Financing the Net Zero Path to Sustainable Supply Chains

Supply chains are increasingly scrutinized by investors and regulators due to the climate crisis, highlighting the importance of social welfare and corporate governance. As companies comply with new frameworks, sustainability is becoming integral to business operations, particularly in securing financing through capital markets. Financing plays a crucial role, not only by providing capital but by shaping the strategies and practices that define sustainable business operations. Supply chains are vital in companies’ net zero transition plans, with around 90% of emissions originating upstream or downstream. Addressing this is essential for achieving sustainability targets.There are key opportunities in incentivizing sustainable finance within supply chains. Companies demonstrating strong sustainability performance may receive better financing terms, such as lower interest rates or longer repayment periods. Innovative financial products, like sustainability-linked supply chain finance programs, are emerging to promote sustainable practices. Additionally, banks increasingly require detailed sustainability reporting, using advanced analytics to ensure transparency and track progress in sustainable supply chain initiatives.