Asda, in collaboration with HSBC UK, is set to enhance its Supply Chain Finance scheme starting January 2025. This initiative will promote sustainability within its supply chain, involving over 250 suppliers.
- Suppliers will access three tiers of financing based on ESG performance, incentivising sustainable practices.
- The initiative uses EcoVadis to score suppliers’ sustainability efforts, focusing on decarbonisation and other ESG criteria.
- Suppliers sharing strong ESG data will gain preferential financing terms, while others remain on standard terms.
- This move aims to enhance transparency and encourage sustainable practices across the global supply chain.
Asda has announced a strategic collaboration with HSBC UK to improve its Supply Chain Finance scheme through sustainability-linked incentives. Scheduled to begin in January 2025, this voluntary initiative will engage over 250 suppliers currently participating in the existing scheme. These suppliers will have the opportunity to access enhanced financing rates, divided into three tiers, contingent on the disclosure of their Environmental, Social, and Governance (ESG) performance data.
The performance evaluations will be carried out by EcoVadis, a leading sustainability data platform. The assessments will prioritise decarbonisation but also include other ESG aspects such as social initiatives. Suppliers who exhibit strong performance against their ESG key performance indicators and openly share sustainability data will be rewarded with the most advantageous financing terms. Conversely, suppliers not engaging with the initiative will maintain current payment terms.
Chief Financial Officer of Asda, Michael Gleeson, emphasised the importance of this programme, stating that it forms a crucial step in their sustainability journey. The focus is not only on transparency but also on competitive financing to motivate a significant shift towards sustainable practices within the supply chain.
Vivek Ramachandran, HSBC’s Global Head of GTS, expressed support for the initiative, pointing out that it encourages suppliers to enhance transparency in ESG data sharing and improve sustainability performance. This step is seen as a vital catalyst for better ESG practices throughout Asda’s global supply network.
This initiative represents a significant step forward in embedding sustainable practices across Asda’s supply chain.
