• Asda partners with HSBC UK to launch a sustainability-linked enhancement to its Supply Chain Finance scheme.
• Suppliers incentivized to share ESG data and meet sustainability targets for better financing rates starting January 2025.
• Performance of suppliers to be evaluated by EcoVadis, focusing on decarbonisation and broader ESG efforts.

Asda has unveiled a new initiative within its Supply Chain Finance programme to drive enhanced sustainability practices among its suppliers. Collaborating with HSBC UK, the retailer is set to introduce a tiered financing system that rewards suppliers for their environmental, social, and governance (ESG) efforts.

Strategic Implementation

Starting in January 2025, over 250 suppliers participating in Asda’s existing finance scheme will have the opportunity to benefit from three levels of enhanced financing rates. Access to these rates will depend on the suppliers’ commitment to transparency in ESG performance, setting ambitious sustainability targets, and making tangible progress towards these goals.

Evaluating Supplier Performance

EcoVadis, a sustainability data platform, will play a crucial role in assessing the suppliers’ adherence to their ESG Key Performance Indicators (KPIs). Those who demonstrate significant advancements in their sustainability practices, particularly in decarbonisation, will receive the most favorable financing terms. This approach aims to embed robust ESG practices throughout Asda’s supply chain.

Long-term Commitments and Partnership

Michael Gleeson, Chief Financial Officer at Asda, emphasized the strategic importance of the scheme: “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 also able to use competitive financing to incentivise a significant number of suppliers to become more sustainable.”

Vivek Ramachandran, Global Head of GTS at HSBC, highlighted the benefits of this partnership: “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.”

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Operational Continuity and Support

The introduction of this sustainability-linked finance enhancement will not disrupt the operations of current suppliers. Those who opt not to participate will maintain their existing payment terms and conditions, ensuring operational continuity. Additionally, the initiative is supported by multiple funding partners, including Rabobank, underscoring the broad-based support for Asda’s sustainability ambitions.

This strategic enhancement to Asda’s Supply Chain Finance programme marks a significant step in aligning financial mechanisms with sustainability goals, setting a precedent for how major retailers can leverage their supply chains to foster greater environmental responsibility.