Welcome everyone. Sustainability often has some very personal values attached so let’s start by looking at what it means to you, and how it manifests itself in your treasury department.

Inês Faden da Silva, Treasurer, Tideway: Our company was created to address a sustainability issue, so it was natural for us to align the financing and the treasury function with that mission. We started with financing and have now turned to our cash investments. On a day-to-day basis, we also have many activities that we do as team, to be more sustainable. We’ve implemented paper-free meetings, and we have organised team volunteering sessions, with litter-picks on the river.

In a huge city like London, we need an acute awareness of the entire ecosystem in which we operate. We look at it as needing both a license to operate for construction and a social license too. We have a long-term view of reconnecting London with the Thames. As an example, in order to build the tunnel, we had to bring tunnel boring machines and other equipment onto the sites, and then remove the spoil from the tunnel. Normally, this would have required about 600,000 two-way heavy goods vehicles trips across London. Our solution was to implement a “more by river” strategy. We now transport about 90% of all equipment and spoil by river for sites on the river. Because we are trebling freight traffic on the river, we worked with the Port of London Authority to establish an academy to train 300 new pilots, for now and for future use of the river.

Adam Richford, Group Treasurer, Renewi: Renewi is a recycling and waste to product company. Sustainability is one of our core values and we have been able to align treasury activities so that we are now entirely green-financed. It’s about making sure that we reinvest into the circular economy. We are focused on finding new, sustainable solutions for waste issues that don’t yet have solutions. Last year we invested in PMC, a joint venture in reprocessing asbestos-contaminated steel which previously would have gone to landfill. We’ve also entered into a joint venture with firms such as Ikea to find ways to recycle old mattresses. In treasury, our focus is supporting the business to continue to invest in the circular economy.

On the financial institution side, what has the sustainability journey been like for your organisations?

Tom Callahan, Head of Global Cash Management, BlackRock: Journey is the right way to describe it for us at BlackRock. Today we have a centralised division called BlackRock Sustainable Investing which focuses on identifying drivers of long-term return associated with environmental, social and governance issues. The team looks across all of our products, considering how we can integrate ESG into our investment processes and create solutions for our clients to achieve sustainable investment return.

Two years ago, in the cash management world, few were talking about sustainability. Through increased investor interest in these issues, we had to work out how we could overlay basic ESG metrics on our existing products, making sure that we were fully capturing the exposure to ESG risks of individual companies. It was a fairly modest beginning, but the world has evolved and sustainability is resonating even more deeply, at a personal and corporate level with many of our clients. We found we weren’t being ambitious enough; there was a void in cash and liquidity management in terms of dedicated sustainable strategies which we have now turned our attention to. Earlier this year we launched a family of green money market solutions to stunning market reception.

One of the main challenges for our clients was the ‘value versus values’ debate, which is something we’re seeking to address. Our job as a fiduciary is to deliver the best risk-adjusted returns. Many felt under pressure from their board and investors to incorporate sustainability, yet were concerned about the risk of underperforming benchmarks. Now we can take a lot of those worries away.

Henrik Lang, Managing Director, Global Head of Liquidity GTS, Bank of America: So not dissimilar to what Tom described. I think that Bank of America has been a market-leading institution in terms of green financing for a long time, and we try to build on that success. Responsible growth is a cornerstone of our corporate strategy, and we try to do that also through ESG leadership in the broader market.

Where I sit, within the global transaction services, we work together with treasurers. And what we found over the last few years is that there is an increasing demand from them to try and turn their treasury departments into more sustainable and greener operations.

Also what we realised, I think, was that in the past we, as a bank, did a really good job focusing on ourselves and making sure that we are doing things in a sustainable way, and the right way. But I do believe that that there is a great multiplication impact to be had once we start extending that approach to our client base, simply because across the globe we deal with thousands of corporate clients.

In my view, the greatest impact for us on the broader economy and in wider society can be gained once we can work together with our clients and turn their treasury departments and businesses into sustainable and greener functions; it creates a far greater impact than if we just focus on ourselves.

It’s because we can impact our clients’ life within their treasury departments across the board, from the point that they make a payment, take out the loan, invest their excess cash, or even get their statements. We realised that we actually provide our clients with a very clear set of actions that they can take back to their businesses and start executing them. And it doesn’t take a lot, honestly; it just requires a little bit of focus and the willingness to move forward with their sustainable agenda.

