Asda, HSBC Launch Sustainable Supply Chain Finance Scheme
Asda, HSBC Launch Sustainable Supply Chain Finance Scheme
Asda, a leading UK-based supermarket retailer, has announced a new sustainability-focused supply chain finance scheme, developed in collaboration with HSBC UK. The initiative, which introduces a sustainability-linked enhancement to Asda’s existing Supply Chain Finance program, is designed to encourage more sustainable practices among its suppliers through financial incentives. The new program aligns with Asda’s broader environmental commitments, which include setting science-based targets for reducing carbon emissions across its value chain. A major factor in this initiative is addressing Scope 3 emissions, which account for 98% of Asda’s carbon footprint, with most of these emissions originating from its supply chain. By focusing on reducing these indirect emissions, Asda aims to foster sustainability not only within its own operations but also across its supplier network. Michael Gleeson, Asda’s Chief Financial Officer, emphasized the critical role of suppliers in achieving the company’s decarbonization and ESG (Environmental, Social, and Governance) goals. “Supporting and engaging with suppliers forms a crucial step in this journey,” said Gleeson. “With HSBC’s support, we can encourage greater transparency over sustainability data within our supply chain and use competitive financing to incentivize suppliers to adopt more sustainable practices.” Under the updated program, which is set to launch in 2025, Asda will offer more than 250 of its suppliers access to three tiers of enhanced financing rates.
These rates will be determined by the suppliers’ disclosure of ESG data, their target-setting efforts, and the concrete actions they take toward shared sustainability goals. Suppliers who perform well against their ESG key performance indicators (KPIs) and actively share their sustainability data will be rewarded with the most preferential financing terms. EcoVadis is a sustainable data base responsible for identifying the performance of suppliers, with a focus on carbon neutrality, although other ESG aspects such as social initiatives are considered. The new funding program will be voluntary, meaning providers can choose whether or not to participate. Those who opt out will remain on the current payment terms. Emphasizing the importance of transparency and improving sustainability practices, Vivek Ramachandran, Global Head of GTS at HSBC, said the initiative will improve ESG practices throughout the supply chain of the world of Asda. This initiative represents a growing trend for companies to integrate sustainability into their supply chain management, aligning financial incentives with environmental and social responsibility.