Tesco to offer sustainability-linked supply chain finance

Tesco to offer sustainability-linked supply chain finance
The Big 4 giant expects the programme to be of interest to small and medium-sized businesses and will provide online tools and support to help these suppliers enrol in the scheme.
// Tesco to become the first UK retailer to offer its supply base sustainability-linked supply chain finance
// It will see annual greenhouse gas emissions data provided by suppliers independently verified and assessed by sustainability experts
// Tesco suppliers will be offered preferential financing rates that incentivise them to make positive changes to their business

Tesco is set to become the first UK retailer to offer its supply base sustainability-linked supply chain finance, in a move the retailer hopes will encourage more suppliers to sign up to science-based emissions reduction targets.

The voluntary scheme has been in development for 18 months and is due to launch in September.

It will see annual greenhouse gas emissions data provided by suppliers independently verified and assessed by sustainability experts from Anthesis, and KPMG will also be engaged to carry out assurance of the programme.


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Tesco suppliers will be offered preferential financing rates via Santander’s supply chain finance platform, which incentivises suppliers to make positive changes to their business while tracking performance and creating a culture of continuous improvement.

The rates will be based on each suppliers’ carbon data disclosure, emissions reduction targets and progress against sustainability goals.

Tesco will regularly update the scope of the sustainability data requirements in line with market best practice and its own sustainability commitments.

The Big 4 giant expects the programme to be of interest to small and medium-sized businesses and will provide online tools and support to help these suppliers enrol in the scheme.

In 2017, Tesco became the first company globally to set science-based climate targets for its own operations on the more ambitious 1.5-degree trajectory of the Paris Climate Agreement.

Last year, the retailer committed to reach its net zero climate target in the UK by 2035, 14 years earlier than originally planned.

In the same year, Tesco set science-based targets for its supply chain, set on a 2-degree trajectory.

The retailer said that since then, 70 of its biggest suppliers reported a 12 per cent reduction in manufacturing emissions, exceeding its science-based target of a seven per cent reduction.

“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,” Tesco chief product officer Ashwin Prasad said.

“This programme not only provides suppliers with a real incentive to set science-based emissions reduction targets, it will help embed sustainability goals throughout our supply chain and support the UK in realising its climate change targets.”

Tesco is working in partnership with wildlife charity WWF to halve the environmental impact of food production, including supporting suppliers in setting sustainability targets.

WWF head of food transformation Sarah Wakefield said: “Global temperatures are rising and the natural world, our life support system, is already feeling the heat.

“We’re working with Tesco to address one of the biggest environmental challenges facing our planet: how we produce and consume food.

“We welcome this latest leadership by Tesco, to be a part of the solution by incentivising their suppliers to report on their emissions and take action to align with 1.5°C climate targets.

“This takes us closer to achieving our shared goal of halving the environmental impact of the average shopping basket.”

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