Citi Perspectives Spring 2020

38 | Treasury and Trade Solutions Treasury’s important role in shifting to sustainable finance Treasurers have an opportunity to steer their businesses toward sustainable finance, partnering with banks to meet critical ESG objectives. More recently, we have seen a significant increase in the number of multinationals who are interested in exploring such financing opportunities. In the last twelve months, a wide variety of clients have reached out seeking support from their banking partner in achieving their sustainability goals. In the consumer and FMCG sector, notably food and beverage, lifestyle and fashion companies, sustainable practices are at the forefront of brand strategies as they seek to address concerns of environmentally aware client bases. Meanwhile in the industrial and energy sectors, attention is focused on how supply chains may adopt alternative resources. For example, automotive companies are looking into reconfiguring their supply chains to buy batteries instead of exhaust systems; miners are considering designing mines that can be operated with the aid of robotics allowing for higher working temperatures and less emission-heavy air conditioning; while power stations are converting coal generation units to biomass. This practice often plays out in sourcing policies where corporations commit that their ingredients may be more sustainable, their fabrics can be ethically sourced, and the agricultural workers who harvest their raw materials should have good working conditions. To be able to prove to the market that these policies are being met, data is required — and data costs money. Suppliers must be audited, goods must be carefully tracked from source to product, and third parties must be engaged to act as independent arbiters of compliance. If a supplier is asked to allow an environmental auditor into her business on a regular basis to track these requirements, there needs to be a recognition that they potentially may incur additional costs as a result. And that’s where the bank comes in. Citi has been a leader in these efforts with a long-standing history of embracing corporate social responsibility standards and practices in promoting business and progress worldwide.