To recognise the growing importance of Corporate Social Responsibility (CSR), Environmental, Social & Governance (ESG) and Diversity & Inclusion (D&I) in the treasury marketplace, TMI is delighted to launch the Treasury4Good Awards.

Dedicated to those corporate treasury teams, banks, and vendors truly making a difference to their organisation’s sustainable growth – and the world around them – these are the first Awards of their kind in our industry.

Nominate

DEADLINE – Nominations should be submitted no later than 1st February 2019

CSR in Action

Best practice green bonds: Tideway’s story 

Tideway was specifically established to protect the tidal River Thames in London from pollution, so sustainability lies at the heart of everything the company does. Tideway has very ambitious sustainability goals and its Legacy Plan contains 54 sustainability targets.

Darren White

“These targets have the potential to have important real-world impacts, but they also require significant amounts of financing,” says Darren White, the company’s Head of Environmental Sustainability. “Since we report on these 54 targets to our board, investors, and the UK government, it seemed like a completely natural step to link the company’s financing to these sustainability credentials, through initiatives such as green bond issues.”

Setting clear objectives

Ines Faden

As Ines Faden, Tideway’s Treasurer, explains: “We had two objectives in mind when deciding to issue green bonds: the first was to integrate CSR even more deeply into the daily processes of the company, and to connect the treasury team more closely with the rest of the organisation.”

The second objective was to appeal to a new investor base, namely those who are specifically looking for ESG investments. While this may still be a relatively small market, Faden says that the number of investors that have a mandate to invest in sustainable financing is definitely growing.

Every piece of debt that Tideway has issued in the last six months has been a green bond. “We have now issued six green bonds, totalling £775m, and we are the world’s largest corporate issuer of green bonds in sterling,” comments Faden. The issues have taken various forms: public bonds; private placements; nominal rate; CPI-linked bonds; RPI-linked bonds; cash bonds and deferred bonds.

Being part of the action

Some companies hold back from issuing green bonds because of the perceived effort. Tideway did not encounter any such challenges, however. “Issuing a green bond was relatively easy for us because we are a ‘pure play’ – everything we do is green, i.e. building the tunnel to clean the tidal river Thames,” Faden explains.

“Companies that aren’t pure plays but want to issue green bonds need to be able to clearly identify the green assets in their business and segregate these. This takes a little bit of time, but generally all of the information already exists within the company; it’s a question of extracting and compiling it to prepare the Green Bond Framework (GBF).” 

Elsewhere, Faden says that the changes required to the prospectus are also pretty simple, so this should not put treasurers off from issuing green bonds. “Likewise, the ongoing reporting is not a burden. Most companies actually collect and report this data in one way or another already anyway,” she adds.

For those wondering about the financial impact of going green, Faden says that “In the big scheme of things, the difference in cost between issuing a green bond and a traditional bond was not significant.” For smaller companies, this might be more of a concern, she notes, but for medium and large companies, it should not be a roadblock.

And as much as there may be a little extra work when issuing the first few green bonds, Faden believes that “It’s actually great fun. It’s a new challenge for the treasury team. It also brings different departments in the company together, helping to raise treasury’s profile within the organisation, improving employee wellbeing, and ultimately leading to a more integrated way of executing the business strategy.”

Read the full case study in TMI ‘Riding the CSR Wave: Green Bond Issuance at Thames Tideway'

CSR in Action

CSR at Rémy Cointreau: already BAU

Luc Vlaminck

Luc Vlaminck has succeeded in embedding CSR into treasury’s daily activities. “As much as CSR is a hot topic at the moment, the concept of sustainable development has been part of Rémy Cointreau’s corporate identity for centuries. In fact, CSR is a crucial part of our business strategy and it’s completely integrated into everything we do, including our treasury operations,” he says.

“Within treasury, we naturally finance all of the company’s activities, and that includes everything CSR-related. Part of our role, for example, is to ensure that the company has sufficient funding to buy new products from the wine growers every year. We often guarantee a certain price for the growers, thereby supporting their cash flows. But in return, we promote strict CSR behaviour, such as using as few chemicals as possible in the growing process to respect the Terroir. In order to protect biodiversity, we also promote responsible and sustainable land and forest management, especially for the wood that is used to build our barrels,” he explains.

Walking the walk

Vlaminck foresees more CSR-related activity ahead. “We have not yet issued a green bond as our funding tends to take the form of private placements or very limited bond issues. Our investors aren’t currently asking for a green ‘badge’ on our products yet, but the trend is definitely changing. So, I expect that the next big funding round we undertake will be ‘green’ in one way or another,” he predicts.

“Something really innovative that we’re looking at doing is having a bank club deal that carries a green label. This would be a normal RCF, but with a green clause included. The challenge with such a facility is isolating the truly green aspects of our business. Because we age natural products, with no chemicals, you could argue that everything we do is green. But that would be too easy! 

