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December 16, 2021

Walmart Financing Supplier Sustainability Initiatives

Posted In: Retail Articles
Walmart Announces Partnership With Green Dot Bank

To help the company reach its sustainability goals, Walmart has created a supply chain finance program to enable greenhouse gas emission reduction using science-based targets to measure success.

By working with HSBC bank and CDP, a non-profit that runs an environmental disclosure system, Walmart will help private brand suppliers – particularly small and medium-sized businesses – by introducing enhanced standards, tools and capacity building so they can upskill and begin aligning their operations with transparent sustainability objectives, the retailer stated.

The initiative is the beginning of the next phase in Walmart’s journey to avoid 1 billion metric tons, or a gigaton, of greenhouse gas emissions from its global supply chain by 2030. HSBC has supported Walmart’s Sustainable Supply Chain Finance program since 2019, encouraging the retailer’s suppliers to launch or expand relevant environmental programs through improved financing access and terms.

Since 2017, more than 3,100 Walmart suppliers have formally signed on to Project Gigaton, reporting more than 186 million metric tons of CO2e avoided in 2020 for a cumulative total of more than 416 MMT of CO2e avoided. However, recent HSBC and Boston Consulting Group research demonstrated that small- and medium-sized businesses don’t have the in-house climate expertise and capital access to drive and fund climate transformation. The research suggested that large corporations should supplement new standards with efforts to co-invest and provide liquidity through supply chain finance, share transition knowledge and resources, and propagate innovation and technologies, Walmart noted.

Project Gigaton suppliers now have the option of setting science-based targets and having their targets accepted 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 invoices approved by Walmart with pricing on financing linked to the supplier’s CDP scores, targets set and impact reports. Suppliers setting the highest goals would get the lowest pricing. Suppliers can 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, Walmart svp/sustainability.

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