Puma is setting up a financing programme aimed at incentivising suppliers to improve environmental and social standards.
The sportswear company has partnered with the International Finance Corporation (IFC) to provide financing to its suppliers in emerging markets.
The first phase of the program will be rolled out in Bangladesh, Cambodia, China, Indonesia, Pakistan and Vietnam. It will offer financial incentives for suppliers to improve environmental, health and safety and social standards, with IFC creating a tiered finance structure for short-term working capital.
It will offer lower costs to suppliers that achieve a high score in Puma’s supplier rating, which will be determined after an audit process to monitor a supplier’s adherence to the company’s social and environmental standards.
Puma chief operating officer Lars Soerensen said the financing programme enabled suppliers to leverage their relationship with the company and benefit from its strong reputation and financial position.
Sergio Pimenta, IFC director of manufacturing, agribusiness and services said: “This agreement with Puma advances IFC’s efforts to encourage small and medium companies such as Puma’s suppliers to improve environmental and social sustainability while achieving strong financial results.”
The first supplier to join the programme is Ball Planet, a Chinese supplier of soccer balls that has been a business partner of Puma since 2010.
General manager at Ball Planet Ken Hong said the company was keen to start using the financing facility as access to affordable financing was a challenge.
“This innovative program 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,” said Hong.
IFC provides financing to ready-made garment and footwear suppliers through its Global Trade Supplier Finance programme, a $500m multi-currency investment and advisory program that provides short-term finance to emerging-market suppliers and small and mid-sized exporters.