Manufacturing activity worldwide jumped in May

The GEP Global Supply Chain Volatility Index — a leading indicator tracking demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses — increased notably in May to 0.21, from -0.18 in April. Crucially, this was the first time since March 2023 that the index is in positive territory, signalling that global vendors are working at capacity and that supply chains are at their busiest for more than a year.

A key factor behind the index’s increase in May was a further improvement in global manufacturing demand, which led factories to ramp up their purchases of raw materials, commodities, and components. Purchasing growth was especially strong in Asia, where the Index rose to 0.19 from 0.07 due to particularly strong demand pressures arising from major markets such as China, India, and South Korea.

Suppliers to North America also got busier during May, where the Index rose to 0.09, from -0.30, its highest since February. May data showed stronger demand from manufacturers in the US and Mexico, exerting more pressure on North American suppliers who's capacity was slightly stretched as a result. 

The European market, which has been a laggard since mid-2022, improved notably, as the Index rose to -0.13 from -0.55, a 14-month high and signalling a substantial reduction in slack across Europe’s supply chains. This suggests that the region’s manufacturing downturn continues to recede. In the UK, the Index rose to 0.15 from -0.47. Increased capacity pressures were seen at UK suppliers for the first time since January 2023.

Globally, reports of backlogs increasing because of staff shortages at suppliers of critical goods and inputs hit their highest in almost a year and a half in May, suggesting capacity expansion is required to meet existing and future orders. Overall, this paints an optimistic picture for the outlook for global supply chains in H2 2024.

“The broad-based nature of the breakout we’re seeing in May is a hugely encouraging sign for the global economy going into the second half of 2024,” explained Mudit Kamar, vice president, GEP Consulting. “If this trend continues, businesses can expect renewed efforts by vendors to rise prices, especially given the recent surge in the cost of many commodities.”

 

BIS and MAS develop climate risk platform blueprint for financial authorities

The Bank for International Settlements (BIS) and the Monetary Authority of Singapore (MAS) have developed a blueprint for a platform that integrates regulatory and climate data to help financial authorities identify, monitor and manage climate risks in the financial system. 

Integrating climate risk analysis into financial stability surveillance is challenging due to the complex nature of climate change, notable data gaps and limited understanding of how to measure the associated risks. To help tackle this challenge, a blueprint of a climate risk platform has been developed at the BIS Innovation Hub Centre in Singapore through Project Viridis. 

The blueprint outlines the key features and metrics required for a climate risk platform. These incorporate data and information on financed emissions, physical risk exposure and forward-looking assessments under different climate scenarios.

Project Viridis demonstrates how regulatory data can be integrated with climate data, which are extracted from corporate disclosure documents using natural language processing techniques. This provides authorities with insights into climate-related financial risks, helping them form an initial view of financial institutions' risk exposures and to identify areas that may require deeper risk assessment.

 

Citi and Emirates NBD launch 24/7 USD cross-border payments in the Middle East

Citi and Emirates NBD have collaborated to launch Citi’s 24/7 USD clearing service in the Middle East. This makes Emirates NBD the first bank to use the service to make cross-border dollar payments available to its corporate and retail clients at any time, end to end, across its branch network.

The service will be available in Emirates NBD’s UAE and Saudi branch networks, helping to remove barriers to the payment flow process in the region that stem from different weekend and early afternoon cut-off times in the UAE for executing transactions. The plan is to expand the service to all Emirates NBD branches in the Middle East and across the globe, including partnerships with its third-party institutions. The bank says it will fully utilise Citi’s 24/7 USD clearing capabilities, including commercial payments and treasury payments execution.

“Consumers demand instant payment capabilities no matter where they are in the world, and our collaboration with Emirates NBD is an important step in our journey to creating a multibank solution that is designed to deliver an end-to-end, ‘always on’ experience for participant banks and their customers,” commented Shahmir Khaliq, Head of Services, Citi.

 

Regions Bank taps Bill for business cash flow solution

Regions Bank and Bill have announced the launch of Regions CashFlowIQ, a digital solution designed to simplify payments and streamline cash-management processes for Regions’ commercial clients.

The solution provides accounts payable and accounts receivable capabilities to help businesses securely pay bills, invoice customers, and receive payments faster. Regions CashFlowIQ will leverage Bill’s flexible payment offerings to provide more choices and capabilities for domestic and international payments. 

Businesses can initiate bill payments, create and send customised invoices, track payment information, streamline workflow approvals needed to approve payments, and automate payments within the Regions OnePass portal.

