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    Navigating ESG integration in Treasury

    The potential of Corporate Treasury in driving ESG objectives
    house and coins

    The corporate treasury function has an important and strategic role to play in any organisation. As more organisations prioritise environmental, social and governance (ESG) factors, treasury must make a meaningful contribution. This can be achieved using both financial and non-financial strategies that can enhance the reputation and success of an organisation.

    Treasurers have realised that their function's integration with the entire business allows them to contribute significantly to a company achieving its overall ESG objectives. Some of the financial and non-financial benefits of being more ESG compliant include greater employee satisfaction, contribution towards a company’s values and culture, a way of remaining competitive such as obtaining better funding and investing rates, and also enabling a company to gain access to a wider base of suppliers and customers, thereby improving a company’s cash and liquidity position.

    Stewart Hagell
    Stewart Hagell

    Director, Corporate Treasury Services

    KPMG in the UK

    Some of the strategies that Treasurers have adopted to contribute towards a company’s ESG goals include:

    • Investing in companies and banks that have sustainably linked objectives.
    • Raising funding using sustainably linked debt.
    • Actively engaging on ESG discussions at C-Suite level
    • Evaluate the ESG credentials of the company’s suppliers.
    • Actively preparing and engaging with internal stakeholders to support ESG commitments (e.g. across supply chains, products, marketing, and finance).
    • Transform the way data is processed and reported by using digital solutions such as digital statements, electronic FX trading and electronic tax filing. This would also include electronic signatures and optical character recognition.
    • Training and educating of all team members on how they can contribute towards achieving ESG goals.
    • The use of purchase power agreements (PPA) to reach renewable energy targets. PPAs can be a cost-effective way to transition to cleaner and more sustainable energy.
    • Obtaining an understanding of the treasury related ESG reporting requirements in terms of the ESG standards issued by the Global Reporting Initiative (GRI), Task Force on Climate-Related financial Disclosures (TCFD) and the Sustainability Accounting Standards Board amongst others.

    Incorporating an ESG strategy into the Treasurer's responsibilities presents certain challenges, such as gathering and documenting ESG-relevant data. The existing systems used by the Treasurer may not be adequate to provide the required metrics for the purpose of ESG reporting. Another challenge that Treasurers are facing are the inconsistencies in the way a company is measured in terms of achieving its ESG targets.

    How can we help?

    Taking the first steps to consider ESG factors can seem challenging. KPMG can assist you with:

    1. Formulating ESG considerations into your treasury policies and procedures
    2. Accounting advice on green related financial instruments, together with support on ESG reporting and disclosure requirements.
    3. Assisting companies in implementing digital solutions such as electronic bank statements and electronic FX trading platforms.
    4. Assisting with the implementation of PPAs in a company’s renewable energy journey. 

    Our sustainability insights

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