Heading in the right direction
Treasury Today Group’s second Global Sustainability Study reveals a swathe of encouraging progress on ESG integration. Indeed, in one standout statistic 61% of our 2021 respondents are new to the survey and didn’t participate in 2020 in a reflection of the growing importance of ESG amongst the treasury community. Elsewhere, we saw a spike in responses from Latin American corporates and find treasury everywhere is spending more time on sustainability.
Our 2021 cohort are integrating new KPIs or targets in their ESG strategy. Companies continue to prioritize emissions, energy consumption and their use of technology, but recycling and working to integrate issues brought to the fore via societal action like the Black Lives Matter movement have also pushed center stage.
Treasury is increasingly tapping the growing number of ESG products. In a marked jump compared to last year, nearly a quarter of 2021 respondents said they are planning to issue a green bond compared to just 12% of our 2020 cohort as frameworks, liquidity and investor demand gathers steam. Indeed, every 2021 respondent had signed up to the ICMA’s voluntary Green Bond Principles in comparison to 63% of respondents last year.
In this year’s study, we draw on new data revealing the key impetus behind sustainability with 47% of respondents saying that stakeholder pressure now drives ESG strategy to “some extent.” Of this, respondents list consumer demand as the primary driver with investor and regulatory pressure close behind.
The latter two influences are certainly set to grow. Like groundbreaking legislation about to arrive via courtesy of the EU’s new taxonomy which will list what constitutes a sustainable activity, with unprecedented consequences for corporate behavior and investment in the years to come. Elsewhere, updated sovereign emission targets and new pledges likely to emerge in Glasgow from COP26 this November, will also increasingly shape treasury strategy.
Elsewhere pressure on treasury and finance teams from investors to integrate financially material ESG data is also growing, with 57% of respondents saying they now include ESG metrics in their annual report.
Of course, not all our findings are positive. 2021 responses reveal treasury’s role in integrating ESG is still unclear. For example, we find some sustainability teams report directly to the CFO bypassing treasury altogether, and although some treasury departments are closely intertwined with colleagues in sustainability (20%) more (25%) reveal they do not work closely with sustainability teams despite the need to pool expertise, processes and rigor. Elsewhere many 2021 respondents say sustainability has lost out to COVID and other more pressing everyday treasury priorities.
But despite one of the most difficult years on record and slow progress in some areas, the survey shows progress nonetheless. Treasury is heading in the right direction.
