Walmart launches sustainable supply chain financing program

Dan Berthiaume
Senior Editor, Technology
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Walmart is providing financial incentives to environmentally responsible suppliers.

Walmart is encouraging its suppliers to reduce greenhouse gas (GHG) emissions with early invoice payments.

The discount giant is working with financial services provider HSBC and environmental non-profit CDP to offer a new supply chain finance program that uses science-based GHG emissions targets. Suppliers taking part in Walmart’s Project Gigaton emissions reduction program now have the option for setting science-based targets and having their targets validated by the Science Based Targets Initiative (SBTI), or achieving certain score thresholds on their CDP climate change reports.

In September 2020, Walmart announced a new commitment to becoming a regenerative company an organization that works to restore, renew and replenish in addition to preserving the planet. This new program allows eligible suppliers to approach HSBC for early payment on their invoices approved by Walmart, with pricing on the financing linked to the supplier’s CDP scores, targets set and impact reported. Suppliers setting the highest ambition would be able to take advantage of receiving the lowest pricing.

The partnership with HSBC helps Walmart address its Scope 3 emissions (emissions associated with a company’s activities) and supports its suppliers to reduce their Scope 1 (direct) and 2 (indirect) emissions. Suppliers can also use the financing proceeds to manage their own working capital and their sustainability-linked improvements.

“Our work with Project Gigaton is purposefully meant to encourage all Walmart suppliers to pursue emission reduction goals across six pillars: Energy, Nature, Waste, Packaging, Transportation and Product Use & Design. That includes creating programs such as the Sustainable Supply Chain Finance program with HSBC so that smaller and medium-sized businesses can also take advantage of special financing to make the necessary investments in their sustainability journeys. Now with CDP scoring added to the mix, the program provides suppliers with one more way to take advantage of improved financing through progress and disclosure – and exemplifies how we approach sustainability through a shared value lens,” said Jane Ewing, senior VP for sustainability at Walmart, in a corporate blog post.

“We are seeing more suppliers enrolling in Project Gigaton since the launch of the Sustainable Supply Chain Finance program two years ago. Our suppliers tell us that the incentives from the program are helping them invest in carbon emissions reduction efforts across their operations – this is why these types of collaborations are critical in ensuring even small- and medium-size businesses can reduce their emissions efficiently,” said Ash Eisa, senior VP for global sourcing at Walmart.

“On average, 80% of a company’s carbon footprint resides in its supply chain, which means delivering on Scope 3 emissions won’t happen unless more is done to help small- and medium-sized suppliers. This program does just that and accelerates net zero transition,” said Surath Sengupta, global head of financial institutions, portfolio management and sustainability, global trade and receivables finance at HSBC.

“Raising ambitions to reduce Scope 3 emissions is paramount in reaching the Paris Agreement goal, and this is only achievable with strong supply chain engagement. CDP’s work with suppliers has helped reduce GHG emissions by 619 million metric tons in 2020 alone, and we are pleased to deepen our relationship with Walmart and HSBC in providing the support needed to accelerate supply chain action through multi-stakeholder engagement,” said Dexter Galvin, global director of corporates & supply chains at CDP.