At Treasury, we care (too)…

François Masquelier, Chairman of ATEL

November 2018

The environment is very much back on the global agenda, as climate change continues to be a major source of concern and the cause of numerous natural disasters & extreme weather events. At the same time, the push for Corporate Social Responsibility is gathering pace, as the new generation “Z” demands the implementation of its core value of sustainability. It is a perfect moment for us, as corporate treasurers, to ask ourselves how we can also do our bit towards this sustainability. And the answer lies firmly in our management choices.

CSR and sustainability

There’s no disputing the fact that “sustainability” and Corporate Social Responsibility are now central concerns for businesses and as such, they also affect the treasurer’s role. What the English also call “Environmental Social Governance”, or “ESG” for short, is fast becoming an obligation and an integral part of internal processes. Digitization is enabling further enhancement of the efficiency of these processes, whether operational, environmental or social. But companies need to truly embrace the idea that it’s the responsibility of all firms to chip in, as it is not only by deploying “clean” funding or “green bonds” that they can contribute (even if such funding is clearly desirable). In fact, there are plenty of other (smaller) actions that can help support their claim to be responsible. The objectives are manifold: to reduce costs, risks and travel, to go paperless, to automate processes, to improve well-being at work, to respect diversity and lastly to add value. And the need is more pressing for the fact that rather than still being a mere fashion or trend, sustainability now constitutes a duty imposed by a European Directive (Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU), which obliges firms to produce reports on this subject. Then there’s the perspective of the new generation of “millennials” and Generation “Z”, with their expectations more attuned to social values. Clearly, any failure to adopt this approach would be demotivating or off-putting for these younger groups, who are on a quest for a more “responsible” society. And since this momentum towards corporate social responsibility is likely to be beneficial in all respects and for all stakeholders, buying into it is becoming a no-brainer. CSR needs to become part of our genes, a central plank of thought process and actions. At their own level, treasurers can contribute positively to the drive towards sustainability, but currently, only 78% of the top 250 companies communicate on CSR. So, there’s still a very long way to go, which explains why the European Union has decided to impose reporting on this topic rather than merely recommending it. Because at least some CEO do believe is important for corporations to fulfil a socially relevant task and the responsibility must become the DNA of the company.

CSR a factor in attracting fresh talent

When it comes to enhancing appeal for recruitment, promoting a company’s socially responsible approach is a definite asset. As we’ve already underlined, millennials”, generation Z and so on are highly sensitive to this aspect and prioritise it when choosing an employer. A treasurer who can demonstrate his/her “socially responsible” credentials can enhance the appeal of his/her department. They may not be able to change or revolutionise anything on their own, but via small tweaks and day-to-day actions in their work or private lives, they can they can still do their bit to help make the world a better place. What’s more, such an approach can also boost the sense of belonging among the employees already in place. In any case, investors are also increasingly seeking this type of investment and favouring companies that present a responsible and sustainable approach. Such actions might involve inclusion in an ad hoc index (e.g. DJSI, FTSE4Good…) or even a detailed report or excellent communication on the CSR theme. Larry Fink, CEO of BlackRock, summed it up nicely as follows: “Every company must not only deliver financial performance, but also show how it makes a positive contribution to society”.

Paperless process

It’s also a good idea to move towards becoming paperless at any level. For instance, let’s consign analogue faxes, snail mails and reams of paperwork to the past. Instead, we can introduce ratios or KPI’s that show, for example, our reduced paper consumption. Let’s ditch our waste paper baskets and encourage clean desks and tablets and PC screens rather than actual paper print-outs, wipeable brainstorming boards, presentations given on giant screens, etc... We can also recommend ideas such as virtual and centralised or digitized KYC procedures. In addition, let’s make paying by cheque a thing of the past and instead encourage electronic payment, which is in any case faster and safer. Immediate payment by mobile phone should be favoured over sending cheque and even over cash. After all, the new “e-payment” methods all seem to have been designed to aid us in this initiative.

Well-being and a better work-life balance

The new generation is clearly keen to have a better balance between their work and private lives and for this, process automation will help reduce the risks, leaving them free to be able to focus their efforts on value-adding activities and to spend less time at work. Corporate social responsibility also encompasses this commitment to an enhanced work environment, as driving people towards burn-out never pays in the long term. Efficiency can be improved simply by ameliorating the work environment and in this respect too, numerous studies indicate that well-being and productivity are not incompatible. Far from it, in fact.

Zero CO2 emissions: the “little things” we tend to forget

Everyone wants a healthier world with more breathable air. The reality of global warming is pretty much proven and the need for action clear. Here too, there are many small ways that we can help create a better world. For instance, we can opt for telephone or video conferencing to avoid unnecessary or repeated travel. And in the same vein, we can favour e-learning over courses held here, there and everywhere. Moreover, by promoting public transport, we can encourage our teams to travel via the most sustainable means rather than using their private cars. If they prefer to drive, car-sharing is another useful alternative, while we can also encourage home-working to a certain extent. Furthermore, we can make use of virtual servers, cloud solutions, IT solutions and machines that limit the waste of time and energy. Treasurers can encourage staff to use less paper (the production of one sheet of A4 requires 10 liters of water, a frightening stat), to recycle, opt for (more) responsible banks and encourage solutions based on block chain technology or its derivatives (i.e. DLT – hyper ledger – Smart contracts). The use of platforms, the Internet, virtual solutions, etc. all amount to beneficial actions. We can be part of the solution at our own humble level, however “minimal” these actions may be. While treasurers can’t make their companies become “Global Compact” (i.e. United Nation certification) participants, incorporate green indexes such as the SEDEX, or impose the “one report” approach (which at the end of the day will soon be compulsory for all), they can at least recommend such initiatives.

Diversity is good for all!

The most fashionable concept is undoubtedly diversity, and there’s no denying that the treasurer profession remains primarily a male domain. Having said that, there are more women in the role than in the past and certain qualities which they tend to possess make them excellent treasurers. But all forms of diversity should be encouraged, not merely in gender terms: we also need to favour a greater variety of nationalities, races and, most trickily in my view, ages, which is surely the most discriminatory area of all. I wouldn’t say that we don’t need to do anything on gender parity, but it’s fair to say that things have changed and that within a few years, via a natural process rather than any form of compulsion, there will be as many women as men working as treasurers, maybe even more. I myself am an advocate of gender equality and my own team contains a lot more women than men. But I believe that this needs to be achieved without the use of mandatory measures. It’s up to us to change mentalities within our community. In the era of #MeToo, absolute respect for all colleagues, irrespective of their sex or their social or ethnic group, is essential to set the right example. As they say, we need to “walk the talk” and, in any case, diversity is said to increase productivity (even if this remains to be proven due a shortage of relevant studies).

CSR: a whole new way of life

All these measures and ideas need to be incorporated into our modus operandi and our day-to-day management. CSR is in a sense a lifestyle choice, a virtuous philosophy. Even the IFRS standards will soon include a non-financial performance reporting section in their accounting standards. By adopting a more responsible attitude, treasurers can play a full and useful role in enhancing sustainability in the wider sense within their company. For instance, they can set a good example by behaving responsibly. This constitutes a fully-fledged philosophy which, in near future, will be demanded by investors looking for “sustainability”. The much-talked-about concept of fiscal transparency also exists in relation to CSR. Stakeholders are actively seeking socially responsible companies and assets which respect their global environment, and I think we can all echo the view of Richard Branson when he says that: “Social purpose should be embedded in the business model as much as any other value proposition”.