German lender Deutsche Bank (DB) has launched the first sustainability-linked payables finance programme in Asia for BASF, the world’s biggest chemical group and a major investor in China, with a solution that meets global standards and has been tailored to suit its local business requirements in China.

The bank’s solution converts BASF’s existing payables finance programme to a sustainability-linked financing for some of its subsidiaries in China, allowing BASF to incentivise its suppliers to adopt sustainable practices. 

The sustainability-related performance of suppliers will be measured by EcoVadis, a globally recognized supplier sustainability rating platform. The rated suppliers are incentivized to progressively improve their performance to qualify for preferential interest rates. Unrated suppliers are motivated to get rated, encouraging them to transition to sustainable practices.

The programme, the bank notes, will enhance the performance of BASF’s payables finance programme through shared value and common goals, and was recently recognized by The Asset’s Triple A Treasurise Awards for as Best ESG Solution in China.

“With this programme, we can deepen our collaboration with our suppliers and strengthen the partnership in the area of sustainability transformation,” says Birka Benecke, BASF’s senior vice-president for corporate treasury. “This also gives us the opportunity to further optimize our supply chains.”