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ESG-related derivatives: innovation or fad?

Part I

Over the past years, more and more corporates have implemented a sustainability framework, incorporating specific KPIs that can be used as a basis to arrange sustainability-linked funding instruments.
Next to sustainable funding instruments, including both green and social, we also see that these KPI’s can be used for other financial instruments, such as ESG (Environmental, Social, Governance) derivatives. These derivatives are a useful tool to further drive the corporate sustainability strategy or support meeting environmental targets.

How can treasury become a sustainable function?

There is more than green financing

As sustainability is gaining momentum as a business priority, numerous corporates are re-assessing their business models and strategic goals. One of the key subjects in this re-assessment is the implementation of tangible and transparent Environment, Social, and Governance (ESG) factors into the business.

Integration of ESG in treasury

Responsible investing is widely known as the integration of environmental, social and governance (ESG) factors into investment processes and decision-making. ESG factors cover a wide spectrum of topics that traditionally are not part of financial analysis yet may have financial relevance. Environmental factors relate to a company’s role in climate change, its use of natural resources, its pollution and waste, and the environmental opportunities it pursues. Social factors cover topics concerning human capital, product liability, stakeholder opposition and social opportunities. Governance factors include aspects regarding the corporate governance and behavior of a company.

Weather Risk

Is it Time to Cover Up?

We’ve all read about climate change, but have you considered what could happen to your company’s bottom line in the event of extreme weather conditions and temperatures?

If you work for a corporation that is dependent on crop commodities, for example, then the failure, delay or poor quality of that crop could damage profits.

The question is: what can you do about it?