And do you notice different regional appetites for this amongst your clients?

Tom Callahan, BlackRock: At BlackRock, absolutely we have and this is reflected in the US$5bn of assets already raised in our green money market strategies in Europe. There has been enthusiasm and energy in Europe that we have not quite seen yet in the US; this is partly due to regulators and governments expanding their focus on incorporating sustainability into investment information and decision making and corporate treasurers are often engaged on the topic through their pension fund or internal sustainability teams.

In Asia, demand has been primarily driven by investors in Hong Kong and Singapore. We are also seeing the ESG investment theme starting to emerge from Chinese investors.

Henrik Lang, Bank of America: I would say no real differences between the regions except perhaps for product choice but there is a difference between the size of the company. Larger corporates, with greater resources might be able to dedicate more people to creating a wider scope of ESG-friendly treasury, whereas I think smaller companies tend to focus, for example, on moving away from paper statements to electronic statements, or they stop using cheques in favour of electronic transfers. Across the globe though, the consistent theme is that clients are really interested in discussing their ESG agendas with us.

Let’s move on now to thinking about some of the best practices that treasury departments can adopt. What best practices have you adopted, and are putting in place for KPIs?

Adam Richford, Renewi: We have introduced a sustainability-linked loan which has various KPIs. As we meet those targets, the price of facility is reduced correspondingly. One of the things that was really important to us was that the KPIs that we chose were also important metrics for the organisation. We were very keen to ensure that we could leverage the same measures that we were already using for our CSR reporting. By putting them into banking documentation they gain importance, they have a monetary value linked to them and they have a specific target linked to them each year over the five-year life of the loan. They need to be realistic and achievable because we don’t want to miss our sustainability targets but they need to be sufficiently challenging to deserve reward from our lenders.

Inês Faden da Silva, Tideway: When I first took a green-financing strategy to the board, I was mindful that I didn’t want to create a mini-industry on the side, just producing reports. Although treasury has to look at what we are doing, how we measure it, and what we are reporting, we also have to align with the rest of the company in this respect. It brings more discipline because once we got treasury involved, the metrics were no longer optional. We formed a great relationship with our sustainability colleagues because it meant we are supporting the efforts that they lead.

I’d add that, like many things you do first time, you can find resistance, but with us, once we went through the cycle and the business saw the final product, those barriers quickly dissolved.

And what I would say on KPIs, it is important to be very candid about it with stakeholders. We have 54 legacy objectives – many in terms of employment – of which about 37 are live, with 90% on-track. Investors like to hear about those targets we meet as well as those we are still working towards and it makes the rest of our performance much more credible.

Sustainability is one of our core values and we have been able to align treasury activities so that we are now entirely green-financed. It’s about making sure that we reinvest into the circular economy.

Adam Richford, Group Treasurer, Renewi

What about external measures such as the Dow Jones Sustainability Index or the Global Green Finance Index. Are any of those of relevance for either of you?

Adam Richford, Renewi: ESG ratings are broadly relevant. There is a lot of commitment to the UN PRI Principles for Responsible Investing from equity investment managers, and it is certainly a topic of conversation on the equity side of the equation. Many ESG ratings are unsolicited and un-consulted so the veracity of them is questionable sometimes. But I think that the ESG rating industry is maturing and is becoming more relevant as a benchmark; as their understanding of the idiosyncrasies of individual companies improves, the level and quality of their ratings improve.

Inês Faden da Silva, Tideway: We are on some of the green bond indices but have minimal exposure to ESG ratings. Some of the unsolicited ratings providers show companies what they have drafted, giving them a chance to provide feedback, others don’t. There is an ongoing discussion in the investor community about the general lack of transparency of the methodology. One view is that they should all have the same methodology, and all be transparent, with companies publishing their data just once a year. I think it is fine for each to have different approaches because it allows for indices to be valued in different ways by investors but consistency in the data procured would be welcomed by corporates.

From a financial services perspective, what are your thoughts on the use of metrics?

