Walmart, along with HSBC and climate research provider and environmental disclosure platform CDP, announced today the launch of a supply chain finance program incentivizing and helping suppliers to set science-based emissions reduction targets, in a bid to advance the retail giant’s efforts to address its Scope 3 emissions footprint.
According to Walmart, the program marks the next step in its supply chain emissions reduction initiative, Project Gigaton. Launched in 2017, the project aims to eliminate 1 billion tons of greenhouse gas emissions from its global supply chain by 2030. To date, over 3,100 suppliers have signed on to the initiative, resulting in cumulative avoided emissions of 416 million metric tons of CO2e.
Jane Ewing, the Senior Vice President for Sustainability at Walmart, said:
“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.”
The new program is aimed at helping Walmart’s private brand suppliers with the introduction of enhanced standards, tools and capacity building to upskill and align their operations with transparent sustainability objectives. The program focuses particularly on small and medium-sized businesses, which often do not have in-house climate expertise or the capital resources to drive climate transformation.
Ash Eisa, Senior Vice President for Global Sourcing at Walmart, said:
“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.”
Under the new program, suppliers taking part in Project Gigaton now have the option to set science-based targets, and to have them validated by the Science Based Targets initiative (SBTi) one of the key organizations focused on aligning corporate environmental sustainability action with the global climate goals. Suppliers can also achieve certain score thresholds on their CDP climate change reports. Suppliers can approach HSBC for early payment on invoices approved by Walmart, with pricing on the financing linked to the supplier’s CDP scores, targets and reported impact.
Additionally, suppliers can also use the financing to manage working capital and sustainability-linked improvements, such as making operations energy efficient.
Surath Sengupta, Global Head of Financial institutions, Portfolio Management and Sustainability, Global Trade and Receivables Finance at HSBC, said:
“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.”
Dexter Galvin, Global Director of Corporates & Supply Chains at CDP, added:
“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.”