Description financing model: Working Capital Solutions

Working Capital Solutions enable suppliers to large food & agri corporates to access improved loan terms (e.g., earlier payment on invoices), often tied to specific sustainability performance indicators and backed by the strong credit profiles of their off-takers

Applicability: Best suited to well-structured supply chains with formal offtake agreements

Considerations: Effectiveness increases when working capital solutions align with credible sustainability criteria and strong supplier collaboration

Description of de-risking tool(s):

N/A

Case study description:

Walmart’s suppliers in the SCF platform receive earlier payment on their invoices, enabled by HSBC, if they adhere to ESG criteria/KPIs

1. Walmart establishes sustainability criteria their suppliers have to meet
2. Suppliers’ science-based targets and progress is verified by CDP to get a sustainability scoring
3. CDP validates suppliers’ ESG data against Walmart’s sustainability criteria
4. Walmart places an order for goods and services from upstream supplier
5. Supplier provides goods and services to Walmart and issues an invoice
6. Supplier sells approved invoices to bank
7. Walmart shares sustainability scoring of suppliers with bank
8. Bank pays the suppliers ahead of invoice date at a discount on the original invoice, with discount size determined by Walmart’s credit risk score, reduced (if achieved) by supplier’s ESG rating
9. Walmart pays back HSBC on invoice due date

+5000 suppliers are participating, representing 75% of Walmart’s U.S. sales