of the progress around electric vehicles in the transport sector.

In terms of what the market can expect from BNP Paribas, I envisage that there will be a lot of investment into this space – but always in a way that assists the client itself as well as its entire ecosystem. It is critical that good ESG practice is rolled out across the full length of supply chains and, as a business head, I am ensuring that all the substantial progress that we make in terms of digitalisation and sustainability is imparted on an international basis, given that trade is a global business.