Walmart has announced the creation of a supply chain finance program that enables greenhouse gas emissions reductions and uses science-based targets to do so in a way that aims for a 1.5-degree Celsius pathway.
Working alongside HSBC and CDP, a global nonprofit that runs the world’s environmental disclosure system, the program will help Walmart’s private brand suppliers – particularly small and medium-sized businesses – by introducing enhanced standards, tools and capacity building to help them upskill and in turn align their operations with transparent sustainability objectives.
The announcement marks a key next phase in Walmart’s journey to avoid 1 billion metric tons of greenhouse gas emissions from its global supply chain by 2030. HSBC has been supporting Walmart’s Sustainable Supply Chain Finance program since 2019 – encouraging its suppliers through improved financing access and terms if they reduce GHG emissions in at least one of the six pillars that are a part of Project Gigaton.
“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, the SVP for sustainability at Walmart, in a statement.
Since 2017, more than 3,100 suppliers have formally signed on to Project Gigaton™ with suppliers reporting more than 186 million metric tons of CO2e avoided in 2020, for a cumulative total of more than 416 MMT of CO2e avoided, according to Walmart.
Suppliers taking part in Project Gigaton™ now have the option for setting science-based targets and having their targets validated by the Science Based Targets Initiative, or achieving certain score thresholds on their CDP climate change reports.
Eligible suppliers can 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 and supports its suppliers to reduce their Scope 1 & 2 emissions. Suppliers can also use the financing proceeds to manage their own working capital and their sustainability-linked improvements, such as making their operations energy efficient to deliver against Walmart’s Project Gigaton goals.
“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, SVP for global sourcing at Walmart, in a statement.
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Image: Walmart