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.
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.
“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.”
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.
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.”
CSR in Action
CSR at Rémy Cointreau: already BAU
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.
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.
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
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