Executives say sustainability investments are up

Climate change remains a top three issue for global C-suite level business leaders (CxOs), surpassing political uncertainty, competition for talent, and the changing regulatory environment. This is according to Deloitte’s 2024 CxO Sustainability Report: ‘Signs of a shift in business climate action’. A key indicator of climate’s staying power on leaders’ agendas is that 85% of CxOs say they have increased investments in sustainability in the past year - up from 75% in 2023 - and half have started implementing technology solutions to help achieve climate goals.

Leveraging climate technology is critical in the race to decarbonise, and each industry, region, and organisation requires their own unique path forward. Considering that CxOs ranked keeping up with the pace of innovation (including generative artificial intelligence - GenAI) as their most pressing challenge over the next year, leaders have a unique opportunity to prioritise investment in solutions that offer both environmental and business benefits. 

In fact, half of CxOs have already begun implementing technological solutions to help achieve climate goals, with another 42% expecting to do so in the next two years. Among those already using technology to bolster their sustainability efforts, more than half say they are doing so to develop more sustainable products and services. Consequently, CxOs say this innovation around their offerings or operations is the top expected benefit of sustainability efforts in the next five years (38%). 

Executives are realising the business potential in the shift to a low-emissions economy, with an overwhelming majority (92%) believing their company can grow while reducing greenhouse gas emissions. 

Notably, leaders also reported a shift this year toward seeing more direct environmental and business impact of their sustainability efforts. Supply chain efficiency or resilience (37%) and operating margins (37%) broke into the top five benefits of taking climate action this year, just two percentage points behind the top-ranking benefit (addressing climate change) and edging out less-tangible benefits like brand recognition and reputation.

CxOs rank the ability to recruit and retain talent as a top three benefit to improved sustainability over the next five years - aligning with the sentiments of younger talent according to Deloitte’s 2024 Gen Z and Millennial Survey, which revealed over four in 10 Gen Zs and millennials have already changed or plan to change their job or industry due to environmental impact concerns. The transition to a low-emissions economy is already transforming workforces, and with over 800 million jobs vulnerable to climate extremes and economic transition impacts, 49% of executives say they are actively preparing workers for green jobs. More broadly, global leaders reported a growing prioritisation of equity and a just transition - which seeks to ensure the substantial benefits of transitioning to a low-carbon economy are shared widely and support those who stand to lose economically - with over half (55%) considering the topics extremely important, up from 46% last year.

More than half of organisations have focused on two to three harder-to-implement, “needle-moving” actions to help drive impact inside and outside their organisations, such as tying senior leaders’ compensation to environmental sustainability performance or developing new climate-friendly products or services. However, overall progress is uneven, with 17% of organisations leading the charge by implementing four to five such actions, whereas over one-quarter of organisations have taken minimal or no “needle-moving” actions. More than half fall into a “moderate middle” category, implementing two to three needle-moving actions but no more.

However, there are several reasons for optimism about the state of corporate climate action. This “moderate middle” group expects climate change to have a high impact on their strategy and operations over the next three years, with one in five anticipating a very high impact. This group’s current commitments, coupled with their expectation for more in the coming years, suggest they are setting the stage to scale up for an even greater impact.

 

ASML, Clarion Partners, and IBM treasury teams recognised

ASML, Clarion Partners and IBM Corporation are finalists for the AFP 2024 Pinnacle Awards, sponsored by Truist. Established in 1997, the AFP Pinnacle Awards recognise excellence in treasury and finance. The finalists were selected by a jury of treasury and finance professionals. Decisions were based on forward-looking solutions that progress the efficiency and effectiveness of their organisation’s treasury and financial operations.

Voting is currently open to select the Grand Prize winner, which will be announced during AFP 2024. Truist will make a US$10,000 donation to a charity of the winner’s choice.

ASML’s entry focused on the improvement of its FX exposure forecasting by implementing an AI-powered model that significantly increased forecast accuracy from 70% to 96% and reduced USD exposures by US$25-50m monthly. Developed through collaboration between ASML’s treasury and data science teams, the solution automates the forecasting process by recognising patterns in historical data and continuously improving over time. The enhanced accuracy has made ASML’s hedging programme more effective, freeing up resources for higher-value activities. The AI model, based on a free, open-source Python algorithm, demonstrates the scalability and accessibility of AI solutions.

