UK grocer Asda has launched a new sustainability-linked supply chain finance scheme, with the aim of rewarding suppliers for their ESG progress and transparency.
The supply chain finance scheme with Lloyds is a conversion of its existing programme to offer domestic suppliers preferential rates based on sustainability performance.
Under the terms of the fresh arrangement, Asda’s suppliers will be incentivised to voluntarily share their sustainability data, establish sustainability commitments, and act towards those goals – in return for enhanced rates and expedited payment terms.
Suppliers performing strongly against their sustainability key performance indicators and sharing their sustainability data will be rewarded with the most preferential terms. Asda appointed Ecovadis, the global sustainability ratings platform provider, to help them assess and improve their suppliers’ performance.
The new Asda and Lloyds scheme follows the retailer’s 2024 partnership with HSBC, which was the retailer’s first sustainability-linked supply chain finance scheme. As with that initiative, the Lloyds programme will have a particular focus on decarbonisation and social initiatives.
Michael Gleeson, chief financial officer at Asda, commented: “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, managing director and head of consumer at Lloyds, added: “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.”
Suppliers who satisfy the criteria should be able to benefit from the scheme from October this year. Asda promised there will be no operational disruption to existing suppliers in the programme, and suppliers who opt not to engage in the new initiative will remain on current payment terms and default rates.
Asda noted that it already asks its largest suppliers – those accountable for around 80% of its product carbon emissions – to share sustainability data through the Ecovadis assessment platform.
[image credit: Green Retail World]
