Asda unveils a pioneering finance initiative to boost supply chain sustainability, partnering with HSBC UK.
- From January 2025, Asda will offer enhanced financial incentives to suppliers meeting sustainability targets.
- Suppliers will be evaluated through EcoVadis, focusing on decarbonization and broader ESG criteria.
- Non-participating suppliers will maintain existing payment terms, securing payments within 14 days.
- The initiative emphasizes Asda’s commitment to transparency and improved ESG practices across its supply chain.
In a significant move towards sustainability, Asda has announced an enhancement to its existing Supply Chain Finance scheme, in collaboration with HSBC UK. This initiative, launching in January 2025, is designed to encourage sustainability within its supply chain through financial incentives. Over 250 suppliers currently engaged with Asda’s finance scheme will have access to three tiers of enhanced financing rates. These incentives are tied to suppliers’ performance on sustainability metrics, evaluated through the EcoVadis platform.
The financial rewards will be based on the disclosure of ESG (Environmental, Social, and Governance) performance data, alongside the setting of targets and actionable steps towards mutual sustainability goals. Suppliers demonstrating strong performance according to ESG Key Performance Indicators (KPIs) will receive preferential financing terms. The EcoVadis evaluation will particularly emphasize decarbonization, while also considering social initiatives to foster robust ESG practices throughout Asda’s supply chain.
For those suppliers opting not to engage with this enhanced scheme, they will continue to receive payments within the standard 14-day term and default rates. Asda ensures that these suppliers will still be part of its supply network, albeit without the additional financial perks offered to those committing to greater transparency and sustainability.
Michael Gleeson, Asda’s Chief Financial Officer, remarked on the importance of this development in driving progress towards Asda’s own decarbonization and ESG objectives. He stated: “As we continue to drive progress towards our own decarbonization and ESG targets, supporting and engaging with suppliers forms a crucial step in this journey.” This collaboration with HSBC allows Asda to utilize competitive financing as a mechanism to promote sustainable practices.
HSBC’s Global Head of GTS, Vivek Ramachandran, also expressed satisfaction in supporting Asda’s sustainability ambitions through this partnership. Ramachandran highlighted the importance of incentivizing suppliers to prioritize ESG data-sharing and enhance their sustainability performance, thus contributing to improved practices across Asda’s global supply chain.
This initiative marks a critical step in Asda’s drive towards greater sustainability and transparency across its supply network.