Henrik Lang, Bank of America: Clients have different priorities. One could be interested only in having sustainable vendors and suppliers, and would like to offer different supply chain models and price points to suppliers that meet certain sustainability criteria. Another could be interested in having diversity on their board or be interested in moving completely away from paper-based payment instruments. Rather than focusing on and trying to follow the sometimes confusing methodologies by the rating agencies, we would rather engage on a bi-lateral basis, then work with them to really dig deep, and then try to tailor our solutions and advisories to those specific objectives.

Tom Callahan, BlackRock: There are issues that have to be talked about, especially the metrics, when creating portfolios. We often see wildly diverging ratings on the same company so we created our own ESG credit methodology approach, taking into account Sustainalytics and MSCI metrics, and other third-party data. It is confusing for clients and we do find a lot of inconsistencies. We have had times where the treasury department can’t buy our funds, but their charitable foundation can, because of different policy guidelines. And there are different standards for what qualifies as a green bond for certain clients, so it is hard to create a one-size-fits-all product when there are so many conflicting demands. We can bring the breadth of our experience, having gone through this journey ourselves, and can create custom solutions for clients. But there needs to be a dialogue because it is more complicated than I think many of us appreciate.

Let’s turn to the practicalities of using green finance tools such as green bonds and green loans. Can you talk us through your experience?

Adam Richford, Renewi: Renewi issued its first green bond in 2015, which was a Belgian retail bond. We did a more substantial green financing in 2018, where we converted our main banking facility into a green finance document. That involved creating a green finance framework, which we worked closely with our banks to prepare, with Sustainalytics reviewing and providing a second opinion.

Our banking group is a syndicate of lenders, and a couple of those banks were our ‘green advisors’. They were able to sound out the other banks on the documentation, making sure that what we were proposing was acceptable to all parties.

Somewhat unusually for Renewi, we were able to create a ‘perpetual’ green framework that documents our asset position versus our liability position. This meant it was fit for purpose for another bond issuance that we did earlier this year; we didn’t need to create a new framework for the new instrument.

Inês Faden da Silva, Tideway: Both Renewi and Tideway are pure-play sustainability businesses and so it may not be quite the same for other companies. I make that caveat because sometimes people say it is easy for you, because you are a pure-player, but we have still taken a green finance strategy to the board and then created our green finance framework.

We are often asked how much work it involves. Our framework offers a short description of the company, a section describing what we do from a sustainability perspective – all that information already exists – and then we just follow the simple four IMCA Green Bond Principles: Use of Proceeds, Process for Project Evaluation and Selection, Management of Proceeds and Reporting. It is relatively straightforward.

Since 2017, all our financing has been green. We have issued seven green bonds – much of which is done on a deferred basis – and in August this year we closed our first green US private placement, also deferred.

We are now going a step further. Our green evaluation by Standard & Poor’s now covers all our bonds issued since the inception of our EMT programme, and we will be transferring all to the London Stock Exchange Green Exchange, greening all of our bond financing.

And then of course there is the reporting. Anyone designing a green bond framework should pay attention to how they plan to report; as they are reporting on the allocation of funds, that has to be very straightforward. In terms of the impact, just don’t design things that will require a lot of work later on!

Like many things you do first time, you can find resistance, but with us, once we went through the cycle and the business saw the final product, those barriers quickly dissolved.

Inês Faden da Silva, Treasurer, Tideway

What benefits have these instruments brought to your organisations?

Adam Richford, Renewi: We get a financial benefit: that is clear, and a strong sell in and of itself. But we are also linking one of Renewi’s core Values, ‘Sustainability’, with multiple teams internally. Our treasury and finance teams are more closely connected with the ESG function and together are driving a stronger dialogue with the board as a result. On the equity capital markets side, it has been a helpful additional part of our narrative; offering proof positive to investors that we are entirely focused on sustainability.

Inês Faden da Silva, Tideway: We are very similar; it has definitely helped in aligning the company’s sustainability mission with financing. It has changed the dynamics inside the company. It has brought financing closer to some other functions. Finance is generally misunderstood but we made it much more understandable, so others could link what the company is doing with what finance is doing; it started a number of conversations. It also started conversations with our shareholders; they are delighted! We are one of the most advanced portfolio companies and so they use a number of our sustainability case studies, including financing, in their reporting.

I’d add that there is a lot of discussion as to whether you get better pricing or not. I think there is some evidence that you may, but I think that it is still early days. It was not our main motivation.

