Financial services ratings agency Sustainable Fitch has conducted the inaugural external assessment of UK supermarket Asda’s environmental, social, and governance (ESG) strategy, providing a comprehensive overview of the company’s performance in these key areas.

The retailer has been awarded an Entity Rating of 3 out of 5 by Sustainable Fitch in its debut external ESG assessment.

The agency commended Asda for its “progressive effort to integrate ESG considerations into its business strategy,” indicating a solid foundation for further advancements. As part of the assessment, Asda also received an Entity Score of 54.

ESG ratings: appraising Asda’s performance

An ESG rating is an external evaluation of a company’s performance in ESG aspects, providing insights into its standing relative to competitors and the industry at large.

This rating system serves as a tool for investors and other stakeholders to easily grasp a company’s ESG profile, risks, and opportunities.

Sustainable Fitch has highlighted Asda’s positive performance against its existing ESG targets, particularly in the decarbonisation of operations by 40% since 2015 and its ongoing efforts to enhance packaging recyclability.

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The agency also commended Asda for its detailed and aligned ESG reporting, following industry best practices and robust risk management processes.

Asda’s commitment to disclosing environmental metrics and sustained reduction in emissions across all scopes was noted as good market practice.

Balanced social profile and areas for improvement

Asda’s social profile received positive recognition, with the implementation of robust human and labour rights policies and a balanced workforce, boasting 49% female representation.

Sustainable Fitch also praised Asda’s actions to increase the share of non-high fat, salt, and sugar in its own-brand products, along with improvements in food nutrition labelling.

However, the assessment also revealed opportunities for improvement, including disclosures on topics not currently reported. Asda has welcomed this feedback and aims to address these areas in its evolving strategy.

For example, the company plans to include climate-related scenario analysis disclosures in its 2023 accounts.