Asda introduces a new sustainable finance scheme, enhancing its existing supply chain finance with an ESG focus.
- Launching January 2025, the scheme incentivises over 250 suppliers to adopt better sustainability practices.
- Three-tier financing rates are available, dependent on the supplier’s disclosure of ESG performance data.
- Performance assessment is based on EcoVadis scoring, focusing on decarbonisation and social initiatives.
- Non-participating suppliers remain on current payment terms, continuing to receive payments within 14 days.
Asda is set to launch a sustainability-linked enhancement to its Supply Chain Finance scheme in collaboration with HSBC UK, scheduled for January 2025. This initiative aims to promote sustainable practices among its suppliers by offering financial incentives. Over 250 suppliers currently using the existing scheme will have the opportunity to benefit from three tiers of enhanced financing rates.
The eligibility for these enhanced rates depends on suppliers disclosing their Environmental, Social, and Governance (ESG) performance data, setting relevant targets, and taking actions aligned with shared sustainability goals. The performance scores, assessed by EcoVadis, a sustainability data platform, will focus primarily on decarbonisation efforts along with other ESG elements, such as social initiatives.
Suppliers achieving high performance in their ESG Key Performance Indicators (KPIs) and who share their sustainability data will receive the most preferential financing terms. This scheme represents a critical step in embedding robust ESG practices throughout Asda’s supply chain, reinforcing its commitment to decarbonisation and responsible business conduct.
According to Michael Gleeson, Asda’s Chief Financial Officer, supporting and engaging suppliers forms an integral part of Asda’s journey towards achieving its decarbonisation and ESG targets. He stated that the partnership with HSBC not only fosters transparency over sustainability data but also leverages competitive financing to incentivise significant supplier sustainability improvements.
Vivek Ramachandran, HSBC’s Global Head of GTS, expressed pleasure at continuing the collaboration with Asda to support its sustainability ambitions. He highlighted that the financing solution encourages transparency by incentivising suppliers to share ESG data and improve sustainability performance, thereby promoting better ESG practices across Asda’s global supply chain.
Asda’s new financing scheme marks a significant advancement in promoting sustainability within its supply chain.
