UK-based grocery company Tesco announced plans to launch a sustainability linked supply chain finance program, offering suppliers with financing rates based on their carbon data disclosure, emissions reduction targets and progress against sustainability goals.

Tesco stated that it hopes that the voluntary program will encourage more suppliers to sign up to science-based emissions reduction targets.

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 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.”

Delivered in partnership with multinational financial services company Santander, the program will offer suppliers 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.

Darren Jones, Head of Santander Corporate and Investment Bank UK said:

“Action on climate change is crucial and from individuals to corporates, we all have a part to play. Supply Chain Finance can be an effective tool for influencing positive change by linking sustainability achievements with competitive financing. Santander recently announced its ambition to achieve net zero carbon emissions across the group by 2050, and we are committed to supporting our clients in their transition to a low-carbon economy. We look forward to working in partnership with Tesco to provide this innovative solution.”

According to Tesco, the company expects the programme to be of particular interest to small and medium-sized businesses. Tesco will provide online tools and support to help these suppliers enrol in the scheme.

Tesco expects the program to launch in September.