Every little helps: how Tesco’s net zero strategy embraced MMFs
Published: Sep 2024
Best Sustainable Treasury Solution
Overall Winner
Tesco plc
Photo of Alistair Clark, Natasha Vowles and Ryan Jones, Tesco, Nick Jones, HSBC Asset Management and Pritesh Vadolia, Tesco.
Alistair Clark
Head of Market Execution
Tesco plc (Tesco) is a multinational retailer of general merchandise and provides consultancy, retail banking and insurance services through Tesco Bank in the UK. The company has a business presence across Europe and the UK. Tesco is headquartered in Welwyn Garden City in the UK.
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The challenge
Tesco has been integrating net zero since 2009 when the supermarket first committed to Net Zero 2050 and pledged to measure and report emissions across its entire group operations. The Treasury team wanted to access cash deposits and MMFs that would support day-to-day cash management in a manner that was also consistent with sustainability policies and objectives as a group.
The solution
Tesco engaged with HSBC Asset Management, which was developing new ESG-specific MMFs that invest according to ESG factors and identify the highest scoring ESG performers in the money market universe. This selection process weeds out 35% of approved issuers. In a second pillar, HSBC’s funds also have a distinct issuer engagement programme focusing on climate change.
Tesco became an initial investor in HSBC Asset Management’s Sterling MMF, investing on day one of the fund’s launch. The company has subsequently reviewed and revalidated its approach, leading to additional investment in the fund in 2023. HSBC’s ESG Liquidity investment solutions have gone from strength to strength since the first fund was launched with over US$8bn of assets under management in ESG cash strategies across Sterling, US Dollar and Euro.
“Winning the Best Sustainable Treasury Solution award further demonstrates our track record of innovative financial practices that embed environmental stewardship and social responsibility.”
Natasha Vowles, Group Treasurer, Tesco
Best practice and innovation
Many ESG MMFs integrate ESG risk in the credit process and apply certain sector-based exclusions. HSBC Asset Management’s philosophy goes one step further to strengthen ESG integration by applying a best-in-class investment process that eliminates many potential issuers who are otherwise eligible.
A two-part issuer engagement programme focuses on climate change. Here, HSBC Asset Management engages one-to-one with a subset of approved issuers in three key areas (Scope 3 data, Net Zero Banking Alliance and Climate alignment scores). In a wider engagement seam, HSBC Asset Management engages via annual communication to all bank issuers that are eligible for any of HSBC Asset Management’s MMFs.
By investing in the HSBC Asset Management ESG MMF, Tesco is supporting the process of change and better management of ESG risks. Tesco has been at the frontier of sustainability for years and the integration of HSBC Asset Management’s ESG solution into the treasury process supports Tesco’s sustainability philosophy, and now extends this to cash investing in a credible way.
Photo of John-Paul Way, Tia McCarthy and James Short, HSBC Asset Management, Alistair Clark and Natasha Vowles, Tesco, Jonathan Curry and Becky Palfrey, HSBC Asset Management, Pritesh Vadolia, Tesco, Nick Jones, HSBC Asset Management and Ryan Jones, Tesco
Nick Jones
Global Head of Liquidity Sales, HSBC Asset Management
As Tesco continue to integrate sustainability into their treasury processes, this award represents the strong decisions they have made to solve ESG challenges. In an ever-changing external environment, Tesco’s commitment to incorporating ESG into their cash management policy is commendable and a statement of intent for their target of becoming net-zero across group operations by 2050. As ESG integration into treasury policy expands, companies like Tesco deserve recognition for their early-adoption, having been an anchor investor in the HSBC Sterling ESG Liquidity Fund. Congratulations Tesco on your Adam Smith Award!
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The Adam Smith Awards are the industry benchmark for best practice and innovation in corporate treasury. The 2024 awards attracted 389 nominations. To find out more please visit treasurytoday.com/adam-smith-awards
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