Asda has today launched a new sustainability-linked enhancement to its Supply Chain Finance scheme in partnership with HSBC UK, which will see the retailer use financial incentives to encourage better sustainability practices within its supply chain.
Launching in January 2025, the voluntary scheme will offer over 250 Asda suppliers who currently use the existing scheme access to three tiers of enhanced rates of financing. Access to each tier will be based on suppliers disclosing their ESG performance data, setting targets and taking action on shared sustainability goals.
Performance will be scored by the sustainability data platform EcoVadis, with those suppliers performing strongly against their ESG KPIs and sharing their sustainability data rewarded with the most preferential terms. The scoring will have a particular focus on decarbonisation, but will also extend to other elements of ESG (such as social initiatives) to support embedding strong ESG practices throughout Asda’s supply chain.
Asda’s Supply Chain Finance programme with HSBC UK has been in place for over 10 years – the introduction of a sustainability enhancement demonstrates the commitment from both parties to support the supply chain in making sustainable changes to their business.
Asda already asks its largest suppliers – those accountable for around 80% of its product carbon emissions – to share sustainability data through the EcoVadis assessment platform.
Michael Gleeson, chief financial officer at Asda, said: “As we continue to drive progress towards our own decarbonisation and ESG targets, supporting and engaging with suppliers forms a crucial step in this journey.
Working with HSBC, we’re not only encouraging greater transparency over sustainability data in our supply chain, but we are able to use competitive financing to incentivise a significant number of suppliers to become more sustainable.”
Vivek Ramachandran, global head of GTS at HSBC, said: “We’re pleased to continue our long-term partnership with Asda to support its sustainability ambitions.
“By incentivising suppliers to share ESG data and improve their sustainability performance, this financing solution encourages transparency and helps to drive better ESG practices in Asda’s global supply chain.
There will be no operational disruption to existing suppliers in the programme. Suppliers who choose not to engage will remain on current payment terms and default rates. Suppliers will continue to receive payment within 14 working days as part of the supply chain finance programme.
