Citi Perspectives Spring 2020

Treasury’s strategic role in supporting the business can be enhanced by the growing importance of environmental, social and governance issues. Digital financial solutions can help corporate treasuries contribute to a company’s sustainability objectives. Sustainability issues such as climate change, carbon emissions, plastic pollution and employee welfare, have become increasingly prominent in recent years. Government and regulatory action, combined with pressure from consumers and investors, appears to be prompting a sea change in attitudes among corporates. We have seen environmental, social and governance (ESG) issues are already impacting businesses profoundly. The stakeholders driving change vary according to industry. For instance, in the fast fashion sector, pressure is coming from consumers to cut waste, recycle more, and improve conditions for workers in developing countries. Meanwhile, oil companies are facing a huge transition to clean energy sources driven by shareholders and regulators, who typically wish to incentivize change without creating a “stranded asset” class. Why treasury? The role of treasurers within many corporates has evolved. Historically, treasurers have focused on financial flows and been responsible for managing liquidity, cash, the supply chain and related issues such as interest rates and FX. However, as corporate models have changed, it appears that treasurers have steadily become more connected to core business activity such as sales or procurement. For example, in the auto sector, treasurers were once mainly focused on managing inflows, short term investments and risks relating to currencies. Now, as auto businesses transition to electric and more technologically-advanced vehicles, treasurers’ expertise seems to be in demand. Many carmakers are working to embed the ability to pay highway tolls and parking charges into cars, for example. The treasurer is the obvious source of information about payment methods and therefore can become a more valuable adviser to the business. Magdalena Mielcarz EMEA Head, Digital Channels and Data, Treasury and Trade Solutions, Citi