Uncovering Societe Generale's financed carbon hotspots for Concord, to drive reductions towards net zero
The Key Benefits
Societe Generale needed supply chain emissions data for its commodity trade finance portfolio, to better understand its clients’ carbon performance and in order to work effectively with clients to support their carbon reduction journeys. CarbonChain worked with Societe Generale and a major commodity trader, Concord Resources Limited (“Concord”), to quantify each trade’s emissions, rate suppliers’ performance, and look to develop KPIs in line with a carbon-reduction trajectory. Both parties now use the CarbonChain platform for annual monitoring and automated tracking.
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CarbonChain empowers us to deliver innovative sustainable solutions to support our clients and build a better future together. With accurate, verifiable carbon footprint calculations that our clients and stakeholders can trust, we’re able to demonstrate transparency on carbon risks, tackle our portfolio emissions, and accompany and effectively support our clients on their carbon reduction journey.
Deia Markova, Head of Trade & Commodity Finance (Switzerland), Societe Generale
The Client
Societe Generale, one of Europe's leading financial services groups and a major player in the economy for over 150 years, supports 30 million clients every day with 133,000 staff in 61 countries. The Group combines financial strength, proven expertise in innovation and a sustainable growth strategy with the objective of creating value for all stakeholders. Societe Generale seeks to be a trusted partner in the projects of those building tomorrow's world today.
Concord is a commodity merchant focused on non-ferrous metals and associated raw materials. Founded in 2015, it has grown to become one of the leading global independent metals and minerals traders. Concord is headquartered in London with representative offices in New York, Connecticut and Hong Kong.
The Challenge
The data gap of financed commodity trade emissions
In line with its corporate purpose, Societe Generale has placed sustainable development – and the energy transition in particular – at the heart of its strategy. Societe Generale wants to contribute to a transition that is both proactive and responsible, by accompanying its clients (like Concord) in the journey towards carbon neutrality.
Societe Generale’s commodity trade finance team lacked the granular, actionable data it needed to analyze its trade loan portfolio’s emissions and understand the carbon footprint of complex individual supply chains it finances around the world.
It is complex to obtain accurate, asset-level emissions data for extractive and agricultural commodity supply chains.
Raw commodities like oil and gas, metals, and agricultural materials are some of the most carbon-intensive products. Understanding the embedded emissions in the financed trades of these commodities was a critical first step towards reducing them in line with Societe Generale’s sustainability goals.
We really valued the tripartite process CarbonChain set up with Concord, and the power of its technology to accurately map carbon hotspots, define relevant benchmarks and build solutions together.
Alla Ferreiro Hermida, Director, Trade & Commodity Finance (Switzerland), Societe Generale
The Process
Footprinting, benchmarking, and client buy-in
In 2020, CarbonChain, Societe Generale and Concord launched a pilot project. CarbonChain’s platform was used to enable information sharing and tracking for each of the trades that Societe Generale was financing for Concord and helped both parties efficiently map out and extract their raw data.
With its AI-powered technology and growing emissions database, CarbonChain calculated each trade’s carbon footprint across the entire supply chain and broke it down by asset and stage.
Beyond the calculations, CarbonChain also provided actionable insights and facilitated agreements between financier and trader:
- Ratings: CarbonChain rated suppliers on a traffic light system according to their carbon intensity and impact to overall goal. Its platform will continue to do this for existing and new suppliers so that Societe Generale and Concord can implement green sourcing strategies and track progress.
- Benchmarking: CarbonChain provided external and international benchmarks for key activities and assets, which revealed potential emissions reduction opportunities at key stages in the supply chain. Societe Generale wanted all parties to objectively see if a particular trade was at a level of green ambition which is required to fight climate change or if it needed to be flagged as not having such an impact.
- Key Performance Indicators: The emissions insights helped Societe Generale start developing KPIs to monitor and evaluate customer performance over time (for instance, the amount of emissions per trade by volume of goods).
CarbonChain’s platform helps us work with Societe Generale to accelerate our journey towards resilient and transparent commodity supply chains. Understanding the carbon footprint of our trades is the first step to managing them, and collaboration between key actors in the value chain, from financiers to supplier, is crucial.
Vikram Rajvanshy, Treasurer, Concord Resources Limited
The Outcomes
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Comprehensive trade finance portfolio footprint
CarbonChain's automated AI-powered technology saved Societe Generale time and cost in data gathering, analysis and calculation. Societe Generale now understands its most significant financed carbon hotspots and the potential emissions reduction opportunities in a key customer’s trades — as does its client, Concord.
02
Client buy-in for long-term climate strategies:
With new shared insights into supply chain emissions, the financier and trader have agreed on an approach to monitoring and tackling those emissions. Carbon accounting is integrated into existing products, so they can stay competitive and grow business as they work towards sustainability goals.
03
Sustainable finance opportunities
Both financier and trader can use CarbonChain’s insights to discuss potential KPIs for trades to embed sustainability-linked features (such as interest rate incentive mechanisms).
Over time, CarbonChain's platform can reveal powerful learnings about the quantified impact of interest rate incentive mechanisms on portfolio decarbonization.
04
Ongoing automated supply chain emissions tracking
Societe Generale and Concord are using CarbonChain’s automated carbon accounting platform for ongoing emissions tracking, annual monitoring and evaluation of carbon-reduction strategies.
All financed trades can be integrated with the platform to give Societe Generale a clear quantified picture of their entire trade portfolio emissions.
Building transparency in commodity trading is a priority for Concord in the transition to a low-carbon economy. We aim to raise the bar for carbon emissions reporting by partnering with Societe Generale and CarbonChain.
Mark Hansen, CEO, Concord Resources Limited
By working with Concord to quantify their financed emissions we can jointly take data-driven action in the fight against climate change. CarbonChain’s platform is helping us both develop a carbon reduction finance strategy to attract low-carbon commodity trading to our portfolio.
Deia Markova, Head of Trade & Commodity Finance (Switzerland), Societe Generale
