Asda has launched a new sustainability-linked supply chain finance programme with Lloyds Bank, in a bid to give UK suppliers access to “preferential rates based on sustainability performance”.

It is understood that the scheme converts Asda’s existing supplier finance programme and builds on a similar initiative the supermarket chain introduced last year with HSBC for its import suppliers.

The new initiative, which is expected to go live from October this year, uses the global sustainability ratings platform EcoVadis to assess supplier performance across environmental, social and ethical metrics.

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The grocery giant said suppliers will be scored against a range of KPIs, with those showing strong progress on sustainability commitments offered tiered enhanced terms and expedited payments, however, those not engaging will remain on existing payment terms.

Asda chief financial officer Michael Gleeson said: “Supporting our suppliers in making meaningful, sustainable changes is central to our wider ESG ambitions.

“Through our new supply chain finance scheme with Lloyds, we’re strengthening that commitment – offering competitive financing that rewards progress and encourages transparency across our supply base.”

Lloyds MD and head of consumer Aled Patchett added: “Converting the programme to reward sustainability efforts will not only deepen support for British businesses, it will also support Asda in meeting its own ESG ambitions.”