Tell us about Bank of America’s approach to sustainable financing and investments.

Henrik Lang, Bank of America: We have heard a lot about green bonds and green financing. Within global transaction services, we like to extend the spectrum of products we are offering in the financing space. One particular solution that we are getting a lot of interest in is sustainable supply chain finance. It’s a very simple yet powerful concept because of the multiplication impact again.

We give tools to our clients that allow them to offer preferential payment terms to certain suppliers who meet specific sustainability targets. Clients love the flexibility that it is not just about their green bonds and loans and facilities but also that they can extend the ESG concept across their entire supply chain model. It remains that the most important incentive for clients, across, all products, is that it enables them to achieve their ESG goals.

And how is BlackRock adjusting its products to keep ahead; are you responding to clients or doing so on your own initiative?

Tom Callahan, BlackRock: We respond to clients and also to market structures. The essence of any money fund is of course liquidity and preservation of capital. Just because a fund is green does not relinquish that requirement. The challenge that any asset manager moving into this space has is that there is very little – next to zero – issuance of short-dated green bonds. Multi-billion dollar liquid portfolios of green bonds just don’t exist!

In time, as market structure changes, our portfolios will change. But as with many sustainability projects, you have to start where you are, not where you wish you were. And right now we are at the front end of the market, where 80% of issuance comes from financials which are not green entities. At BlackRock, our approach is ‘best of breed’. We have many financial names and we filter and rank them based on publicly available green criteria.

As we become successful and these funds grow, it is going to change issuer behaviour. Since we have launched these funds, we have issuers talk to us about green CP programmes and green CD programmes. The short end of the market is always the deepest, most liquid and most cost-effective part of the curve to issue, but right now that is not available to choose a green project. As firms like BlackRock create the products and the demand, supply should follow, making it cheaper and more efficient to finance green projects.

And do you see a time when we will stop using the term ‘green’ because it will become ubiquitous?

Tom Callahan, BlackRock: What I would love to see is that, whether you call it green or whether it just becomes a more ubiquitous term, that the green issuance will trade at a premium to non-green issuance, ie the market will pay more and issuers will finance more efficiently for green products than for non-green products. When we get to that point, it becomes the ultimate incentive for issuers to create these products.

We hear a lot about how technology is revolutionising corporate treasury so would you say that it is enhancing your sustainability agenda?

Adam Richford, Renewi: I don’t personally see, at the moment, technology playing a major part in our sustainability activities. Obviously using a treasury management system concentrates the activity and makes it more efficient, but that’s really driven by efficiency and how we want to operate.

Inês Faden da Silva, Tideway: I agree that system integration can help – we have in our procurement policies a number of ESG KPIs that can be centrally managed.

How is Bank of America using technology, in terms of driving your own sustainability agenda, and as a service for clients?

Henrik Lang, Bank of America: We believe that technology does have a very important role in driving the sustainability agenda and are trying to look at different ways to innovate around this. An example of what I mean is the idea of ‘digital disbursements’. This allows corporates to make payments based on an email address. There are two very important sustainable aspects to this.

Because it is all electronic it replaces the need for anything paper-based, removing a lot of transportation and paper costs. Also, where we work with a number of US charities, we have found that in areas impacted by natural disasters, for example, by hurricanes, often the physical infrastructure is damaged; using digital disbursements helps get immediate aid to people. For us, it’s about challenging ourselves, using technology in innovative ways, helping drive the sustainability agenda.

The greatest impact for us on the broader economy and in wider society can be gained once we can work together with our clients and turn their treasury departments and businesses into sustainable and greener functions.

Henrik Lang, Managing Director, Global Head of Liquidity GTS, Bank of America

And how is technology being used within the asset management space in the context of sustainability?

Tom Callahan, BlackRock: Our company is built around a single best in class risk analytics and order management platform, called Aladdin, which enables us to efficiently manage our own US$6trn in assets. Our approach is to fully integrate sustainability and ESG metrics into Aladdin so that we are able to operate at scale.

Anytime a portfolio manager purchases an asset in one of our green funds, it goes through the same filters as any other class, ensuring that we are being consistent with our investment philosophy and that non-green assets don’t end up in green funds securing their credibility.

Let’s turn now to how this space might evolve over the next five years. How much further forward do you think your company’s approach to sustainability will be?

