Asda is partnering with HSBC to offer its suppliers financial incentives to encourage better sustainability practices across its supply chain.
In January 2025, the supermarket is launching a new sustainability-linked enhancement to its existing Supply Chain Finance scheme that will be largely aimed at its international suppliers.
This will give over 250 Asda suppliers who use the current scheme access to three tiers of enhanced rates of financing.
Access to each tier will be based on suppliers disclosing their environmental, social, and governance (ESG) performance data, setting targets, and taking action on shared sustainability goals.
Suppliers’ performance will be scored by the sustainability data platform EcoVadis. The producers who perform strongly against their ESG indicators and share their sustainability data are granted the best terms.
The scoring will have a particular focus on decarbonisation as food businesses work towards net zero goals, but will also extend to other elements of ESG such as social initiatives.
Asda CFO Michael Gleeson 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 also able to use competitive financing to incentivise a significant number of suppliers to become more sustainable.”
Asda’s voluntary Supply Chain Finance programme with HSBC UK has been in place for over 10 years.
Those who’ve been taking part in the scheme will see “no operational disruption”, it said, while those who choose not to take part will remain on current payment terms and default rates.
The retailer also asks its largest suppliers, accountable for around 80% of its product carbon emissions, to share sustainability data through the EcoVadis platform.
Vivek Ramachandran, head of global trade solutions 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.”
Asda’s move follows Aldi’s announcement last week that its net zero targets were validated by the international Science Based Targets initiative (SBTi) – therefore joining the big four as well as Co-op, Waitrose and M&S in committing to science-based targets to reach net zero greenhouse gas emissions by 2050, as per the Paris Agreement.
Britain’s leading food and drink manufacturers – including Ferrero, Mondelez, Unilever, Mars and Nestlé – have also recently been urged to bolster their climate targets after being found responsible for “staggering” carbon emissions in a new report.
No comments yet