An automatic sync and payments reconciliation feature aims to help clients reconcile their financial books by automatically syncing with accounting software. The platform integrates with many accounting software options currently available. The bank’s clients can also leverage multiple payment options from Bill, such as credit or debit cards, virtual cards, ACH, cheques, and international wires to complete transactions. This should provide greater flexibility to make secure domestic or international payments.

“Regions CashFlowIQ helps clients digitally transform, automate, and consolidate their payment processes,” said Bryan Ford, head of Treasury Management for Regions Bank. “This results in smoother business operations. It helps the client focus more time and resources on their own products and services while we make managing money easier, more intuitive, and more productive.”

 

UOB and Enterprise Singapore look to simplify sustainability-linked financing

UOB and Enterprise Singapore (EnterpriseSG) launched the Sustainability-Linked Advisory, Grants, and Enablers (SAGE) programme, which is targeted at small and medium-sized enterprises (SMEs). The programme aims to simplify sustainability-linked financing solutions for SMEs by providing preferential loan rates from UOB for participating SMEs that achieve pre-agreed sustainability performance targets (SPTs).

The programme involves a collaboration with sustainability service partners CDP, Convene ESG, M1, Paia Consulting, PwC Singapore and TÜV SÜD, where SMEs can come onboard a single programme offering pre-set SPTs.

The SAGE Programme is tailored to help SMEs reduce the time, cost and resources required to set SPTs and secure financing. This was developed to address concerns from businesses that were highlighted in a recent UOB survey, where only four in 10 businesses adopted sustainability practices, citing key challenges such as increased costs, insufficient knowledge and lack of manpower.

Under the SAGE Programme, companies can select from three “plug and play” options of pre-defined, sector-specific SPTs to obtain sustainability-linked financing from UOB. These SPTs have also been validated by a second-party opinion partner, Environmental Resources Management, to ensure credibility and alignment with the globally recognised Sustainability-Linked Loan Principles. The SPTs focus on the reduction of greenhouse gas (GHG) emissions, certification of management systems, and improvement of ESG ratings.

 

Liberis and Paytrail to offer revenue-based financing to Finnish e-commerce businesses

Liberis, a global embedded finance platform, has partnered with Paytrail, a Finnish online payment service provider. Paytrail Financing, powered by Liberis, is designed to offer e-commerce businesses in Finland revenue-based financing within a four-click journey.

Revenue-based finance is not yet a staple in Finland despite its benefits to small and medium-sized businesses (SMBs). The introduction of this solution into the Finnish market aims to provide Finnish SMBs with the funding they need in as little as 24 hours. More importantly, the flexible payment structure will work in line with their revenue, ensuring they only pay when their customers pay them.

“It’s our mission to help small businesses access the money they need to unlock short-term growth opportunities,” said Rob Straathof, CEO of Liberis. “Our partnership with Paytrail will offer fast, flexible and pre-approved funding to around seven thousand merchants in Finland, strengthening our position in the Nordics.”

 

ISS ESG launches enhanced modern slavery solution

ISS ESG, the sustainable investment arm of ISS STOXX, has launched an enhanced Modern Slavery solution that aims to help investors monitor and report on portfolio risk. This solution is supported by ISS ESG’s differentiated and holistic assessment of modern slavery-related risk exposure, disclosure, management, and controversies.

The offering includes a scorecard and portfolio report powered by a dataset sourced from three ISS ESG solutions, the ESG Corporate Rating, Norm-Based Research and the ESG Country Rating, along with data sourced from external sources such as the US Department of Labor. Its methodology assesses 25 quantitative and qualitative factors developed by ISS ESG’s modern slavery and human rights experts. As of June 2024, the Modern Slavery solution covers approximately 60,000 issuers globally in its risk assessment section and 8,000 issuers are covered by all sections of the report. The universe is growing on a regular basis in order to meet client demand.

Investors face ongoing scrutiny regarding portfolio holdings involved in controversies such as forced labour, child labour and human trafficking. The new solution supports investors’ risk management by identifying portfolio exposure to modern slavery-related risks and allows investors to benchmark portfolio companies against their industry peers. 

It facilitates investor reporting on modern slavery risks, disclosures, performance and controversies, including significant areas of geographic, industry and product risk. Further use cases include supporting investors’ due diligence by integrating the granular data into in-house assessments and helping investors to identify high-risk and poor-performing companies for engagement.