Asda has announced the introduction of a new sustainability-linked supply chain finance programme in partnership with Lloyds Banking Group, designed to provide UK suppliers with access to better financing rates directly linked to their sustainability performance and commitments.

The programme is a major change to Asda’s existing supply chain finance platform, turning it into a tool that uses financial incentives to drive significant sustainability improvements throughout the retailer’s supplier network.

Offering structured incentives based on environmental performance

Under the newly launched scheme, suppliers will be offered access to better rates through a tiered structure that directly links with their sustainability performance against set key performance indicators. Those showing robust environmental and social governance practices and willingly sharing their sustainability data will receive the most favourable financial terms.

To ensure credibility and standardisation in the review process, Asda has formed a partnership with EcoVadis, a globally recognised sustainability ratings platform. EcoVadis will conduct thorough evaluations of suppliers’ environmental, social and ethical performance throughout their value chains, with this data serving as a fundamental part in determining rate allocations.

The EcoVadis assessment will evaluate multiple aspects of business operations, including carbon emissions reduction targets and achievements, waste management practices, ethical labour conditions, supply chain transparency, governance structures and policies, and social impact initiatives.

This approach builds upon Asda’s existing requirement for its largest suppliers, those responsible for approximately 80% of the retailer’s product-related carbon emissions, to share sustainability data through the EcoVadis review platform.

Asda’s advancement of corporate environmental objectives

The programme marks a shift in Asda’s sustainability strategy, following its 2024 partnership with HSBC UK, which was the retailer’s initial sustainability-linked addition to its supply chain finance framework. For suppliers participating in Asda’s programme, the benefits are twofold in terms of improved cash flow and lower financing costs.

Suppliers that meet the criteria can join the scheme starting in October 2025. Participation is voluntary; those who choose not to join can continue under their existing payment terms and default rates without disruption to their business.

Michael Gleeson, Chief Financial Officer at Asda, emphasised the strategic importance of this programme: “Supporting our suppliers in making meaningful, sustainable changes is central to our wider ESG ambitions. Through our new supply chain finance scheme with Lloyds, we’re strengthening that commitment – offering competitive financing that rewards progress and encourages transparency across our supply base. It’s a practical way to support our suppliers in making sustainable changes to their business, while building a more resilient and responsible supply chain for the future.”

Aled Patchett, Managing Director and Head of Consumer at Lloyds, commented on the strategic partnership: “We’re proud to have supported Asda for many years in its work to build further resilience in its supply chain. Our existing programme has successfully supported suppliers over the years and converting it to reward sustainability efforts will not only deepen support for British businesses, it will also support Asda in meeting its own ESG ambitions.”

With climate-related disruptions costing businesses £16 million per hour, proactive sustainability measures are now essential for economic viability, not just corporate responsibility. By implementing sustainability criteria into financial incentives, Asda would help suppliers adopt more sustainable practices while furthering its own environmental and social governance goals.