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HSBC and Walmart Join Forces on Sustainable Supply Chain Finance

HSBC and Walmart are collaborating on a new sustainable supply chain finance program that pegs a supplier’s financing rate to its sustainability performance.

This global program announced on Thursday allows Walmart’s suppliers that demonstrate progress in Walmart’s Project Gigaton or Sustainability Index Program to apply for improved financing from HSBC based on their sustainability ratings.

Project Gigaton is Walmart’s worldwide initiative to eliminate 1 billion metric tons, or a gigaton, of greenhouse gases through commitments from its suppliers in the global value chain by 2030. The company’s Sustainability Index gathers and analyzes information across a product’s life cycle. It was developed by The Sustainability Consortium (TSC), which is dedicated to improving the sustainability of consumer products, to help Walmart benchmark suppliers and encourage continuous improvement.

Also on Thursday, Walmart said its suppliers have reported avoiding 3.46 million metric tons of greenhouse gas emissions in the Chinese value chain as part of Project Gigaton China. As part of its sustainability efforts and in an effort to source more sustainable fibers, Walmart said last week it will increase the use of recycled polyester fiber, setting a goal of using 50 percent recycled content by 2025. It also has plans to source 100 percent more sustainable cotton for its private brands.

Walmart also said that by 2022, its U.S. stores will source apparel and home textile products solely from suppliers working with textile mills that use the Sustainable Apparel Coalition’s Higg Index Facility Environmental Module to measure and help improve environmental performance.

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“The procurement standards of a buyer are a huge driver for sustainability, and this is why we are proud to join forces with Walmart, the world’s largest retailer and a company that shares our mission to build a more sustainable future,” Natalie Blyth, global head of trade and receivables finance HSBC, said. “In many industries it is a company’s supply chain, rather than the company itself, that is responsible for most of the environmental impact and therefore offers the greatest potential for sustainability improvements.”

Matthew Allen, vice president of finance and assistant treasurer at Walmart, said the company feels the only way to a sustainable future is through combined effort and it shares HSBC’s commitment to “empowering our suppliers on this journey.”

“We want to encourage companies throughout the supply chain to focus on sustainability, as we have seen first-hand how this sparks innovation and generates value,” Allen said. “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.”

HSBC believes that supply chains are “one of the most important levers for banks and businesses to create a positive effect on the world,” according to Allen.

According to a recent HSBC Navigator survey, 81 percent of global companies said ethical and environmental sustainability is important to them, and 83 percent want to be an ethical or environmentally sustainable company.

As a leading international bank, HSBC said it can play a key role in supporting a shift to sustainability in global supply chains. That’s why it is embedding sustainability into the products and services it offers to customers.