ASDA tackles Scope 3 with ESG KPIs in SCF programme
Published: Sep 2025
Best Supply Chain Solution
Highly Commended Winner
ASDA
Joe Prosho
Head of Sustainable Sourcing & Agriculture
Richard Sykes
Treasurer
UK
Asda is a diversified retail group serving circa 16 million customers each week from over 1,200 UK locations and online.
With roots dating back to a Yorkshire family business in the 1920’s, the first Asda officially opened on 3rd May 1965. Today, Asda employs more than 150,000 colleagues across its stores, depots, home offices in Leeds and Lutterworth and wholly owned subsidiaries including IPL, Forza, Kober and LEON.
The challenge
As one of the largest supermarket retailers in the UK, ASDA faces a significant GHG emission reduction challenge.
Having identified approximately 98% of ASDA’s carbon emissions are Scope 3 (outside its direct control) and primarily within its supply chain, ASDA realised it would need to do something different to engage the supplier base to align with its own ESG objectives.
ASDA was looking for ways to encourage improved ESG disclosure and incentivise suppliers to become more sustainable, with a focus on carbon emission reduction. Specifically, ASDA wanted “to drive supply chain sustainability engagement and improvement, while setting ourselves up to deliver ambitious science-based carbon targets,” says Joe Prosho, Head of Sustainable Sourcing & Agriculture.
The solution
Already partnering with HSBC on SCF, the opportunity was to leverage the existing solution to support ASDA’s ESG objectives – launching a new sustainability-linked feature to the existing programme with the help of HSBC UK.
Launched in January 2025, the US$190m programme offers financing to ASDA’s suppliers on enhanced pricing terms based on their ESG performance – effectively the more sustainable the supplier, the cheaper the SCF facility. It’s a simple but effective concept.
Performance is being scored by the sustainability data platform EcoVadis, with those suppliers performing strongly against their ESG KPIs and sharing their sustainability data rewarded with the most preferential terms. The scoring will have a particular focus on decarbonisation but will also extend to other elements of ESG (such as social initiatives) to support embedding strong ESG practices throughout ASDA’s supply chain.
“As we continue to drive progress towards our own decarbonisation and ESG targets, supporting and engaging with suppliers forms a crucial step in this journey. Working with HSBC, we’re not only encouraging greater transparency over sustainability data in our supply chain, but we are able to use competitive financing to incentivise a significant number of suppliers to become more sustainable.”
Michael Gleeson, Chief Financial Officer, ASDA
Best practice and innovation
The facility will allow ASDA to use financial incentives to encourage behavioural change in its supply chain from an ESG perspective, with a specific focus on carbon emission reduction.
There is no operational disruption to the existing suppliers, in what is a voluntary programme. Suppliers who choose not to engage remain on current payment terms and default rates. There is no punitive element to the conversion – there is only an up-side to those suppliers who want to engage and take advantage of both the financial and ESG benefits it provides. This ensures all suppliers, including the smaller ones (where getting the assessment done might be more challenging from a cost/resource perspective) are treated fairly.
From January 2025, the initiative will extend incentives to over 250 of ASDA’s suppliers based on their sustainability practices and showcases how major retailers can engage their supply chains to encourage greater transparency and progress towards wider sustainability goals.
Key benefits
Cost savings.
Process efficiencies.
Incentives suppliers to improve ESG performance.
Future-proof solution.
Improved key performance indicator (KPI) metrics.
The Adam Smith Awards are the industry benchmark for best practice and innovation in corporate treasury. The 2025 awards attracted 454 nominations. To find out more please visit treasurytoday.com/adam-smith-awards
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