“As such, we are looking to find ways to identify the parts of our business that actively support the goals we have set out in our 2020 CSR Plan. Our membership of the SEDEX (Supplier Ethical Data Exchange), where we favour responsible and sustainable purchasing partners, is a good example,” he notes. In 2016/2017, the percentage of the group’s suppliers subscribing to SEDEX increased from 54% to nearly 83%. The target for 2018 is to reach 90% and 100% by 2019/2020.

An easy business decision

Another aim outlined in the company’s 2020 CSR plan is to ensure that employees remain motivated through clear CSR objectives and a CSR incentive scheme. “One of the biggest benefits our company has seen as a result of our CSR engagement is employee wellbeing,” he explains. And while that might sound a little ‘airy’ – especially to a treasurer – in reality, it has a very concrete impact. 

“Diversity and inclusion are incredibly important values for us, as a family-owned company, and all of our CSR efforts make employees very proud to work here. This is a great help when it comes to talent acquisition and retention; in fact, I’d say it is a competitive differentiator.” 

CSR is also directly linked to the financial wellbeing of the company, he explains. “We produce luxury products and our customers pay for the craftmanship of our spirits and the time we take to ‘elaborate’ them as well as the peace of mind that our responsible business attitude brings. The more sustainable we make the product, the more socially-conscious consumers will be prepared to pay for it. It’s a no-brainer.”

CSR in Action

So What if You're Gay?
5 Tips for Embracing Inclusion in Treasury

Darren Rickards

Workforces are becoming more inclusive. Yet many LGBT+ employees still do not feel as if they can be their true selves at work – which has ramifications on performance and wellbeing. Darren Rickards, Head of Corporate Banking, CEEMEA and Co-Exec Sponsor of the EMEA LGBT Pride Employee Network at Bank of America Merrill Lynch, outlines some practical tips for treasurers looking to encourage inclusivity within their teams.

Whilst ESG (Environmental, Social and Governance) and PR initiatives quite rightly speak the language of inclusion, it’s up to all of us as individuals to create, encourage and foster an inclusive workforce. Looking at the treasury space, there are many practical steps treasurers can take to encourage frank conversations and to promote an open and honest culture:

1. Encourage your employees to bring their whole selves to work

Before I came out at work, I was a totally different person. I was headstrong and taciturn, and I avoided any conversation about my private life – which meant that my team saw me as rather aloof and distant. Coming out fundamentally changed this: being a more authentic version of myself has allowed me to become more outspoken, persuasive and engaged in my job. Removing the anxiety around coming out has freed me to concentrate on things that really matter and unleash my potential.

2. Watch your language and check your privilege

As any LGBT+ person knows, an off-the-cuff remark can delay coming out by months or even years. It is therefore so important that we watch our words and keep our teams in check, to make sure unconscious bias isn’t legitimised. Often, we will be completely unaware that casual conversations and terms of reference may ostracise others. Make a positive statement about inclusivity by cutting negative statements out of the conversation.

3. Take discrimination seriously in your recruitment and promotion practices

Establish a strong anti-discrimination policy and ensure that all employees know what is not tolerated in the workplace. In cases of homophobic bullying, promptly recognise the problem and take action.

4. Develop support and engagement programmes for LGBT+ employees

At Bank of America Merrill Lynch, we are very proud of the initiatives that we have had in place for a number of years, to support a diverse and inclusive workplace, such as mentoring, employee networking groups, seminars and conferences. Our global Ally programme, for example, allows colleagues who aren’t LGBT+ to show their support of their LGBT+ colleagues; join training sessions to better understand what it means to be L, G, B or T; and attend events and talks that discuss some of the issues facing this community. Moreover, our LGBT+ Pride Employee Network is at the centre of everything we are doing to create an LGBT-inclusive culture and to bring allies with us on our journey.

5. Upskill senior leadership with answers to difficult questions, helping to bring inclusion into their day-to-day working practices

Frequently, there is an appetite to shift cultural norms, but a lack of knowledge to make progress. To combat this at Bank of America Merrill Lynch, we hold seminars that are open to all our employees across Global Banking and Markets, and support functions, such as ‘So what if you’re gay?’ sessions with LGBT and straight employees. These have facilitated extremely open and candid conversations with no questions being ‘off limits’. I take the view that given my relative seniority, I can do more good than bad by speaking about my personal experiences and offering advice so that we hopefully reach a point where these sessions are no longer necessary.

Times may have changed, but often people’s fears and experiences of discrimination have failed to keep pace. We cannot forget that it’s the people who make our organisations great. If we realise the power of diversity and value all our differences – in thought, style, culture, experience, ethnicity, sexual orientation, gender identity and expression – we will be even stronger. Inclusion is so much more than a buzzword, it is a prerequisite to how we do business.

Keep your eyes peeled for the longer version of this article which will appear in the next issue (no. 262) of TMI.