The Missing part of a Treasury Job Description

Any usual job requirement for a Treasurer includes Cash Management, Risk Management, Hedging, Cash flow forecasting, P&L and similar. But where is one of the most trending consideration? Especially, in times when corporations are weighing sustainability targets not far from their profitability targets. Is it not the responsibility of a “treasury” function to be cognizant and be considerate of possible approaches to impact environment through their decision of investments and borrowings?

This brings us to consideration – Are corporations expecting specific functions (read CSR team/ PR team) to work towards and prove their sustainability efforts to the world? Are corporations willing to implement the sustainability philosophy into organizational DNA?

With evolved considerations, gone are the days when a Treasurer was just involved in risk management and ensuring liquidity. In current scenario of news going viral each action creates a ripple effect. As famous Jane Goodall once said : “You cannot get through a single day without having an impact on the world around you. What you do makes a difference, and you have to decide what kind of difference you want to make”. A Treasurer has to take an active role in policy making and lead her organization towards sustainability and protecting consumers.

How can a Treasurer help in sustainability?

As I advocate sustainability related expertise, lets evaluate how a Treasurer can help in sustainability:

1. Consideration in Investment/Borrowing Rationale

• Choosing counter-party carefully: A Treasurer while selecting for investing options for excess cash, while trying to increase returns for the company should also ensure that the partners with whom she is working are aligned with sustainability. ESG is the new word which is taking importance nowadays with almost all the organization, banks , asset management companies trying hard to come up with various financial products which are aligned with ESG . Try to choose such sustainable investing options where the counter party is trying to have a positive impact on environment and at the same time you don’t compromise on your returns.
• Green Bonds / Sustainable finance : You don’t need to be in a renewable space to issue green bonds. You just need to have an intent: Drew Wolff, Starbucks launched green bond within few weeks of joining Starbucks in 2016. Even though it was an infrequent issuer, didn’t have leverage of being a regular issuer in the market they took chance by entering into sustainable bond space. The use of proceeds were supposed to get used to buy sustainable coffee. “The bond acted as lightning rod for a lot of separate social responsibility efforts at the company and helped align financing and these efforts for the first time” said Wolff. Additionally it increased commitment to transparency and reporting. Corporate should try to make best use of the current investment trend where investments both from retail and institutions have increased by 34% from 2016 in green investments. Investors have become savvier and trying to invest more in bonds which have green element in it. Corporates should try to integrate its financing with sustainable finance. Once they incorporate sustainable financing, they will automatically be aligned with guidelines designed for the same which will in turn give them a direction towards sustainability.

2. Business Partnership

• A Treasurer also has a stake in supply chain, how? Let me answer this by asking one more question? Who had the most sleepless nights when Volkswagen posted loss for the first time in 15 years when caught implanting a sophisticated defeat device it implanted to pass emission tests? What would you have done if in your career you had to bear the scar of posting a loss for an organization due to an unethical supply chain? A Treasurer should increase her influence in company’s sourcing/ manufacture products and extended supply chain because they are the ones to bear the brunt when the cash flows are hit.

3.  Behavioral Considerations

• Less Paper more technology: In this rapid world of digitization there are still few who take help of paper and pen. You may see print outs of hedging structures lying on tables. Banks sometimes still need hardcopy of underlying from Corporates for their records. A small step of ensuring less/no paper usage by Treasurer will ensure that the team follows her and will eventually impact environment in a positive way.
• There are times when there is no one in Dealing room but the Television (which is on so that we don’t miss any global news) is on. Dealing rooms have a Televisions as a necessary accessory, and its important also to keep a check on what’s happening in world. But we also know that it can be switched off when no one is in the room.
• There are many other ways where just by small step a Treasurer can impact the environment positively. Just by saying no to sales/ business development professionals for a physical meeting and instead suggesting a skype meeting may help save fuel and decrease carbon emission.

Eventually it depends upon an individual that she just sticks to what has been asked for or to step forward and do something worthwhile which impacts the organization, its stakeholders and our future generations who look up to us to provide them a health living environment to live.

Sources :

1. https://www.theglobaltreasurer.com/2019/04/29/green-bond-demand-continues-to-rise-as-esg-returns-grow/
2. https://ctmfile.com/sections/background/sustainable-green-treasury
3. https://www.oregon.gov/treasury/invested-for-oregon/Pages/Sustainable-Investing-governance.aspx
4. https://www.bloomberg.com/professional/blog/treasurers-need-know-sustainable-financing/
5. https://www.treasury-management.com/article/4/412/3484/the-rise-of-esg-business-drivers-and-treasury-imperatives.html

What are your thoughts?

Aastha Tomar

FX & Derivatives | Debt Capital Markets | MBA Finance
Electrical Engineer | Sustainability