Asda is encouraging its suppliers to be more sustainable with the launch of a new sustainability linked supply chain finance scheme with Lloyds. It will see the company converting its existing sustainability-based programme to offer domestic suppliers preferential rates based on their sustainability performance.
Incentives will be in place to encourage Asda suppliers to share their sustainability data, establish sustainability commitments and act towards those goals. Although the scheme will be voluntary, it’s hoped that the enhanced rates and expedited payment terms will encourage suppliers to report their data and make changes.
The preferential rates will be on a tiered basis, dependent on sustainability performance measured against a range of KPIs. Global sustainability ratings platform Ecovadis has been appointed by Asda to help the retailer assess and improve supplier’s environmental, social, and ethical performance across their value chains.
Asda partnered with HSBC last year to offer the first sustainability-linked enhancement for its Supply Chain Finance scheme. As with the other scheme, the EcoVadis scoring will help to embed strong sustainability practices throughout Asda’s supply chain, with a particular focus on decarbonisation and social initiatives.
Wider ESG ambitions
Michael Gleeson, chief financial officer at Asda, said: “Supporting our suppliers in making meaningful, sustainable changes is central to our wider ESG ambitions. Through our new supply chain finance scheme with Lloyds, we’re strengthening that commitment – offering competitive financing that rewards progress and encourages transparency across our supply base.”
“It’s a practical way to support our suppliers in making sustainable changes to their business, while building a more resilient and responsible supply chain for the future.”
Aled Patchett, MD and head of consumer at Lloyds, said: “We’re proud to have supported Asda for many years in its work to build further resilience in its supply chain. Our existing programme has successfully supported suppliers over the years and converting it to reward sustainability efforts will not only deepen support for British businesses, it will also support Asda in meeting its own ESG ambitions.”
Qualifying suppliers can access the scheme from October while those who choose not to engage will remain on current payment terms and default rates.
Asda already asks its largest suppliers – those accountable for around 80% of its product carbon emissions – to share sustainability data through the EcoVadis assessment platform.
Earlier this month, Asda announced the launch of Asda Xpert, allowing suppliers access to information about their performance online with Asda.
Stay informed
Our editor carefully curates two newsletters a week filled with up-to-date news, analysis and research. Click here to subscribe to the FREE newsletter sent straight to your inbox. Why not follow us on LinkedIn to receive the latest updates on our research and analysis?
