Through a new partnership with IFC and Citi, McCormick’s herbs and spices suppliers can qualify for discounted rates on short-term working-capital financing when they meet McCormick’s sustainability standards.
Spice giant McCormick & Company has partnered with the International Finance Corporation (IFC) and Citi to provide its herbs and spices suppliers with financial incentives linked to improvements in measures of social and environmental sustainability. The program has started with suppliers in Indonesia and Vietnam, and will soon be launched in other countries.
Under the initiative, suppliers can qualify for discounted rates on short-term working capital financing when they meet sustainability standards accepted by McCormick. Those standards include performance on labor conditions, health & safety practices, crop management, environmental impact, farmer resilience and women’s empowerment. The higher the supplier’s performance level in meeting these standards, the more they save.
The financial partnership includes an advisory component in Vietnam — where IFC is helping McCormick build a more sustainable, traceable, certified and quality-compliant pepper supply chain through capacity development and the empowerment of female farmers, aimed at helping to achieve environmental and social improvements for pepper suppliers and producers.
“At McCormick, we’re committed to doing what’s right for people, communities, and the planet we share. Through our partnership with IFC and Citi, we’re enabling our suppliers to sustainably source our herbs and spices more easily, and, in turn, are working toward our own goals at the same time,” said Michael Okoroafor, VP of Global Sustainability and Packaging Innovation at McCormick & Company. “Through our Purpose-led Performance approach, we’re going beyond the industry standard to ensure that we’re improving farmer resilience, elevating women’s empowerment, and mandating ethical behavior at every level of our supply chain.”
The unique partnership leverages Citi’s global Supplier Finance platform and is part of IFC’s Global Trade Supplier Finance (GTSF) program — a $500 million multicurrency investment and advisory program established in 2010. GTSF provides short-term financing to small and midsized suppliers in emerging markets selling to large domestic buyers or exporting to international buyers, by discounting invoices once they are approved by the buyer. The financing rates can be linked to sustainability measures to minimize impacts on the environment and promote climate-resilient agriculture practices, while connecting smallholders to global markets.
“Promoting sustainable business starts with clear incentives,” said Rana Karadsheh, IFC's Director of Manufacturing, Agribusiness and Services for Asia and Pacific. “That’s why we’re proud to support McCormick’s sustainability goals and build upon IFC’s sustainability goals, and work with them to enhance IFC’s trade finance offering. Such initiatives help make sustainable business good business for emerging-market players.”
More and more companies are realizing that, in order to reach their sustainability goals, they must help their suppliers rein in their own social and environmental impacts. And McCormick’s new initiative is the latest in a growing number of efforts by multinationals and the finance industry to foster regenerative finance practices — making much-needed financing accessible to smallholder farmers and other small businesses in the developing world, who often face barriers to obtaining adequate capital. Earlier this week, PayPal joined the Catalyst Fund in its work making digital finance more inclusive — as a way to help increase the financial and climate resilience of the communities that are the least responsible and yet most impacted by climate change.