Walmart Offers Cheaper Supplier Finance For Sustainability

Walmart and HSBC are introducing a new initiative that pegs supplier financing rates to that vendor’s sustainability performances.

In an announcement this week, Walmart and HSBC said the new supply chain finance program aims to promote sustainability through the supply chain by connecting vendors to more affordable financing rates as they make progress in Walmart’s Sustainability Index Program or Project Gigaton. Suppliers that show progress can apply for HSBC financing.

The Project Gigaton initiative is Walmart‘s effort to cut one billion metric tons of greenhouse gasses from its value chain by 2030. Supplier collaboration is key to achieving that goal, Walmart said. The retailer’s Sustainability Index Program analyzes data across a product’s lifecycle to assess its impact on the environment.

By connecting financing rates with sustainability performance, HSBC global head of trade and receivables finance Natalie Blyth said supply chains can be more effective at achieving their sustainability goals.

“The procurement standards of a buyer are a huge driver for sustainability, and this is why we are proud to join forces with Walmart, the world’s largest retailer and a company that shares our mission to build a more sustainable future,” Bluth said in a statement. “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.”

“We want to encourage companies throughout the supply chain to focus on sustainability, as we have seen first-hand how this sparks innovation and generates value,” added Walmart’s VP Finance and Assistant Treasurer Matthew Allen in another statement. “Investing in sustainability can not only lead to higher productivity and cost savings for suppliers, but can also drive their business growth as they make a positive contribution to the world.”

The companies pointed to McKinsey analysis that found the typical consumer business supply chain generates significantly more environmental impacts than the company itself. Supply chains account for more than 80 percent of greenhouse gas emissions and more than 90 percent of air, land, water, geological resource, and biodiversity impacts.