HSBC has been supporting Walmart’s Sustainable Supply Chain Finance program (SSCF) 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,” said Jane Ewing, the SVP for Sustainability at Walmart. “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.”
“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,” said Surath Sengupta, global head of Financial institutions, Portfolio Management and Sustainability, Global Trade and Receivables Finance at HSBC.
Since 2017, more than 3,100 suppliers have formally signed on to Project Gigaton with suppliers reporting more than 186 million metric tons (MMT) of CO2e avoided in 2020, for a cumulative total of more than 416 MMT of CO2e avoided. However, recent research from HSBC and Boston Consulting Group (BCG) highlighted that small- and medium-sized businesses don’t have the in-house climate expertise and have limited access to capital to drive and fund climate transformation. The research found 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 help propagate innovation and technologies.
“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,” said Dexter Galvin, global director of Corporates & Supply Chains at CDP.
The Sustainable Supply Chain Finance program
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 (SBTI), 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,” said Ash Eisa, SVP for Global Sourcing at Walmart. “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.”