Knorr-Bremse Rewards its Suppliers for Adopting More Eco-Friendly Business Practices

Knorr-Bremse AG is working on ESG in a planned way and, with the help of Deutsche Bank, is linking its existing Supply Chain Finance (SCF) programme to suppliers' ESG ratings. Knorr-Bremse is taking another big step toward creating more sustainable value chains by giving its suppliers financial incentives to be more sustainable.

For 15 years now, suppliers of Knorr-Bremse have benefited from the Supply Chain Finance programme run by Deutsche Bank. For example, they get their money sooner because the bank pre-finances at attractive interest rates until Knorr-Bremse pays the invoice. The financing costs for the suppliers are based on the creditworthiness of Knorr-Bremse, which usually reduces the financing costs for the suppliers.

Adding elements of sustainability to the programme makes these financial benefits for the suppliers even better. Those who operate more sustainably get better financial terms. In this way, the global programme will gradually get more and more suppliers to improve their ESG measures.

Frank Markus Weber, Chief Financial Officer and Executive Board Spokesman of Knorr-Bremse AG: "Our Supplier Early Payment Programme is becoming more sustainable: With our Syndicated Loan and our Sustainability Linked Bond, we have already shown how financing instruments and sustainability can be combined in a meaningful way.

The Sustainability Linked Supply Chain Finance Programme, which Knorr-Bremse and Deutsche Bank set up together, is now the third type of financing that is used to promote sustainability. The financial benefits arising from the latest programme make an ESG rating particularly attractive for suppliers, creating a win-win situation for both sides: for our suppliers and us as Knorr-Bremse."

Jan-Philipp Gillmann, Head of Corporate Bank EMEA, Deutsche Bank: "Sustainability-linked Supply Chain Finance programmes enable our clients to create an incentive for their suppliers to be more sustainable. By improving their ESG rating, suppliers can further reduce financing costs together with their clients."

Suppliers in the Sustainability-linked Supply Chain Finance programme (SSCF) can select between Ecovadis and NQC as ESG rating providers. As a result, the programme offers greater flexibility compared to similar offerings. This is NQC's first appearance in an SSCF programme. Many worldwide vehicle brands use NQC's supplier assurance platform to evaluate their suppliers.

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Source: Deutsche Bank