Editorial

All smooth transitions require early action

COVID and Brexit aside, our conversations with treasury teams over the last year have revealed an enduring preoccupation with two transitions. On one hand, treasury is having to navigate the transition from LIBOR to new risk-free rates. For corporates who have embarked on the journey, moving every type of bank loan, bond issuance, inter-company loan or derivative exposure to the new benchmarks, working out the cost of borrowing and setting up new treasury systems is proving no mean feat.

Elsewhere, corporates are increasingly focused on transitioning to a low carbon economy as the world weans itself off fossil fuels and gets down to the business of solving climate change. Although the transition to a low carbon economy doesn’t come with a fixed date, like LIBOR’s demise, regulatory pressure to mitigate climate change is growing and November’s COP26 in Glasgow promises an eye opener on the urgency ahead.

Given that the key to any successful transition is planning and early action, this edition urges treasury teams to act now for smooth transitions in both cases. Recounting how the Italian energy giant has become a leader in sustainable financing in just a matter of years, ENEL’s passionate head of finance and insurance Alessandro Canta assures all corporates they too can put sustainability centre stage. Most recently the company has worked with banks to develop a pioneering step-up feature in its bond issuance that attaches a value to sustainability.

As for LIBOR, corporate treasurers at BAT and Associated British Ports share their progress in transitioning to the new benchmarks and the challenges therein. It’s a process that has some experts worried at the slow pace of change in the bank loan market, as well as the prospect of a spike in bank borrowing costs within the new risk-free rates for smaller businesses.

LIBOR reform and pushing sustainability frontiers shows the dynamic and challenging nature of treasury today. Characteristics of the profession Nora Baker, profiled in this month’s Corporate View, has become expert at navigating. VP, Finance at Advantage Solutions, she shares a career path that began with a French major and a stint at the World Bank’s IFC, to later roles at UTC and United Paper. Today her experience touches every part of corporate life from new business growth and managing cash and treasury, to building international teams and overseeing restructuring.

Lastly, we report on how inclusion is now the new battleground in the diversity challenge. The moral imperative and performance benefits of diversity are well known, and recruitment practices, new apprenticeship schemes and targets are helping turn the tide. But if diverse treasury professionals don’t feel able to voice their opinions, miss out on networking opportunities and building their brand – much more difficult in COVID times – even the best diversity statistics won’t change group think.