Adam Smith Awards Case Study: Valeo

French auto group, Valeo, commits to gender equality in novel deposit solution.

The challenge

Valeo Group’s ESG targets include carbon neutrality by 2050. By 2030, as a mid-term objective, Valeo plans to have reduced its greenhouse gas emissions from multiple dimensions, including by 75% in its operations and a 15% target reduction in its upstream and downstream value chains. 

In China, Valeo has enjoyed 30 years of continuous growth. It has 35 production sites, located in different provinces and cities across China. Due to the nature of the auto industry, the company deals with imports and exports with more than 1,000 overseas clients and suppliers around the globe.

Valeo’s core aims:

• Contribution to ESG ambitions from dedicated projects. Valeo was looking for opportunities to utilize certain portions of their deposit interest income to support United Nations sustainable development goals (SDGs) related purposes. In addition, Valeo would prefer to provide support to activities and projects that are aligned with its broader corporate goals.
• Contribution to carbon neutrality from operational flows, which is mainly related to cross-border payments and bank acceptance draft (BAD) handling.
• For cross-border payments, the shared service center (SSC) of Valeo China manages over 15,000 cross-border transactions, consisting of USD, EUR, JPY and CNY. This includes currency conversions, cross-border payments and collections, with much manual work executed by the local team to prepare and present supporting documents to the bank’s e-banking platform.
• For BADs handling, the core target is to eliminate paper-handling and delivery work on BADs issuance. Valeo China SSC handles around 20,000 BADs annually, as BADs is a common payment instrument in the mobility industry. For BADs issuance, they must deliver hardcopies of supporting documents including sales contracts and invoices to its bank, Citi, to fulfil regulatory requirements.

The solution

In mid-2024 Citi China launched a solution called Contribution Deposit, which is a demand deposit account (DDA) whereby Valeo is given the option to choose a portion of its interest income to contribute towards SDG 5 – gender equality. 

To enroll in such a product, Valeo only needs to have a DDA with Citi China and submit the application form to confirm contribution related elements. Contribution Deposit operates on existing Citi China’s capacity and the additional contribution feature will not change Valeo’s use of its demand deposit service. Valeo is provided with the flexibility to decide its preferred contribution period without exceeding the product timeframe. The contributed interest will be automatically calculated during Valeo’s confirmed contribution period and consolidated by Citi China for further payment to the United Nations Entity for Gender Equality and The Empowerment of Women (UN Women).

Best practice and innovation

The launch of Contribution Deposit, a first in China, involves the collaboration of Citi China – working as Valeo’s agent – and the UN Women targets that women and girls can benefit from equitable and gender-responsive laws, policies, budgets, services and accountable institutions that reduce gender inequality in China.

This solution facilitates the philanthropic actions of Valeo, without depending on Valeo’s ESG ratings or performance, as long as Valeo is not engaged or involved in industries or activities that are considered exclusionary criteria for partnership by UN Women.

Key benefits

• Cost savings.
• Process efficiency.
• Increased automation.
• Manual intervention reduced.
• Increased system connectivity.
• Exceptional implementation (budget/time).

Download the PDF here.