European equipment

The race to attract, develop and retain industry talent 


The importance of inclusion and diversity in recruiting and retaining the skills and talent needed in the asset finance industry was a prominent issue raised in a number of sessions at the AFC June conference, with a group of young ambassadors discussing the components of diversity strategies that are crucial in attracting and retaining a pool of talented people.

Building and growing the right relationships between staff and clients and partners is of paramount importance to the auto, asset and equipment finance industry.

SGEF’s Florence Roussel-Pollet pointed to some historical long-term partnerships of over 20 years at SGEF, stressing the importance of building these relationships by shifting together as a company’s business model transforms. Developing strong and close relationships helps lenders and partners overcome adversity and address the current economic situation.

To meet these growing challenges and changes in our societies and economies, companies must create diverse teams, to reflect the wider diversity of business and society at large.

“There is a war for talent and it is really an employee’s market at the moment.”

Ylva Oertengren, Chief Operating Officer, Simply Asset Finance

Within the UK market, the number of job vacancies currently exceeds the number of job seekers. According to McKinsey, 53% of employers are experiencing greater voluntary turnover than they have in previous years. And 64% expect this to get worse over the next six to 12 months.

Therefore, companies now more than ever are in a talent war to attract new talent to a company and retain new recruits and hires. Ylva Oertengren, Chief Operating Officer at Simply Asset Finance agrees: “there is a war for talent and it is really an employee’s market at the moment”.

Businesses need to consider corporate responsibility in the context of diversity as social exclusion and low economic activity rates can limit business markets and their growth. Corporate responsibility was previously centred on environmental issues, but an increasing number of employers now take a wider view, seeing the overall image of an organisation as important in attracting and retaining both customers and employees.

Oertengren highlights that many new young employees have a passion to work for a purposeful company in a purposeful industry: “unless you can explain why the company’s values are important, then you won’t get the best out of people”.

People want to work for employers with good employment practices and they also want to feel valued at work. It is important to create open and inclusive workplace cultures in which everyone feels valued, respects colleagues, and where their contribution is recognised.

As Nathan Mollett, Head of Asset Finance at United Trust Bank points out, “The next generation of talent put greater emphasis and importance on working for an organisation that has common values and common purpose.”

Matthias Grossman, CEO Commercial Finance at Siemens Financial Services believes that a company’s values are increasingly important to future employees.

Key areas of debate

Four young ambassadors from the asset finance industry – Alex McWilliams, Communications Manager at Simply; Lauren McQuilken, Business Development Manager at United Trust Bank; Jessica Hall, Business and Performance Manager at NatWest Group; and Ricky McNeil, Director of Operations at MAF Finance Group – discussed the topic in greater depth at the AFC June conference.

They considered the three key areas highlighted in McKinsey’s 2021 research entitled, ‘Great Attrition’ or ‘Great Attraction’? The choice is yours’:

  • avoiding transactional relationship
  • career development and progression
  • providing a sense of community

According to McKinsey, if companies make a concerted effort to better understand why employees are leaving and take meaningful action to retain them, the Great Attrition could become the Great Attraction: “By seizing this unique moment, companies could gain an edge in the race to attract, develop, and retain the talent they need to create a thriving post-pandemic organisation.”

“The next generation of talent put greater emphasis and importance on working for an organisation that has common values and common purpose.”

Nathan Mollett, Head of Asset Finance at United Trust Bank

Avoiding transactional relationships

McWilliams believes that while work is always going to be transactional, a transactional relationship can only take an employer so far with their employees. People want to be valued and credited for their experience in ways other than remuneration.

However, over the last two and a half years, a lot of people have been affected by the Covid pandemic which created a slight separation between employees and employers, and relationships were no longer going to be enough. According to McWilliams, this can be resolved “through good culture, making sure that your employees feel like they’re in a sort of a safe space where they can communicate properly, making sure that there’s career development opportunities as personal and professional development opportunities.”

By keeping communication open, reducing separation and creating a good culture where people feel valued and able to talk freely about their aspirations, enabling employers to understand their employees, the relationship will start to feel less transactional resulting in increased productivity and employee engagement.

As stated in the 2021 McKinsey article, “employees want meaningful—though not necessarily in-person—interactions, not just transactions.”

In McNeil’s experience, salary and bonuses have only ever been a short-term retention plan. If a company is using financial incentives as a key retention strategy, then they are going to struggle to create any long-term relationship or loyalty with employees.

Reverse mentoring has been frequently highlighted as a tool to help companies understand the next generation’s culture and values, and to improve employer-employee relationships. This is a two-way benefit as the young ambassadors get a rewarding working environment within a purposeful company that helps them develop, while the senior management that the young talent is reverse mentoring gain huge benefit as well. As Roussel-Pollet highlighted, there are many initiatives going on inside organisations like SGEF that the young ambassadors and young talent have bought to management and that have since been implemented.

Career development and progression

McNeil believes that career development and progression is an extremely important part of retaining talent, and a key area of most employee’s strategies. When a company has the right culture in place, they are able to empower employees to take ownership of their own development by signposting people to routes of opportunity, highlighting success stories and resources.

Nathan Mollett agrees that “giving younger people within the organisation project management responsibility is also viewed as a promotion in terms of career progression and keeping them interested”.

