Sustainable Green Treasury
Sustainable and green strategies have never been more important to corporate financial health. In the Internet age, when reputations can be built and ruined at viral speed, companies are under more pressure than ever to be transparent and accountable, not just for their organisations but for their investments and their whole supply chains. There have been numerous high profile cases of companies suffering reputational and financial damage when unsustainable, unethical or environmentally-unfriendly business practices came to light, either in their business units or among their vendors and suppliers.
Whether its oil spills or toxic emissions, lax or fraudulent safety and hygiene standards, unfair employment and payment policies or other business practices that society just doesn't agree with, companies need to be vigilant in ensuring they don't expose themselves to such reputational risk.
Scandals of this type can be very financially damaging when companies start to lose customers or if they incur legal or remedial costs. And while treasurers and CFOs have limited influence over where their companies source or manufacture products and extend their supply chain, they do have to pick up the pieces when revenues and cash flows are hit. Unsustainable or unethical supply chain and investment decisions can have a profound impact on the company's risks, revenues and cash flows, which is why treasurers have a stake in supply chain risks and sustainability.
Facts on climate change and supply chain risks:
- 16 of the 17 warmest years on record occurred since 2001 (source: Nasa); https://climate.nasa.gov/evidence/;
- 97 per cent of researchers say global warming is happening and is probably due to human activity (source: Nasa);
- global sea levels rose by about 8 inches in the last century – but the rate in the past two decades is nearly double that of the last century (source: Nasa);
- the planet's average surface temperature has risen by 1.1C since the late 19th century, caused largely by increased carbon dioxide and other human-made emissions into the atmosphere (source: Nasa);
- the extent and thickness of Arctic sea ice has declined rapidly over the last several decades (source: Nasa);
- almost 21 million people globally are victims of forced labour – 11.4 million women and girls and 9.5 million men and boys (source: International Labour Organization);
- only 6 per cent of companies in the Americas, Europe and Asia-Pacific have full visibility over their supply chain (source: Supply Chain Worldwide Survey 2017, by Geodis); https://www.geodis.com/geodis-unveils-its-2017-supply-chain-worldwide-sur-@/en/view-2189-communique.html/1961
- companies with greater commitment to three key goals (sustainability & trust, growth and profitability) have increased revenues and increased Ebitda (source: Accenture Strategy Study). https://www.accenture.com/t20170731T055134Z__w__/us-en/_acnmedia/PDF-57/Accenture-Formula-Won-PoV.pdf#zoom=50