Sustainable and inclusive growth has become a cornerstone of corporate strategy, transcending mere corporate social responsibility initiatives. It is now viewed as essential for long-term viability and competitiveness. As such, corporates are aware of the mounting pressure from stakeholders, including institutional investors who increasingly use ESG metrics in their investment decisions.

Climate change mitigation, biodiversity preservation and social equity are no longer peripheral concerns but central to business planning. Companies recognise that sustainability drives innovation, enhances brand value and helps attract top talent. Moreover, it is becoming clear that sustainable practices often lead to cost savings through resource efficiency and waste reduction, directly impacting the bottom line.

For corporates, this involves a comprehensive overhaul of business models and operations, including setting targets for emissions reduction, embracing circular economy principles to minimise waste and ensuring ethical labour practices throughout global supply chains. Companies are increasingly adopting the UN Sustainable Development Goals as a framework for their sustainability efforts.

In terms of inclusion, businesses are not only focusing on workforce diversity but also on fostering inclusive product design and expanding access to underserved markets. Many are integrating sustainability into their research and development processes, creating products that address environmental and social challenges. To embed these parameters, companies are revising their governance structures, creating dedicated sustainability committees at the board level and linking executive remuneration to ESG performance metrics.

Treasury’s involvement in sustainability is expanding, but unevenly. The most recent European Association of Corporate Treasurers’ survey shows ESG is gaining importance, yet 20% of treasurers are not involved in ESG processes. However, many treasurers are becoming key players in sustainability strategy with top actions including reducing business travel, revising processes for sustainability and issuing green bonds. Additionally, treasurers are increasingly involved in sustainable capital allocation, green investments and ESG risk assessment. They are participating in sustainability committees and integrated reporting. At BNP Paribas, we observe treasurers’ expertise being valued in evaluating financial implications of sustainability scenarios.

This is because treasury brings a unique set of skills and perspectives to the sustainability table. Treasurers can access sustainability-linked credit facilities, implement ESG screening in investments and design sustainable supply chain finance programmes. They can promote inclusive financial practices and develop products for underserved communities. Treasurers are already structuring innovative instruments like sustainability-linked bonds, tying interest rates to ESG targets. Importantly, treasury’s role spans from leveraging banking relationships for green products to fostering diversity within their department, effectively extending ESG practices beyond direct operations.

The importance of sustainability in treasury operations is set to grow exponentially. As ESG factors become increasingly material to financial performance, treasurers will likely become central figures in driving sustainable finance strategies. With proliferating sustainable finance regulations, treasury will be crucial in ensuring compliance with new disclosure requirements. Treasury professionals’ skillsets will need to expand to include deep understanding of ESG issues and sustainable finance principles. Ultimately, we anticipate sustainability becoming so integral to treasury that the distinction between ‘traditional’ and ‘sustainable’ treasury functions may blur entirely, transforming the role of treasury in corporate strategy.