Adam Richford, Renewi: We completed our conversation to all-green finance earlier this year; it was a major milestone for us. We have got our CSR targets too, so in five years’ time I would hope that we have met all of those. But that won’t be the end of the journey. We will need to define the next stage of the journey for the organisation, and from there continue to focus on the positive impact of sustainability.

Inês Faden da Silva, Tideway: We started with financing and so all our financing going forward is green and sustainable. We are now turning our attention to our cash deposits, and in particular money market funds. It’s very early days in this market. There are probably only two or three companies that have suitable products available, and even explaining how these work is still difficult.

We’re also focusing on the ESG performance of our counterparties. They may have a great fund, but if the organisation is not committed, we’re not so interested. We’ll either replace them or engage them in dialogue. We know that it’s difficult in the very short-term investment space, where 80% of holdings are financial institutions, to create a product that is different from what exists already. But we are watching that space.

Generally, I think for all companies sustainability is quickly becoming central to their business. It’s not something on the side, it is essential to their strategy. Most of the business opportunities and most of the risks will come from this space and soon it will be second nature to everybody, treasury included.

Are either of you working towards any other kind of sustainability agenda at the moment, with specific goals?

Adam Richford, Renewi: Becoming an entirely green-financed company was our primary focus but in the longer-term maybe there are more products to consider as the banking market evolves, and as Renewi itself evolves. Hopefully we can participate in some of those developments.

Inês Faden da Silva, Tideway: Corporates have traditionally been under-represented in bodies where frameworks and guidelines have been created but these will ultimately have to be implemented by corporates so it is vital that we have a voice. That’s why we are a group member of the Corporate Forum on Sustainable Finance, and we are very keen to share our experience and best practices with others at event such as this.

As corporates, will you increasingly expect green credentials from your suppliers?

Adam Richford, Renewi: I think that would be a logical extension. Obviously, it depends on the nature and scale of your organisation and the nature and scale of your suppliers. In our industry, we work with businesses of all sizes, and the requirements are going to be different for a ‘mom and pop’ business versus a massive global corporate.

Inês Faden da Silva, Tideway: We have three main work contracts of around £2.6bn and they have to report on a quarterly basis on all of those commitments. We try as much as possible in our procurement policies to extend our commitments to other suppliers, but we have to be realistic.

How do you see this space evolving over the next five years from a financial services perspective?

Henrik Lang, Bank of America: Just based on what we have seen in the last few years, I think it is just going to be more front and centre for our clients. In August, more than 180 CEOs signed, as part of the business roundtable, a new statement making sustainability part of a common core strategy, with common goals that we are going to work towards in the next five years. This topic is not going away, it is just going to become part and parcel of our everyday life.

Tom Callahan, BlackRock: My hope, ambition and expectation is that in the coming years, as it relates to liquidity investment, sustainability goes from a niche strategy to the default choice for liquidity management. That might sound ambitious, but I think that there is a generational shift that is happening in the world, and certainly in corporate treasuries where the up-and-coming generation care passionately about these issues.

What are the key sustainability initiatives that your organisations are working on for next year and beyond?

Henrik Lang, Bank of America: I think we have managed to get to a point now where ESG in Bank of America is not just a group of experts sitting somewhere in New York. ESG principles are embedded in all our lines of business. Our product managers are thinking about the kind of products we should bring to market. We are, for example, looking at bank-deposit products which could align with ESG principles. We are looking at broadening our digital solutions, helping treasuries to become more sustainable.

We are also spending a lot of time on training our sales force and our coverage bankers, educating them on the importance of ESG, giving them the confidence to open up that discussion with their client base and adding another dimension to that relationship.

Tom Callahan, BlackRock: At BlackRock, our focus right now is on broadening and deepening our investor base and our product line-ups. We have been very encouraged by the market reception of our approach to sustainable cash investing. We will see where we go from here, based on investment demand, but we feel on the evidence so far, we are on the right track.

As experienced practitioners, what advice would you offer to treasurers who are just getting started on a sustainability project?

Adam Richford, Renewi: Just talking to people. You can hear from the other side of the table that this is a conversation that the banks are very happy to have. I think there are other treasurers who have experience, such as myself and Inês, who are happy to share that – and there is a growing body of that experience.

