The Bank's Industries Sector's ambition: fifty sustainable deals in 2017

Frans Cuppen

There’s certainly no shortage of attention for circular entrepreneurs active in the industrial sector. Obviously, that’s a good thing, but who’s going to finance all those new business models? “We want to take the lead,” says Frans Cuppen, Regional Director and Coordinator of ABN AMRO’s Industries Sector entity. He says meeting the objective will take a lot of creativity, expertise and determination – after all, “this is different from traditional financing in nearly every respect.”

ABN AMRO wants to help more ambitious companies in the industrial sector launch circular projects in 2017. Why?

“As a sector bank, we see the circular economy as central to the future of the industrial sector. Sustainability is hot, and companies are looking for ways to work smarter and more efficiently. But the forerunners are looking further afield and are working to close the loop. Circular enterprise means no raw materials are wasted. Plus the full value of existing materials is captured in order to protect the environment. But all this requires major investment – for developing innovative technologies to recycle raw materials, for instance. With its specialist expertise, ABN AMRO can help by creating new forms of innovative financing.”

How are these forms different from traditional financing?

“They’re different in nearly every respect. A recent case in point is a Dutch company called LEDsEnable, which makes it easy for businesses to switch to sustainable, cost-effective lighting. LEDsEnable have launched an initial project at the Chemelot Campus in the city of Geleen. Companies like DSM rent the lighting, so they pay to use the equipment, but don’t own it. LEDsEnable needed a different approach to financing because, unlike a traditional business, they don’t operate out of an office or maintain an inventory. Not to mention that in this case they only had one client.”

What does all this mean for the bank?

“We’re seeing a shift from traditional collateral such as property and inventory to contracts and cash flows. This type of financing means we need to look carefully at the creditworthiness of product suppliers and buyers. We also enlist the aid of our asset specialists who have a great deal of expertise in tech, as well as our legal specialists, to assess the value of contracts and cash flows.”

So essentially your department provides both capital and knowledge?

“By taking a smart approach to financing and by collaborating with financial partners in and outside the bank, we’re able to provide financing solutions which would otherwise be impossible. We can then share with our clients all the knowledge we’ve built up involving the structuring of these projects.”

Can you give us an example?

“One very interesting case is Black Bear Carbon, a Dutch company which has developed a technology to recycle car tyres and simultaneously reclaim the very valuable black pigment they contain, called carbon black. This type of process is sometimes referred to as upcycling. The first Black Bear Carbon installation, which cost several million euros to build, is based in the town of Nederweert. There’s now a lot of international interest in the firm, and it’s easy to see why. Many used tyres are being burned even today, with devastating effects on the environment. Because of the sustainable nature of the business, the professionalism of the company and the enormous potential of Carbon Black Bear, ABN AMRO is looking to create a financing structure for the company. That takes creativity, expertise and determination. It’s thanks to collaboration and sharing both expertise and risk that the company will soon be able to start operating worldwide and the bank will be helping to solve a global environmental problem.”

Your initial projects have been ambitious start-ups. What about existing companies with circular aims in the sector?

“Fortunately, many companies are trying to figure out ways to be smarter and more efficient, increasingly in close collaboration with other businesses in the chain. Suppliers of raw materials and end customers are a perfect example. Not only the companies themselves, but also the bank, stand to benefit from this development. As a rule, sustainable enterprises have better-organised processes and generate higher returns.”

What are ABN AMRO’s objectives?

“Securing financing for LEDsEnable took a lot of determination. We’ve only just started the process with Black Bear Carbon, but all of us involved are convinced that this is the start of something big. That’s why our aim is to close fifty sustainable deals in 2017. Although it will require a lot of effort in the short term, the long-term pay-off should be significant, not just in financial but also in sustainable terms. We think it will be good for people, planet, society at large and the bank.”