Suppliers who demonstrate perfomance against various KPIs can access preferential rates
Asda has launched a new sustainability-linked supply chain finance scheme with Lloyds.
The move – which will provide access to preferential rates for numerous suppliers on a tiered basis, dependent on sustainability performance against a range of KPIs – comes as the retailer aims to use financial incentives to drive sustainability progress and performance within its supply chain.
Suppliers performing strongly against their sustainability KPIs and sharing their sustainability data will be rewarded with the most preferential terms.
Asda has appointed Ecovadis, the global sustainability ratings platform provider, to help it assess and improve its suppliers’ environmental, social, and ethical performance across their value chains. This data is used as part of the scheme.
The new Asda and Lloyds scheme follows the supermarket’s 2024 partnership with a separate bank, which was Asda’s first sustainability-linked enhancement for its Supply Chain Finance initiative.
As with the other scheme, the EcoVadis scoring will help to embed strong sustainability practices throughout Asda’s supply chain, the retailer said, with a particular focus on decarbonisation and social initiatives.
Asda said the introduction of an additional sustainability-linked supply chain finance programme highlights its commitment to improving and supporting its supply chain in making sustainable changes to their business.
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.”
Suppliers who satisfy the criteria can access the scheme from October this year. Asda has promised that there will be no operational disruption to existing suppliers in the programme, and suppliers 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 per cent of its product carbon emissions – to share sustainability data through the EcoVadis assessment platform.
