Tesco links £2.5bn loan to emissions

Tesco has established a £2.5bn revolving credit facility which links interest rates to progress against key environmental targets over the next three years.

The retailer will enjoy a lower interest rate loan margin if it achieves its goals for reducing scope 1 and scope 2 emissions, sourcing renewable electricity, and cutting food waste.

“This financial instrument is a positive step in further integrating sustainability into all aspects of our business,“ said Tesco chief financial officer Alan Stewart.

“This further demonstrates the strength of our commitment and reinforces our belief that financing activities can help us achieve our sustainability commitments.

“As a large retailer, we can play a key role in decarbonising the wider economy through engaging our suppliers and customers in the transition.“

This comes after Tesco, in 2017, became the first business globally to set science-based climate change reduction targets on a 1.5 degree trajectory, including committing to using 100% renewable electricity by 2030.

The retailer has also published its own food waste data annually since 2013, and called for the wider food industry to adopt the Target, Measure, Act framework of reporting food waste data.

It said that aligning its corporate financial strategy to its sustainability commitments is a natural next step for the business and that “it will help accelerate continuous improvement in areas that are material to the company's retail business, suppliers and stakeholders“.