Employees are increasingly focused on opportunities for development and progression in their role, as well as striving to find an employer who has similar ideals to them, with a sense of responsibility, culture and teamwork.

Having the right conversations with employees to understand their development ideas and where they want to go in their career is vital for employers, according to Hall, so that they can help and support their employees, and point them in the right direction.

As McWilliams concludes, “it’s about having an open dialogue and creating a space where employers listen to what it is that employees want.”

“It’s about having an open dialogue and creating a space where employers listen to what it is that employees want.”

Alex McWilliams, Communications Manager, Simply

Sense of community

Most young people entering a new role in a new organisation want to enter an industry that has a sense of community within the company and within the industry as a whole. Hall believes the asset finance industry offers a lot of opportunities to do this.

McWilliams points to the innovative work carried out by the Leasing Foundation’s Next Generation Network in boosting community and encouraging businesses and lenders to push their employees to network and collaborate with their peers in an open and inclusive environment, giving them a significant advantage when it comes to seeking advice and guidance. She reports, “it is gaining traction and that community is getting bigger.”

Socialising with the competition was previously frowned upon, recalls Mollett, but things have changed and “the more you can do to empower colleagues within your organisation to build a network outside of your own, that actually plays into colleague retention, rather than increasing the risk of them leaving.”

As United Trust Bank’s McQuilken states, “retention is one thing, but attraction is another.” Attracting young people to the asset finance industry is something that must be addressed according to MAF Finance Group’s McNeil: “initiatives and schemes that can be implemented through the Leasing Foundation, for example, to help look at how we attract more talent, through graduate schemes, apprenticeship schemes, even looking at school leavers. The more that the Foundation can do to support this the better and that’s one of the ways we’ll tackle the attraction issue.”

Jeff Lezinski, SVP, Solution Architecture at Odessa discusses Odessa’s thoughts and initiatives on attraction and retention of new talent within the industry.

As Nathan Mollett, who is also Chair of the Leasing Foundation, notes turning attrition into attraction isn’t easy in any industry because it requires companies to really understand their employees.

Simply’s McWilliams believes that a good company culture is the key to successful employer-employee relationships.

Looking to the future

To create a healthy future for the asset finance industry, time and investment is needed to attract and retain a pool of talented people who can pass on their culture and values to companies and the industry as a whole in these changing times. Without the proper tools, such as career advancement and providing a sense of community, the industry will be unable to recruit a team of diverse individuals who can relate to an increasingly diverse client base.

Organisations such as the Leasing Foundation have launched a number of projects and initiatives to help the asset finance industry attract, develop and retain a new generation of employees, including the Next Generation Network, a network for the next generation of business financial professionals, the Diversity & Inclusion Initiative, and 30 Under 30, an annual list of individuals who are driving forward the asset finance world today.

Analysis from Nathan Mollett Chair of the Leasing Foundation

The discussion with the Next Generation Network young ambassadors raised a number of key points and strategies that are particularly important when attracting and retaining talent to the industry.

Companies must provide new and current employees with development opportunities, which should be discussed in the recruitment process so that candidates can visualise progression. However, feel free to be creative about these development opportunities! They don’t have to simply be promotions; development can also come in the form of project responsibility. Any exposure you can give your new talent to make a change or IT related projects are of high value.

Company culture is particularly important to the next generation of talented professionals coming into the industry and this needs to be emphasised at the initial stages of recruitment. Companies should double check that their culture and values are relevant and appealing to younger people. Environmental issues and inclusivity need to feature here, as these important issues help to create common values and goals with a younger generation.

Another area that I feel is particularly important when recruiting new talent is language and tone. Words and terminology should be used that reinforce the greater good that is achieved through their activity in the organisation. Rather than focusing on how many deals they have helped transact and how much profit they have made, the emphasis should be on areas of positivity relating to the company’s culture and values such as focusing on how they have helped SMEs grow or potentially helped drive the green agenda. This is a different type of messaging to that seen and experienced in the industry 10 or 20 years ago, but this type of authenticity is particularly important to a company’s culture and values as we move forward.

European equipment

Scope 3 emissions: biggest reporting challenge yet?


ESG standards measure a business’s impact on society, the environment, and how transparent and accountable it is. ESG is fast becoming a mainstream consideration for all investors, and was one of the key topics discussed at the first summer AFC face-to-face event since Covid.

Investors are increasingly scrutinising ESG performance – and looking for companies to rise to the challenge. Environmental ESG reporting is now more prominent with increased regulatory pressure to report on emissions with Scope 3 reporting.

A panel of industry experts comprising John Rees, Community Head, Equipment Finance at Asset Finance Connect, alongside Karima Haji, Director of Transformation at Scania UK, Michiel Kranenborg, Manager Group Finance & Reporting at DLL, and René Kim, Founding Partner of Steward Redqueen debated the issues surrounding Scope 3 emissions measurement, management and reporting at the AFC Summer conference.

Scope 1 emissions: direct Green House Gas (GHG) emissions from company-owned and controlled resources, e.g., emissions released into the atmosphere as a direct result of a set of activities, at a firm level.

Scope 2 emissions: indirect emissions from a company from the generation of purchased energy, from a utility provider, e.g., all GHG emissions released in the atmosphere, from the consumption of purchased electricity, steam, heat and cooling.

