Deutsche Bank links Henkel supply chain financing to ESG ratings

FRANKFURT (Reuters) – Deutsche Bank said on Thursday it had linked its supply chain financing for Henkel to environmental, social and governance (ESG) ratings of the German consumer goods group’s suppliers in the first move of this kind in Europe.

The programme, which Deutsche Bank currently offers in Europe but aims to expand to other countries, gives Henkel’s suppliers a discount on costs of financing in the supply chain according to their ESG rating.

Judging corporate performance on issues related to climate change and social justice is a growing area of investment, but there is still much debate about the criteria that need to be used for such evaluation.

On Wednesday, S&P Dow Jones Indices removed electric carmaker Tesla from the widely followed S&P 500 ESG Index because of issues including claims of racial discrimination and crashes linked to its autopilot vehicles.

(Reporting by Zuzanna Szymanska Editing by Miranda Murray and Mark Potter)