Walmart encourages its suppliers to reduce greenhouse gas (GHG) emissions with advance bill payments.
The discount giant is working with financial services provider HSBC and the environmental nonprofit CDP to come up with a new supply chain finance program that uses science-based GHG emissions targets. Suppliers participating in Walmart’s Gigaton Project Emissions Reduction Program now have the option of setting science targets and having their targets validated by the Science Based Targets Initiative (SBTI), or meeting certain score thresholds on their reports. CDP on Climate Change.
In September 2020, Walmart announced a new engagement become a regenerative company – an organization that works to restore, renew and replenish in addition to preserving the planet. This new program allows Suppliers eligible to contact HSBC for prepayment on their Walmart-approved invoices, with funding pricing linked to supplier CDP scores, set targets and reported impact. Suppliers with the highest ambition could benefit from the lowest prices.
The partnership with HSBC helps Walmart tackle its Scope 3 emissions (emissions associated with a company’s activities) and helps its suppliers reduce their Scope 1 (direct) and 2 (indirect) emissions. Suppliers can also use the financing proceeds to manage their own working capital and sustainability improvements.
âOur work with Project Gigaton is deliberately aimed at encouraging all Walmart suppliers to pursue emission reduction targets on six pillars: energy, nature, waste, packaging, transportation and product use and design. This includes creating programs like the Sustainable Supply Chain Finance program with HSBC so that small and medium-sized businesses can also take advantage of special funding to make the necessary investments in their sustainability journey. Now, with the CDP rating added to the package, the program gives vendors an additional way to leverage enhanced financing through progress and disclosure – and illustrates how we approach sustainability through a lens of shared value, âsaid Jane Ewing, senior vice president for sustainability at Walmart, in a corporate blog post.
âWe have seen more and more suppliers sign up for the Gigaton project since the launch of the Sustainable Supply Chain Finance program two years ago. Our suppliers tell us that the program’s incentives help them invest in carbon reduction efforts across their operations – which is why these types of collaborations are essential to ensure that even small and medium-sized businesses can reduce their emissions. efficiently, âsaid Ash Eisa, senior vice president of global sourcing at Walmart.
âOn average, 80% of a company’s carbon footprint resides in its supply chain, meaning that delivery on Scope 3 emissions will only happen if more is done to help suppliers of small and medium size. This program does just that and accelerates the net zero transition, âsaid Surath Sengupta, global head of financial institutions, portfolio management and sustainability, global trade and debt finance at HSBC.
âMeeting the ambitions to reduce Scope 3 emissions is essential to achieve the Paris Agreement target, and this can only be achieved with a strong commitment in the supply chain. CDP’s work with suppliers has helped reduce GHG emissions by 619 million metric tonnes in 2020 alone, and we are delighted to deepen our relationship with Walmart and HSBC by providing the support needed to accelerate action. of the supply chain through multi-stakeholder engagement â, noted Dexter Galvin, global director of business and supply chains at CDP.