A U.S. unit of Siemens AG is launching a program to provide $100 million of loans to small and midsized businesses looking to cut their carbon emissions, as bigger companies increasingly pressure their smaller suppliers to cut greenhouse gases.
The program comes as companies including Walmart Inc. and Apple Inc. have pledged to reduce emissions throughout their supply chains. But the smaller and mid-sized companies that make up much of those supply chains often don’t have the resources to track their emissions or fund projects that might cut their carbon footprint, said Anthony Casciano, president, and chief executive officer of Siemens Financial Services Inc., in an interview.
Siemens USA, a U.S. arm of the manufacturing and technology company, plans to make loans to these companies for projects that could include adding solar panels, redesigning a factory floor, or implementing technology to track emissions, Casciano said. Loans can range from around $1 million to more than $10 million for three or more years, he said.
Emissions of suppliers – known as Scope 3 emissions – usually constitute the majority of a company’s footprint, according to a Siemens statement seen by Bloomberg. Most suppliers are small and medium sized businesses, which account for nearly half of U.S. private-sector employees, according to the Small Business Administration.
Many of these companies have no idea how to reduce their emissions and must rely on expensive outside consultants to figure it out, said Martin Powell, head of sustainability and environmental initiatives Americas at Siemens Financial Services.
But big companies are increasingly paying attention to greenhouse gases when choosing suppliers, he said.
“It’s going to be about the value of the carbon emissions that each company has and that’s a real shift from how it was even 18 months ago,” Powell said.
Siemens plans to offer the loans at costs in line with a normal corporate loan, Casciano said. And he said that Siemens has “significant balance sheet capacity” to put more money in the program, which it’s calling Kickstarter Capital.
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