Scope 3 emissions: all indirect emissions – not included in Scope 2 – that occur in the value chain of the reporting company, including both upstream and downstream emissions, i.e., emissions linked to the company’s operations.

Scope 3 emissions are all indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions. They are by far the largest source of emissions for most auto and equipment finance businesses.

Unfortunately, Scope 3 emissions are the hardest emissions to measure and manage and there are significant problems around reporting on them as there is a myriad of Scope 3 emissions along the value chain.

René Kim, Founding Partner of Steward Redqueen explains what Scope 3 emissions means for an asset finance company:  

In order to effectively manage scope three reporting, companies must stay on top of the usage data. So essentially, practitioners in the industry must know how often their asset is being operated, and what emissions it is making during the life of the finance agreement to be able to report the data.

“There are three levels to managing Scope 3 emissions: improved efficiency, cleaner fuels and new technologies.”

René Kim

Kim highlights that there are three levels to managing Scope 3 emissions: improved efficiency, cleaner fuels and new technologies:

  • Improved efficiency. Efficiency of the asset and its components e.g., machine performance, better engines, transmissions, tyres; operational efficiency – is it the right asset for the right task; pricing – what can be done on the pricing side to entice a customer to make more efficient use of the asset, e.g., usage-based business models.
  • Cleaner fuels. Liaise with vendors to see whether the assets can run on cleaner fuels; incentivise a client to use cleaner fuels.  
  • New technologies. Can newer technologies affect residual values and render an asset obsolete?

For bank-owned finance companies, banks are already falling in line with their net zero reports, while asset finance and leasing companies need to start looking at the processes and setting targets.

The first step in the process is to measure and disclose – as Kim points out, companies must “measure what you can, estimate what you must and make sure that, over time, you have systems in place to get better data, especially for new assets.” Companies must also set targets which can be difficult when you need to set a target on something that is beyond your control, but over time things will become clearer and easier. Kim warns that “not setting targets is not an alternative anymore.”

“Not setting targets is not an alternative anymore.”

René Kim

While many companies are announcing their target to be net zero by 2050, Kim advises companies to set a shorter term, for example, 2030, which means focusing less on new technologies and more on improving the Scope 3 emissions within current regulations and within current technologies.

When discussing current actions in the ecosystem, Kim highlights three areas of focus for asset financiers:

  1. The need to finance the growing demand for infrastructure, housing, and food; the whole system, not just the asset, but also the supporting infrastructure.
  2. Get involved with regulation.
  3. Engage in continuous conversations between vendors and clients: What are the technology roadmaps? What is possible on the OEM side? What are the real needs of clients? Scope 3 emissions reporting has made companies look at the planet and their carbon footprint – business is not only about profit, it is also about the reputational risk of being seen as a polluting company which can be extremely damaging for the business.  

Case study: Scania

Scania has a very strong roadmap up to 2030 to reduce their carbon footprint, by 50%, by 2025, for Scope 1 and 2, and then by 20% for scope three emissions. In 2017-18, Scania launched a plug-in hybrid vehicle and currently in Sweden, Norway and Denmark their battery electric vehicles are thriving.

Karima Haji, Director of Transformation at Scania UK hopes that “by 2030-2035, Scania should be able to offer a product that you can transition for all of your use cases across the transportation industry. We’re driving our agenda around new products, battery electric vehicles.”

Obviously, HGVs are very expensive assets and battery electric vehicles are more costly than diesel or petrol-powered vehicles, so Scania are looking at new business models, such as pay per use, to engage customers and allow them to transition towards battery electric vehicles and to reduce their carbon emissions through different business models. Haji points out that Scania want to work with their customers to make sure that the proposition is financially palatable.

In addition to introducing new sustainable products and new business models to their clients, Scania is also keen to be part of the circular economy by working across the full value chain, looking at all the components sourced, how long those components will last, and what the lifecycle of those components will be.

Haji points to the work at Scania to initially manufacture products using green steel which helps in a circular economy when it comes to regulation and reporting:

Case study: DLL

The reporting process is different for a bank-owned leasing company such as DLL, who have distinguished the various portions of their portfolio due to their portfolio being made up of various different types of assets for which there is “no single one-size-fits-all roadmap”.

DLL have therefore disaggregated their portfolio and are now working on what Michiel Kranenborg, Manager Group Finance & Reporting at DLL calls “a theory of change”, looking at every part of the portfolio where they can engage with vendors and end users to see what is possible for the end user and come up with a journey for that part of the portfolio, moving it from the current high intensity emission asset to the lower or zero emission type of asset.

DLL as a leasing company will work with the vendor to see how they can come up with a package for the end user that is attractive rather than pushing something that they cannot use.

“The key is that you should help your end users make a change, which will then be reflected in your Scope 3 emissions.”

Michiel Kranenborg

In addition to proposing increasingly sustainable packages for the end user, DLL is equally happy to promote a circular economy, helping the planet through the transition and reusing assets or asset components to create a second and third life for assets. DLL will buy secondhand assets, refurbish them and lease them out, because they believe that the value chain has not ended yet.

However, sometimes in its second or third life, the equipment may have higher carbon emissions because it is slightly less efficient than it was. However, it stops the original manufacturing process and, on a net basis, even though the emissions of the used asset are higher, they are still less than the original manufacturing costs of new equipment. This refurbishment concept can therefore cause problems when it comes to Scope 3 reporting.