Clarion Partners’ entry focused on the complexities of managing over 1,300 bank accounts across several banking relationships. In a joint effort with IT, they developed a customised in-house system, BARS (Bank Account Request System), that streamlines account opening, tracks account information and centralises documentation. Secure, scalable and paperless, this solution has transformed their treasury operations, reduced risks and improved efficiency.

IBM Corporation’s entry focused on linking its treasury cash management efforts to its overall enterprise performance management framework and investor reporting goals for free cash flow (FCF). In a collaborative effort, the team took a manual, complex and fractured process and standardised it into the treasury technology platform. This solution provides real-time visibility, actionable insights and increased speed to action. IBM achieved over 90% error-free data, decommissioned 8+ tools, freed up thousands of personnel hours and contributed to a US$1bn increase in FCF, with ongoing enhancements expected to drive further growth.

“The finalists of the 2024 Pinnacle Awards represent some of the leading innovators in treasury and finance,” said Jim Kaitz, President and CEO of AFP. “At AFP, we are proud to recognise ASML, Clarion Partners and IBM Corporation for their unique solutions which have advanced their organisations and the treasury and finance profession at large.”

 

Northern Trust launches digital carbon credit ecosystem

Northern Trust has announced the formal launch of The Northern Trust Carbon Ecosystem with the first live transactions on the blockchain-based platform which enables institutional buyers to digitally access carbon credits from leading project developers.

The official live transactions were initiated by Water Recovery Systems IP Limited and CUT Carbon Distributed Technologies AG, which sold carbon credits to institutional buyers for retirement. The live transactions follow Northern Trust’s completion of fully automated transactions on the initial minimum viable product, announced in September 2023.

The ecosystem is powered by the FI’s digital assets platform, Northern Trust Matrix Zenith, to connect institutional buyers with project developers focused on climate solutions to avoid, reduce, or remove greenhouse gases in the atmosphere. Supported by private ledger digital blockchain technology, buyers can purchase digital carbon credits directly from project developers and retire these against their emissions footprint. Northern Trust acts on instruction to record, transfer and settle digital carbon credits in its capacity as the designated custodian.

Northern Trust is working with a number of project developers including Water Recovery Systems, a water purification and membrane technology company based in the UK, and CUT Carbon Distributed Technologies, a carbon credit proponent company based in Liechtenstein. Each project developer completed transactions on the platform, with CUT Carbon selling digital carbon credits to Adapt Global, a global telecommunications company that supports circular and sustainable technology solutions.

 

Broadridge announces high-quality liquidity asset use case for its DLT repo platform

Expanding its network across the global repo market, Broadridge Financial Solutions has announced that a Tier-1 Canadian bank has implemented its distributed ledger repo (DLR) platform for high-quality liquid asset (HQLA) treasury securities management. This collaboration sees the bank become the first to go live with this HQLA use case through DLR, showcasing the potential of distributed ledger technology (DLT) in transforming financial operations.

As the industry continues to evolve, firms are increasingly turning to digital strategies that incorporate DLT to unlock significant operational and cost benefits. Broadridge says it is helping clients navigate the complexities of the digital era and achieve long-term operational efficiencies.

The global expansion of the DLR platform across sell-side and buy-side firms is generating a network effect, amplifying benefits and supporting a wider variety of transaction types. In a statement, Broadridge said it continues to lead the way in utilising distributed ledger technology to reshape the global repo market with a monthly volume reaching US$1 trillion.

 

Finastra integrates with Prelim to streamline retail and commercial deposit account opening

Finastra has announced an integration with fintech Prelim for its Finastra Phoenix core solution, enhancing the retail and commercial deposit account opening experience. Prelim helps financial institutions digitise the customer experience by automating the application process and internal operations such as reviewing, processing, underwriting, and servicing. 

From onboarding deposit customers to provisioning treasury services and originating select credit products, Prelim’s technology helps make account opening faster, reduces back-office complexities, and provides a more seamless and enhanced customer experience for account holders.

Through Finastra’s Open Finance ecosystem, Prelim integrates with Phoenix APIs, enabling the creation of new accounts for both new and existing account holders. These accounts are then reflected within the digital banking solution, providing a cohesive user experience. This comprehensive integration allows financial institutions to efficiently onboard new accounts and services, ensuring a smooth and streamlined process.

“In a digital-first society, consumers and businesses expect their financial solutions to be agile and transform as needed to keep pace with their needs,” said Peter Longo, vice president of product management, US Mid-Market Banking Solutions at Finastra. “As we look to continuously enhance our offerings, Prelim is a trusted partner to support this transformation and our Open Finance ecosystem.”