SDGs: HSBC and Walmart launch green finance program

Madeleine Cuff –
FlickrMike Mozart

One of the world’s largest retailers has teamed up with HSBC to launch a new program offering its global suppliers improved financing rates tied to their sustainability performance.

Firms in Walmart’s supply chain that are able to demonstrate progress on cutting carbon emissions will be able to apply for preferential financing packages via the new arrangement with HSBC, Walmart said.

The retailer has promised to cut one gigaton of carbon emissions from its supply chain by 2030, as part of the company’s wider science-based emissions targets, which have been independently judged to be in line with a 2 degrees Celsius trajectory of warming.

Suppliers that participate in Walmart’s Sustainability Index Program, where the environmental impact of an entire product’s lifecycle is assessed and benchmarked, also will be able to access the scheme, Walmart said.

A spokesperson for Walmart said the retailer could not give any detail on Sustainable Supply Chain Finance (SSCF) program’s specific offer for competitive reasons, but insisted the financing package would be an “enticing proposition for suppliers” as long as they can prove their environmental credentials.

The move is part of a growing trend for corporates to use financing rates as leverage to drive progress on sustainability targets, with the likes of Royal DSM, Pearson and Thames Water agreeing loans with interest rates pegged to environmental action in recent months.

Matthew Allen, VP of finance and assistant treasurer at Walmart, said the retailer hopes its offer will “encourage companies throughout the supply chain to focus on sustainability, as we have seen first-hand how this sparks innovation and generates value.”

“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,” he added.

Research by consultancy giant McKinsey suggests a typical consumer goods company’s supply chain accounts for more than 80 percent of its greenhouse gas emissions. Natalie Blyth, global head to trade and receivables finance at HSBC, said trade finance therefore has a “vital role” to play in cutting carbon and meeting the United Nations’ Sustainable Development Goals (SDGs).

“Embedding sustainability in global supply chains is not only beneficial for the environment and society, but also for companies’ bottom lines,” she added.

But slicing one gigaton of emissions from Walmart’s supply chain in little over a decade may be easier said than done. In an update earlier this month Walmart revealed that since the goal’s launch in April 2017 Walmart’s suppliers have conserved 93 million metric tons of emissions through a combination of energy efficiency, renewable energy and sustainable packaging projects. But to achieve the gigaton goal, this reduction rate needs to rise to 83 million metric tonnes a year, it said.