UK supermarket giant Asda announced the launch of a groundbreaking sustainable supply chain finance scheme in partnership with HSBC UK. The program introduces sustainability-linked financing as an incentive for suppliers to improve their environmental, social, and governance (ESG) performance.

The initiative reflects Asda’s commitment to reduce carbon emissions across its value chain, with Scope 3 emissions—those from its supply chain—accounting for 98% of the company’s total carbon footprint. As part of this effort, Asda aims to encourage its suppliers to adopt sustainable practices through enhanced financing rates.

Michael Gleeson, Asda’s Chief Financial Officer, emphasized the significance of supplier engagement in the company’s decarbonization strategy. “Supporting and engaging with suppliers forms a crucial step in this journey,” Gleeson stated. He added that through the partnership with HSBC, Asda will not only promote greater transparency in sustainability reporting but also offer competitive financial incentives to suppliers meeting their sustainability targets.

The program, which will be launched in 2025, offers over 250 suppliers three tiers of financing based on their ESG data disclosure, target-setting, and actions taken toward shared sustainability goals. Suppliers who perform strongly against their ESG KPIs, as assessed by EcoVadis, will receive the most favorable financing terms. While decarbonization remains a primary focus, the program will also consider other ESG factors, such as social initiatives.

HSBC’s Global Head of GTS, Vivek Ramachandran, highlighted the role of the financing scheme in driving transparency and improving ESG practices in Asda’s global supply chain. Participation in the program will be voluntary, and suppliers opting out will remain on their current payment terms.

This initiative marks a significant step toward integrating sustainability into supply chain management, offering financial incentives to foster long-term ESG improvements.