Commercial - May 6, 2021
Tesco first UK retailer to offer supply chain sustainability-linked financial incentives
Tesco will become the first UK retailer to offer its supply chain partners preferred financing rates based on their sustainability progress. The voluntary program has been designed over the last 18 months. It will launch in September, and company executives hope the possibility of incentives will encourage suppliers to commit to more science-based emissions reduction targets.
Tesco suppliers will be offered preferred financing rates based on each suppliers' carbon data disclosure, emissions reduction targets, and progress against their sustainability goals.
Technical experts will measure rates against targets, track positive changes, performance, and steps to create a culture of continuous improvement. Suppliers' annual greenhouse gas emissions data will be independently verified and assessed by sustainability specialists engaged in carrying out assurance of the program.
In a statement, Ashwin Prasad, Tesco's Chief Product Officer, said: "In this critical year for climate action, we're delighted to be able to offer thousands of suppliers access to market-leading supply chain finance linked to sustainability. This program not only provides suppliers with a real incentive to set science-based emissions reduction targets, it helps embed sustainability goals throughout our supply chain and supports the UK in realizing its climate change targets."
Tesco expects the new program to be of particular interest to small and medium-sized businesses. The company will provide online tools and support to help these suppliers enroll in the plan.
In 2020 Tesco committed to reaching its net zero climate target in the UK by 2035, fifteen years earlier than initially planned. Also, in 2020, its 70 biggest suppliers reported a 12% reduction in manufacturing emissions, exceeding its science-based target of a 7% reduction. In 2017, the retailer also set science-based targets for its supply chain, set on a 2-degree trajectory.
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