Walmart join with HSBC to financially incentivise sustainability-compliant suppliers

Walmart, the world’s largest firm by revenue, and parent company of the Asda grocery chain in the UK, is partnering with London-headquartered HSBC, Europe’s biggest bank, to deliver financial incentives to suppliers for complying with the retail giant’s sustainability objectives. Professionals holding procurement and supply chain jobs at Walmart and The Sustainability Consortium devised sustainability programmes that award rankings to suppliers for their sustainability performance. The global programmes link a supplier’s financing rate to their sustainability performance, so that suppliers with higher ratings can receive better loan terms.

The Sustainability Consortium collaborated with Walmart to devise the Sustainability Index benchmarking programme in 2012, when the grocery colossus announced it would use the programme to ensure that 70% of the goods sold in its stores met with its sustainability standards by 2017.

Practitioners in supply chain jobs at Walmart, including supply chain interims, have been tackling the sustainability issue with determination. In March last year, the company announced Project Gigaton, a commitment to slash 50 million metric tonnes of greenhouse gas emissions from its China value chain by 2030. The Project also commits the company to cut one billion tonnes of these emissions from its global value chain by the same deadline. Just over a year later, the firm has revealed that its suppliers have already avoided 3.46 million metric tonnes of these emissions in the Chinese chain, amounting to the average electricity consumption of more than 3 million Chinese households.

Commenting on the supplier incentivisation angle, HSBC’s Global Head of Trade and Receivables Finance, Natalie Blyth, said: “In many industries it is a company’s supply chain – rather than the company itself – that is responsible for most of the environmental impact and therefore offers the greatest potential for sustainability improvements.” The Carbon Disclosure Project also applauded the incentivisation scheme as a good way of encouraging emissions reductions.