I would say to treasurers contemplating it, that as well as discussing it with your banks and your peers, also make a point of connecting internally if you are not already, with your teams responsible for managing CSR and sustainability. Do make sure that you understand these themes within your organisational context because it will help you explain it when you are having those conversations with the banks and the investment community.

More and more treasurers are interested and engaged, and they are curious as to my experience of sustainable finance, and how they can translate that into their own organisation. As we have said, each organisation will be different in its application, and they may be very different in their Purpose and Values, but that doesn’t mean that they can’t find the parts of the organisation where they can have a positive impact and find eligibility in the way that we have.

Inês Faden da Silva, Tideway: Have a go! And I think have a go now whilst it is optional, because regulation will soon catch up. There are risks and opportunities involved, but I believe that one day this will become central to all corporate treasuries, finance being at the heart of all of companies.

As treasurers, we may not know everything about sustainability, but we can bring a lot to the table alongside our specialist internal partners. In fact, we bring a wealth of experience in communicating with investors and in reporting, and that is valuable to other areas of our organisations.

There is a lot of information out there to fill the gaps. As an example, A4S, the Accounting for Sustainability Project , published a very practical guide, with lots of case studies, earlier this year specifically for treasurers, explaining how to raise sustainable finance.

Henrik Lang, Bank of America: From a bank perspective, I agree with Adam, encouraging clients to speak with their financial providers, and also to challenge them because we need to be proactive in bringing these solutions to our corporate clients.

But I would also encourage treasurers to think as broadly as possible. For a number of years it has all been about green finance and green bonds. We’ve heard today that there are so many other possibilities, from how diverse their treasury department is, to what extent they incorporate green and sustainable principles into their investment policies or into their broader treasury policies. But also think about rating vendors and suppliers from a sustainability point of view, and even to what extent it is possible to eliminate paper from treasury.

Tom Callahan, BlackRock: I agree with what everyone else has said, but perhaps the most important advice that I would give to corporate treasurers is to understand the power that they have. This is a new and evolving market. It may not seem so important in terms of sustainability for the treasurer to think about where they allocate their cash, but the power that they exercise through their investments will change the products that the asset management brings to market. And those products will change issuer behaviour, and issuer behaviour will have a direct impact on green and sustainable products. Treasurers should never underestimate the upstream impact that they have at this very early stage of this market in terms of how this market will evolve. It is incredibly powerful. They should appreciate that power and exercise it!

My hope, ambition and expectation is that in the coming years, as it relates to liquidity investment, sustainability goes from a niche strategy to the default choice for liquidity management.

Tom Callahan, Head of Global Cash Management, BlackRock

Sustainability has a naturally strong human element so, to finish, I wanted to ask you all if there was a moment for you personally when you knew it was something on which you needed to focus your attention?

Adam Richford, Renewi: For me certainly there was less of a focus on sustainability before being part of Renewi. But it particularly became front and centre as we went through a merger and created a new organisation and got to re-define our sustainability purpose as an organisation. The personal resonance that this has for me became very obvious and apparent as well, and that has been a driving force to want to push the agenda within the organisation.

Inês Faden da Silva, Tideway: I previously worked in banking and in the emerging markets energy sector. In 2003, a small group of banks, including mine, launched the Equator Principles, a risk management framework to help banks assess and manage environmental and social risk in project finance, based on IFC’s Safeguard Policies from 1998. Because of that, I became very much aware of critical environmental and social aspects affecting the projects on which I was advising.

But it was only since joining Tideway, a company created to address a major sustainability issue – and where the whole company is enthused by what we are doing – that I really knew I had to do something, to the point where I decided to study sustainable business whilst working.

Henrik Lang, Bank of America: For me, it all started with volunteering, early on in my life. Later, when I had a family, I realised just how important sustainability is. At Bank of America, culturally, it is just ingrained within the organisation. Everybody is aligned with our sustainability cause and works together as a team. Importantly, we enjoy talking about these topics. ESG discussions are very personal so it becomes interesting and easy for everybody to engage.

Tom Callahan, BlackRock: Engaging with our clients around sustainable cash investing has been personally transformative in terms of how I think about this and how I live my life.

The world is changing, and so are our clients. BlackRock holds charity events throughout the year and our beach clean-ups have quickly become the most popular and over-subscribed.

Thank you all very much for taking part.