While Scope 3 reporting provides the opportunity for companies in key industries to multiply their carbon reduction impact by decarbonising their supply chains, there are several challenges when measuring and reporting Scope 3 emissions:

Data. When reporting Scope 3 emissions, there can be problems with the consistency of data, the risk of double-counting, and availability of accurate data. This is the case for bank-owned leasing companies who are not as close to the asset and data as an OEM, for example. There is also the issue of who owns the data from the asset. 

At Scania the data is owned by the customer, not the OEM. Scania may generate the data from their sensors, particularly in the Scania trucks, but they offer customers service packages, such as a data monitoring package or a reporting package, which allows the customer to monitor fuel usage, driver efficiency and the CO2 emissions from the amount of diesel.

Methodology. There can be methodological challenges involved in capturing scope 3 emissions. These include estimating emissions for suppliers that do not calculate their own emissions, defining an appropriate calculation approach for each Scope 3 category whilst recognising that double counting may occur when emissions are aggregated across multiple organisations. 

Refurbishment issues. Michiel Kranenborg, Manager Group Finance & Reporting at DLL highlights a further inconsistency with Scope 3 Reporting: “DLL do a lot of asset refurbishments as part of our sustainability drive…. but in the calculation of financed emissions, probably refurbished slightly older assets will score less than a brand-new asset. So, in the financed emissions calculations and disclosure, there is an incentive to not refurbish because that will increase your emissions.”  

The European Commission’s Corporate Sustainability Reporting Directive (CSRD) which envisages the adoption of EU sustainability reporting standards, sees refurbishment or the circular use of assets as one of its cornerstones. However, this is in contrast to Scope 3 reporting as Kranenborg highlights in the video below.

Risk of reporting. There is a risk that emissions reporting and reporting requirements will become so onerous that it will stifle innovation. As Kim notes, “companies could be very environmentally sensitive, and have good internal policies that follow a good ESG strategy. But if they can’t send the necessary reporting to their shareholders, to their regulators, it defeats the purpose of being that environmentally friendly company.”

Looking to the future

Scope 3 emissions can no longer be ignored. While it can be easy to forget the impact that extends beyond direct activities, “out of sight, out of mind” can no longer be an excuse. With such a high percentage of carbon emitted from assets along the value chain, and with so many potential benefits from reducing this carbon, it is fast becoming imperative for businesses to measure and reduce Scope 3 emissions.

Companies who are currently working to reduce their Scope 3 emissions have the opportunity to differentiate themselves from their peers and competitors. Effective Scope 3 reporting positions these companies as innovative, conscientious and forward-looking organisations who are working to reduce the environmental impact along the value chain.

DLL’s Kranenborg agrees that the world is changing and customers will see the reporting rules differently; this can already be seen when engaging with customers and seeing that vendors are changing: “it might hurt to make that transition but not making them essential in the end will hurt a lot more, because the world is changing.”

Analysis from John Rees head of Asset Finance Connect equipment finance community

The overriding imperative call from the Scope 3 reporting discussion at the June Asset Finance Connect event is that the industry must act now and collaborate to solve the challenges of Scope 3 reporting and to find ways that the industry can design its products to reduce emissions not increase them.

The “challenging” topic of reporting related to Scope 3 emissions was discussed by an industry panel with plenty of audience input and participation. The discussion developed some ongoing topics that had been debated at recent Asset Finance Connect webinars.

Marije Rhebergen, global head of sustainability at DLL, commented in a recent AFC webcast that Scope 3 reporting is a very complex topic with challenging methodology. However, Rhebergen also pointed out the benefits of Scope 3 reporting from a business perspective: “This reporting creates a wealth of data which can be used to better steer the company in a greener and more efficient direction.”

Scope 3 reporting is not an easy topic for the industry to manage – partly because at this point in time the rules are not fully defined. But the message that came across strongly from the expert panel at the conference was “to get involved in the discussion so that the regulators appreciate what the industry can do”. It was strongly recommended that leasing executives get involved in the ongoing debate with the European regulators to ensure that the industry’s voice is heard in the discussions.

As René Kim commented, “the industry has not engaged with the regulator… they’ve come up with an idea that prescribes the process rather than the outcome. And I think this is why it’s so crucial that the industry gets involved.”

Patrick Beselaere, Chair of Leaseurope, who was attending the Scope 3 reporting panel discussion, urged the industry to work together, to engage in discussions with the regulators and technical experts, and also to reach out to politicians, in order to find “a good balance between the green ambition and the economy.”

Current expectation amongst asset finance industry leaders is that asset finance companies are going to be asked to report on emissions from assets that are not in their possession and for which they have limited control over the asset’s use. Let’s take a working example – a lessor provides an item of construction equipment to a civil engineering customer on a five-year operating lease. The contract has unlimited “hours” usage in its terms so it is up to the lessee as to how much he wants to use the diesel engine powered excavator. Scope 3 emissions reporting data as currently drafted would require the lessor to report the amount of emissions the excavator engine had made. That is not an easy task for the lessor unless there is some form of web-enabled reporting link between the machine, the user, the manufacturer and the lessor.

This example shows how complex Scope 3 emissions reporting is going to be for lessors and hence the urgent need for the industry to get involved in the debate as to what exactly these reporting requirements will require lessors to report.

