Walmart Seeks More Sustainability Action from Suppliers

Walmart is aiming to prompt more action on climate change from businesses throughout its supply chain—including small and midsize suppliers—with the launch of new sustainability resources and incentives. 

The Bentonville, Ark.-based retailer said Wednesday that it's expanding on its two-year-old sustainable supply-chain finance program to let suppliers that set and meet science-backed sustainability targets obtain the lowest available financing rates if and when they choose to seek early payment on their invoices. The offering is meant to help give smaller suppliers, in particular, more access to working capital that they can then invest back into their sustainability initiatives and into growing their businesses.

Suppliers participating in Walmart's Project Gigaton, an emissions-reduction initiative that seeks to keep 1 billion metric tons (a gigaton) of greenhouse gas emissions out of the company's global supply chain by 2030, now will be able to have their homegrown sustainability programs evaluated and validated through the Science Based Targets Initiative (STBI). The STBI is a program of the not-for-profit environmental-reporting organization CDP, which issues climate-change scores to companies based on companies' environmental goals and their progress against them.

Project Gigaton participants that have their environmental targets validated by the STBI or that achieve certain climate-change scores from CDP will be eligible for the best financing terms from Walmart partner HSBC, a U.K.-based multinational bank.

See also: Walmart, IKEA, H&M Partner on Retail-Focused Sustainability Campaign

Since 2017, more than 3,100 suppliers have signed on to Project Gigaton, according to Walmart. The pace of signup accelerated after Walmart's launch of the sustainable supply-chain finance program in 2019, the retailer noted, and in 2020, suppliers reported more than 186 million metric tons of carbon-dioxide emissions avoided—for a total of more than 416 million metric tons avoided since Project Gigaton debuted. Still, more action is needed to help bring smaller and midsize suppliers on board and ensure that the supply chain is on track to meet the gigaton-by-2030 goal, Walmart indicated. The company cited research from HSBC and Boston Consulting Group that found that smaller suppliers often don't have the in-house climate expertise or funding to help drive meaningful, measurable sustainability initiatives.

Incorporating CDP scoring into the sustainable supply-chain finance 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," Walmart SVP for Sustainability Jane Ewing said in a Walmart news release.  

Added Walmart SVP for Global Sourcing Ash Eisa: "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."