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HSBC and Walmart Pushes for Carbon Reductions in Retail Supply Chain

2019-05-09 11:49 Thursday

Walmart, one of the world's largest retailers, has teamed up with HSBC to offer its global suppliers financing rates linked to sustainability performance.

Walmart said companies in its supply chain that could demonstrate progress in reducing carbon emissions would be able to apply for preferential financing through the new arrangement with HSBC.

 HSBC and Walmart Pushes for Carbon Reductions in Retail Supply Chain

Walmart said suppliers involved in its Walmart's Sustainability Index Program would also be able to use the preferential financing. The sustainability index project evaluates and benchmark the environmental impact of the entire product life cycle.

A Walmart spokesman said the retailer could not provide any details of the offer for the Sustainable Supply Chain Finance Program because of competition, but that the financing would be an "attractive offer to suppliers" as long as they could prove their environmental credentials.

As companies such as Royal DSM, Pearson and Thames Water have agreed in recent months to link lending rates to environmental actions, companies are increasingly using the financing rate as a lever to promote sustainable development goals.

Walmart hopes its proposal will "encourage companies across the supply chain to focus on sustainability". Investing in sustainability not only leads to higher productivity and cost savings for suppliers, but also drives their business growth because they contribute positively to the world.

Research by McKinsey, a consultancy, suggests that a consumer-goods firm's supply chain accounts for more than 80% of its greenhouse-gas emissions. Integrating sustainability into global supply chains is not only good for the environment and society, but also good for corporate profits.

But in just over a decade, it is easier said than done to cut one billion tons of emissions from Walmart's supply chain. Since the target was launched in April 2017, Walmart's suppliers have saved 93 million tons of emissions through energy efficiency, renewable energy and sustainable packaging projects. But to meet the gigatons target, that rate would need to rise to 83 million tons a year.

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