The key messages from the AFC conference and recent Scope 3 emissions debate in the industry has been – understand the complexity of the reporting requirements, get involved in the discussion with regulators and collaborate with industry executives to solve the challenges of Scope 3 reporting. Asset Finance Connect will be seeking to enable this industry collaboration through their conferences and digital events in 2023.

European equipment

Building the world’s largest independent asset finance provider


After a glittering career at the very top of the asset finance sector, Bill Stephenson has put retirement on hold, opting instead to seize the opportunities cloud-based technology offers for innovation to create a new world-leading independent finance provider.

Addressing an Asset Finance Connect webinar, the latest in a series sponsored by Solifi, Stephenson laid out his ambitions in his new role as CEO of HPS Global Leasing, which include PEAC UK and PEAC Europe.

The record audience of 250 delegates from 30 countries heard Stephenson explain that a period of self-reflection during Covid had encouraged him to look for new challenges.

As he observed: “Let’s face it, there hasn’t been a new global competitor entering the marketplace in over 20 years. My aim is to build the largest global independent brand with a very strong differentiator.”

And for Stephenson, that means not working with a bank; a strong growth and acquisition strategy; and a global rather than regional presence.

Hear Bill talk about re-igniting the feeling of waking up with “hunger in the belly”.

“My aim is to build the largest global independent brand with a very strong differentiator”

Bill Stephenson


As Stephenson acknowledged, one of the biggest challenges for bank-owned lessors right now is the impact of regulation, with compliance issues taking up senior management time that could be spent finding better ways to serve customers. During the 2008 financial crisis, a bank’s leasing arm was left often fighting for relevance as it was previously viewed as little more than a conduit for excess profits from its parent. Not any more, though, as leasing operations are now embedded as a vital part of the bank’s business.

“But the problem is that the regulators don’t understand the difference between consumer loans or mortgages and leases. All those rules that are being forced on the industry are disruptive to customers – banks are losing 5% of customers at the onboarding process as it’s so cumbersome,” Stephenson pointed out.

Hear Bill discuss how independent lessors are set to challenge the banks’ market domination.

Stephenson also predicts that in the future, successful lessors will be those who offer additional services, including maintenance and refurbishment, and who control the asset lifecycle, which will prove a further barrier to banks, particularly when it comes to new concepts such as pay-per-use.

“Banks are losing 5% of customers at the onboarding process as it’s so cumbersome”

Bill Stephenson


Stephenson told his audience that a major frustration over the last ten years has been around IT, and in particular high costs and limited flexibility. The aim at HPS is to come straight out the gate using the latest cloud-based technology and APIs for direct links with clients.

“The challenge with legacy IT systems is that you can’t just delete what you have and add a new function, in the same way as you add or delete an app on your phone. Instead you need to rebuild and then when you fix one thing, something else breaks,” he maintained.

Listen to why Bill sees cloud-based systems as the future.

In Stephenson’s eyes, all transactions need to take place at the point of sale, rather than being taken back to the office to be completed. “In a recession, there are going to be fewer transactions and that means more and more people competing for each customer. The only differentiator is how well you service that customer, and the most seamless way is to close at point of sale,” he explained.

Bill explains the changing role of the salesperson.

HPS’s current focus is on business in central and eastern Europe, the Nordics, the US and Canada, and while keen to avoid over-expansion at an early stage, Stephenson said the company is not done with acquisitions in order to build market share.

“There’s not a lot of organic growth, so we will be looking to take market share through our value proposition, which is based on the principles of service, trust, transparency and true partnership, and not on price, rebates, false residuals or fake approvals,” Stephenson declared.

In competing against bank-owned lessors, much of the “secret sauce” for success is down to creating the services customers want, innovating quickly and flexibly, and product development, all of which is driven by technology.


Acknowledging that sustainability issues are coming to the fore in both Europe and the US, Stephenson cautioned that there is no “big switch” to force compliance with a new green approach, but that lessors should work with their customers to develop the right strategy.

“There is no one silver bullet solution, and we need to be there to support vendors and clients and to help them through the transition, rather than dictating what we will or will not fund.

“We need to get the industry to move away from a ‘sell and go’ approach, as there is so much we can do around the circular economy which will impact ESG. We can help companies take product through all possible lifecycle stages and refurbishment and, at the end, extracting rare earth materials so that they can be re-used. There is only so much of that on the planet, so salvaging what we have is important,” he explained.

Hear Bill outline lessors’ roles in the second and third life of assets.

Looking to the future

In response to audience questions about the risks for lessors of being left holding “dirty” assets which had lost value because of sustainability concerns, Stephenson pointed out that the supply chain crises provoked by Covid, and subsequently conflict in Ukraine, had underlined the value of lessors controlling the entire asset lifecycle.

“We’ll see this evolve more towards a focus on selling services, maintenance and refurbishment, as opposed to the usual idea of ‘build it and burn it’,” he argued. “And one of the advantages of being a global entity is the ability to move those assets on. There is a natural transition and move towards green equipment, and that will happen.”

But for the immediate future, Stephenson is clear that utilising the latest technology to create genuinely frictionless customer experiences and to innovate new products is the way to go. With lessors able to control the whole lifecycle of an asset, the circular economy is becoming a reality for those with the flexibility to respond.

