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Asda, one of the UK's largest supermarket chains, has unveiled a new initiative aimed at boosting sustainability within its supply chain. In partnership with HSBC UK, the retailer has launched a sustainable supply chain finance program designed to offer better financing rates to suppliers that adopt and implement sustainability practices.
This voluntary program will extend incentives to over 250 suppliers, encouraging them to share their environmental, social, and governance (ESG) data and set and work toward specific sustainability goals. The initiative builds upon Asda's existing supply chain financing scheme, which has been in place for more than a decade but now offers three tiers of enhanced rates based on the suppliers' sustainability commitments.
Suppliers will be evaluated through the sustainability data platform EcoVadis, where their performance on ESG key performance indicators (KPIs) will determine the level of preferential terms they receive. Those who excel in meeting their sustainability targets will benefit from the most favorable rates.
Asda has already been asking its largest suppliers, responsible for approximately 80% of its product carbon emissions, to submit their sustainability data through EcoVadis. While the new scoring system will primarily focus on decarbonization efforts, it will also consider broader ESG factors, including social impact initiatives.
"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," said Michael Gleeson, chief financial officer at Asda. "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, expressed the bank's enthusiasm for extending its long-standing partnership with Asda, mainly supporting the supermarket's sustainability goals. He emphasized that this initiative aligns with HSBC's commitment to driving sustainable practices across industries, noting that the collaboration with Asda is a powerful example of how financial incentives can accelerate meaningful environmental and social change within supply chains.
"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," he said.
The new scheme is part of a broader trend where more corporations offer better financing rates to suppliers who commit to enhancing their environmental performance. This approach helps businesses reduce emissions and minimize environmental impacts across their supply chains and presents an opportunity for financial savings.
Suppliers gain access to more competitive financing, enabling them to invest in cleaner technologies and sustainable practices. In the long run, these investments can reduce emissions, lower operational costs, and a more substantial overall commitment to sustainability.
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