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HSBC and Walmart launch green finance initiative

US retail giant Walmart is teaming with HSBC to launch a programme under which its global suppliers will be offered improved financing rates tied to their sustainability performance.

Firms in Walmart's supply chain that can demonstrate progress on cutting carbon emissions will be able to apply for preferential financing packages via the new arrangement with HSBC, Walmart said.

The US chain, one of the world’s biggest retailers has promised to cut one gigaton of carbon emissions from its supply chain by 2030, as part of the company's wider science-based emissions targets, which have been independently judged to be in line with a 2 degrees Celsius trajectory of warming.

Suppliers participating in Walmart's Sustainability Index Programme, where the environmental impact of an entire product's lifecycle is assessed and benchmarked, also will be able to access the scheme,

A win-win proposition

Walmart said that it was unable to release greater detail on Sustainable Supply Chain Finance (SSCF) programme’s specific offer for competitive reasons but insisted the financing package would be an “enticing proposition for suppliers” provided they can prove their environmental credentials.

Matthew Allen, Walmart’s vice-president of finance and assistant treasurer at Walmart, said the retailer hopes its offer will “encourage companies throughout the supply chain to focus on sustainability, as we have seen first-hand how this sparks innovation and generates value.

“Investing in sustainability can not only lead to higher productivity and cost savings for suppliers but can also drive their business growth as they make a positive contribution to the world,” he added.

Research by consultancy group McKinsey suggests a typical consumer goods company’s supply chain accounts for more than 80% of its greenhouse gas emissions. Natalie Blyth, global head to trade and receivables finance at HSBC, said trade finance therefore has a “vital role” to play in cutting carbon and meeting the United Nations’ Sustainable Development Goals (SDGs).

"Embedding sustainability in global supply chains is not only beneficial for the environment and society, but also for companies' bottom lines," she added.

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