“There is a natural transition and move towards green equipment, and that will happen.”

Bill Stephenson

Analysis from John Rees head of Asset Finance Connect equipment finance community

It’s fair to describe Bill Stephenson as a legend within the asset finance industry. Over the course of a 35 year career, he played a huge part in building DLL’s position as the global market leader in bank-owned vendor finance and a major player in the equipment leasing sector. As well as his CEO role, with responsibility for a €35 billion-plus portfolio, Stephenson was also a highly influential chair of the Equipment Leasing and Finance Association in the US.

So the obvious question is, having achieved so much by retirement age, and with the golf course beckoning, why take up another senior executive post?

Bill’s answer was to use the analogy of moving house – essentially, it’s always possible to improve on a property if you’ve got a lot of experience based on what you’ve owned before, and what you know new technology can deliver. So he is taking the benefit of his learning at DLL to mould a new, cutting edge, organisation.

Freed from the constraints of IT systems which have been developed over decades, with obsolescence built in, he is now looking to cloud-based technology as way of responding immediately to new requirements.

And Bill is clear that technology is only going to enhance, rather than obliterate, the role of the salesperson. That is why his response to a question from a young member of the audience about how to build a successful career was so valuable. The man who made it to the very top has two key lessons for getting there: learn to fail; and embrace rejection.

“Rejection is never personal. Hearing a ‘no’ just means you don’t understand what someone is asking to achieve,” is Bill’s view. It’s advice to take on board, as he views the greatest risk to the asset finance sector is that there are not enough of the next generation coming through the ranks.

All of us within the asset finance industry should also take to heart his other advice, which is the need for us all to join together and form a single entity to take on the regulators and make the case for our industry.


European equipment

SGEF: Sustainability focus heralds new ‘Golden Age’ for asset finance


Pandemic disruption underlined the need for the asset finance sector to be agile and reactive, and lenders who built strong bonds with their customers and vendor partners have reaped the benefits. Now the industry needs to adopt the same approach to deal with the challenges presented by the sustainability agenda, according to Jochen Jehmlich, CEO at Société Generale Equipment Finance (SGEF).

Speaking at an Asset Finance Connect Senior Executives Fireside Chat, sponsored by Solifi, Jehmlich predicted a potential “golden age for asset finance to come”, pointing out that the urgent pressure for businesses and the whole economy to adopt climate-friendly ways of operating means that all assets will need to become greener.

Jehmlich predicts a potential “golden age for asset finance to come”,

“Countries and governments have committed to reducing CO² emissions dramatically over the next few years. That means the whole economy has to run on electricity or hydrogen. It’s not about whether as lenders we should fund only solar panels or wind turbines—it’s about exchanging all assets for greener options.

“In areas like vehicle fleets and commercial equipment, everything will need to be replaced”

Jochen Jehmlich


While acknowledging the pandemic had come as a “big surprise and we were not super prepared”, Jehmlich said SGEF’s decision to offer a moratorium on payments and subsequently a staged approach to scheduling repayments had proved successful, with almost all customers back to regular payments by the end of 2020.

“We were proactively seeking a joint way forward. You build good customer relations in the bad times, and not the good times,” he noted.

Jehmlich also pointed out that, with offices shut overnight and overseas travel on hold, digital transformation had happened at a much faster pace than previously anticipated. Within a month, all employees were working virtually, and digital technology became a lifeline.

“Suddenly it was possible to sign a contract from home and all the hurdles the legal department had raised before were pushed aside. We have made a jump forwards in terms of digital working”


The focus on ESG issues at both organisational and country level is proving to be an equally disruptive event, as is already evident in the auto industry. There is also pressure from governments who are linking funding subsidies to investment in green technologies and approaches.

“There is a clear understanding that there is a connection between global warming and CO² emissions, and countries and governments have committed themselves to reduce CO² dramatically. It’s not that all our assets we finance today will get greener – they all have basically to be exchanged. All these replacements have to be financed, and we should be in a position to catch some of it,” Jehmlich stated.

SGEF, as part of a big multinational group, has already made a tranche of sustainability commitments, including dropping out of financing anything related to coal, withdrawing financing for oil and reducing and eventually ending lending for certain forms of gas.

“But we are not converting into NGOs – we are still profit driven organizations with a decent return on equity targets. We don’t want to end up with stranded assets or equipment with no value, but the question is how we make money with solutions that are attractive to our customers,” Jehmlich said.

Residual values

One key issue is identifying and managing the risks in financing a new generation of assets based on constantly evolving technologies. ‘We can see this already, for example with electric buses for communities. They are used to the idea there is an open residual and they give the bus back after a while. Whilst we would have been prepared in the past to take it, or the manufacturer would take it, nowadays nobody wants to take it because a bus can run for eight years. Nobody knows how the battery life cycle will look in eight years,” Jehmlich pointed out.

While the auto industry has been the first to experience complete disruption as a result of new technologies, Jehmlich forecast that other sectors will also undergo a revolution. For example, as pressure grows for agriculture to focus less on meat production and more on plant-based production, that could see the introduction of new types of equipment, perhaps smaller assets which target specific activities.

“So, we look for new [green] assets, try to find solutions to finance them, and try to integrate subsidies,”

Jochen Jehmlich

Pay per use

One option is the growing interests in “pay per use” equipment deals, priced on a consumption basis. This requires the traditional approach to calculating residual values and pricing risk in contracts to change.

“We are talking about the circular economy, where the lender funds a new asset which the manufacturer subsequently refurbishes for a second life as a used asset, and which at the end of its life is broken down into parts which are re-used. But no one will jump into this new environment without thinking carefully about which risks they will take,” Jehmlich explained.

Currently, the second life value for a solar panel, for example, is unknown. But while electric assets are likely to be more expensive at the beginning of their life, the maintenance and running costs are potentially lower, suggesting they may have a longer life.

“That opens up the way for lenders and manufacturers to build a long term relationship with the customer and to sell lots of services, for example, updating services,’ Jehmlich said.

However, he cautioned that the uncertainties over who will take the risk over the life of the asset mean a true “pay per use” solution was some way in the future. Currently it is limited to certain areas, such as photocopiers, where there is a high volume of customers sharing one piece of equipment and where levels of usage are reasonably predictable. Nevertheless, such deals have to take account of not only the credit risk if the customer defaults, but also utilization risk, for example if there are problems in a particular industry sector so that turnover falls or customers desert that particular company.

But Jehmlich closed the session with a glimpse of the future possibilities. SGEF is working with Philips on a project which will see the medical equipment supplier take over the whole operation of a clinic for a 10-year period. The customer will pay monthly instalments, and the supplier will take care of the equipment and ensure the technology is upgraded as required.

He also put the asset finance sector on notice that change is inevitable. “I’m always astonished when at a leasing conference, how much less talking there is about the digitialization of the asset finance industry. If you compare that would other parts of the universal banks, there complete areas have been completely disrupted. And banks have been expelled from some areas. So we have to be aware that once in a while, there could be a disrupter coming in showing us a much simpler form of the industry, one we can’t imagine right now. Compared to the whole banking industry, business leasing and asset finance is quite a conservative part that goes very slowly, but that must not be the case in the future.”

Analysis from John Rees head of Asset Finance Connect equipment finance community

As head of SGEF, rated as the number one asset finance lender in the AF50 European rankings, with €9.8bn of new business across 35 countries, Jochen Jehmlich is very clear about one thing – it is no longer business as usual.

Covid-19 has already disrupted the sector, as some big businesses found they could no longer operate during the early days of the pandemic and so were at risk of defaulting on contracts. But as Jochen points out, by staying close to customers and building up relationships, it has proved possible to reschedule payments and bring lending back on track.

And in some ways, pandemic-induced change has been good for the industry. Digital working has become the norm, offering efficiencies and opening up new opportunities. And with supply chains squeezed, companies and their customers are more prepared to look at how to make the most of the assets they already have in hand, through better utilisation.

But the biggest change to come, Jochen predicts, is the requirement to respond to the intense pressure to move to a more sustainable model of working. The “use and throwaway” society, which consumes without thought for how goods are manufactured and what happens to them at end of life, is at an end. At first glance, this wipes out the traditional model of financing an asset for a finite time period, and then replacing it with a new item.

However, lenders have no choice but to look for new solutions, as government, business and the public make it clear that steps must be taken to address climate change and the adverse environmental impact of “dirty” industries like coal and oil.

That presents a challenge for asset finance providers, because the new “green” assets are based on evolving technologies and lack the track record necessary to assess risk and residual value.

As Jochen points out, this is already evident in the automotive sector and is set to spread to other industries imminently. One option is to move to a “pay-per-use” model, whereby multiple users have access to an asset and payment is assessed according to utilisation. While simple in principle, this is more difficult to manage in practice.

But as Jochen emphasises, the asset finance sector is going to have to find solutions to these dilemmas. And for those lenders who do, there are rewards ahead, with predictions of a ‘golden age’ for asset finance as businesses seek to replace older equipment with new, green alternatives. This is not the moment wait and see, because as Jochen explains, there are plenty of disruptors waiting in the wings to seize the opportunities that traditional lenders may be too slow or too timid to explore.

We are discussing what ESG means for the asset finance industry, and progress towards new models, in our equipment finance community. Register for our webcasts and join in the discussions.

European equipment

DLL and ESG: a vision which marries profit with purpose


For DLL, with over 50 years as a global asset finance leader and a presence in more than 30 countries, creating long term partnerships has been critical to success, and the lender is now actively seeking to spearhead the push to more sustainable solutions for partners and end users, according to Marije Rhebergen, global head of sustainability.

“Increasingly our partners are asking us questions about the overall sustainability of their assets and asset solutions, rather than just the productivity of those assets”

“With many of our clients we are exploring ambitions to achieve net zero emissions and to move to a circular economy. But we can only do that together in partnership. The same is true of our own industry – we need to share experience to bring the industry to a higher level.”

Speaking at an Asset Finance Connect webinar, Rhebergen highlighted the growing pressures to bring ESG factors into consideration in contracts, among them changing public opinion. A recent DLL employee survey found 80% reporting that prioritizing the environment and sustainability was “very important”, while 75% ranked environmental impact first in importance, higher than profit.

“We are a very commercial company, so I thought people would see profit as most important. This doesn’t mean that we shouldn’t continue to be commercial, but we need to find ways to manage a profitable business and also seek to reduce the environmental impact of what we do. People feel a sense of urgency about this,” Rhebergen said.

Rhebergen’s observations struck a chord with Nick Leader, CEO of webinar sponsor Acquis, who observed that “We already have a very strong ethos about being transparent, so the real question is how early should we be engaging ESG into our conversations? And how do we maintain that culture within our own organizations and help create a matching culture and mind set with our partners, because the more they buy in to any solution, the more they will be wanting you to help them get there.”

Business challenges

In response, Rhebergen pointed out that at a very early stage clients are seeking analysis from an ESG risk perspective, and this requires a new way of looking at the traditional equipment life cycle, changing the nature of risk assessments. “ESG is being embedded in the credit risk and implementation process, and that can prove challenging. Lenders have always done broad checks in areas such as sanctions, but now we are being asked to consider both local legislation and a company’s own ethical policies in certain areas,” Rhebergen pointed out.

While initiatives such as the EU’s Corporate Sustainability Reporting Directive due to go live in 2023, the EU taxonomy, and national and global ESG requirements changing “at the speed of light”, Rhebergen said it was complex and challenging for lenders and their customers to ensure they were meeting ESG best practice requirements. A particular concern is accounting for responsibilities for “Scope 3” emissions, which are those occurring upstream and downstream in the supply chain.

“In some cases lenders may not know how the equipment they are funding is being used, making it difficult to assess potential ESG concerns”

Business benefits

“But tracking assets creates a wealth of data. This can be used to give a better steer to a client on how to move in a greener or more efficient use of assets direction, but it also provides new business opportunities, such as helping companies to develop offsetting propositions,” Rhebergen explained.

Pointing out that recent research showed less than 9% of the precious minerals used are recycled back into use, Rhebergen noted “this is a waste for those who are working to extract them and environmental burden, but it’s also an economic loss. What if we could bring those resources back into the loop – we’d have a much more effective economic model alongside the environmental benefits.”

The solution is refurbishing and remanufacturing equipment, and lenders being prepared to finance used equipment. The supply chain shortages experienced during the pandemic have served to highlight the business opportunities here, pushing second and even third life sales higher up the business agenda.

“To what extent you can build a circular solution depends on the user type and the value of the asset over time, and whether it is designed in a modular way so that elements can be upgraded when needed. For high value assets that retain their value over years, we are increasingly looking at a circular model.”

However, she cautioned that ESG pressures themselves could have an impact too, as an asset can lose value when legislative and regulatory changes are made.

“There is clearly residual value risk in funding diesel, which could become a hugely devalued asset class, but then there are also risks to funding newly emerging asset classes such as EVs because the technology evolves very quickly in the early stages,” Leader added.

New models

Rhebergen pointed out that the switch from traditional ownership of an asset towards paying for usage is also gaining traction, encouraging new ways of using assets. Citing the example of agricultural equipment, Rhebergen said there were opportunities for manufacturers and lenders to work together using smart solutions which encourage more resource efficiency, and maximize asset utilization.

“And of course there is the option of sharing an asset or Pay-per-use – where an end user only pays for the usage of the equipment, not a fixed monthly cost. The benefit is better alignment of cost and revenue. Here you are talking about active asset management, compared to traditional asset management which is passive. Normally you assess the asset value at the beginning and the end of the contract, but now you are looking at what is happening during its use,” Rhebergen stated.

With that closer link to the asset, she argues, lenders are better able to support the transition to a circular economy, using telemetry and onboard computer systems to optimize maintenance and repair, for example.

“The next generation in the workforce is very interested in ESG and by linking that to our strategy now, [we can] marry profit and purpose”

Marije Rhebergen

Analysis from John Rees head of Asset Finance Connect equipment finance community

Up until recently, ESG issues have been seen as a social rather than a business issue, but as outlined by Marije Rhebergen, head of sustainability at one of the world’s biggest asset finance providers, they are now firmly in the corporate mainstream.

So far, most of the emphasis is on the ‘environmental’ part of ESG, with lenders increasingly aware that they need to know much more about where and how an asset is being used. But as Marije indicates, social concerns are now rising to the top of the business agenda, while governance is also proving critical.

Her bold conclusion is that it is entirely possible to be profitable and sustainable at the same time. Indeed, the push towards more environmentally-friendly process is actually opening up new lending opportunities in second and third life equipment deals which if well managed could bring even greater commercial rewards.

But to get to a truly circular economy, where assets are routinely used, refurbished, reinvented and recycled, requires a lot of work. Marije is clear that the asset finance industry as a whole, needs to get together to work effectively on this, and to align to manage some of these topics.

Not least of the challenges is the complexity of the reporting required, and that is an area where the sector will want to collaborate to ensure its particular requirements are acknowledged. Working groups are already being contemplated to tackle such reporting issues, and the asset finance industry needs to unite to make its voice heard. Finance providers will want, for example, to be part of the discussion on how to measure and report on their material emissions – the Scope 3 emissions that come from upstream asset manufacture and downstream usage of assets. There is no doubt, however, that the push to make more of the assets available is set to be a guiding principle for years to come. The asset finance industry has a clear role to play, given the wealth of data available on asset usage, maintenance, output and lifecycle.

AFC is ideally placed to help the industry create communities and working groups that can bring together ideas and solution for everyone.