U.K.-based Treasury Today wrote recently about "Building ESG considerations into MMFs," which tells us, "Sustainability and environmental, social and governance (ESG) considerations are increasingly becoming an important focus for corporations around the world.... For corporate treasurers, one area where this topic is becoming a particular focus is that of short-term investments. As such, money market funds (MMFs) are increasingly taking steps to incorporate sustainability and ESG considerations into their products." They write, "Natalie Cross, Senior Client Portfolio Manager at Invesco, says that as companies make changes to their corporate ESG policies and business strategies, 'these are increasingly becoming key considerations for many treasurers. Investment policies and guidelines now frequently include ESG requirements and form part of their due diligence process when considering which MMFs they utilise.' As a result, she says, the firm is increasingly being asked to demonstrate how it is addressing ESG factors within the management of its MMFs. Jonathan Curry, Global CIO Liquidity & CIO Americas at HSBC Global Asset Management, likewise reports growing interest from treasurers on this subject -- although as he points out, the level of interest does vary, depending on where a company is on the journey of defining its wider sustainability goals. 'We see this played out most keenly in the disparity of investor expectations as to the extent to which ESG considerations can have an impact on portfolios and their outcomes,' he says. For those at the start of that journey, with a less fully defined philosophy on sustainability, he says: 'we see interest in ESG named products with simpler formulaic approaches such as exclusionary screens applied to specific sectors.' Meanwhile, firms with well-developed philosophies 'are more focused on the impact of a strategy and how it can contribute more meaningfully to achieving their corporate sustainability goals, such as net-zero commitments or reducing their carbon output.'" The piece continues, "Cross says that ESG integration, combined with active engagement, 'are the pillars of our ESG approach.' She adds: 'We have built a holistic framework that analyses qualitative inputs, quantitative impacts, investment decisions, and active ownership.' ... For HSBC Global Asset Management, meanwhile, Curry says the firm is focusing on two key areas: Sharing expertise with investors on ESG integration and the benefits it can have in terms of identifying and mitigating risks arising from ESG factors. Actively developing a market-leading ESG MMF investment strategy that will support investors looking for an investment solution that goes beyond ESG integration." The article adds, "Looking forward, Cross says that ESG 'will continue to be a core factor in the decision-making process for treasurers, with growing emphasis placed upon this element.' ... Curry says the focus on sustainable investing 'is here to stay, and will continue to grow due to increasing levels of investor demand for sustainably invested MMFs, calls for greater transparency on investments and growing stakeholder engagement in all areas of sustainability.' But he also notes that the specific areas of focus will vary between different MMF providers -- and that simpler ESG screening methodologies, such as screening out specific sectors, 'may have very little impact given the A1/P1 investible universe of MMFs and the high weighting of portfolios to financial institutions, sovereigns and government agencies.' As such, he says, the firm's focus is on 'delivering a more innovative solution' that will address these shortcomings." See also Treasury Today's "Women in Treasury Spotlight: Geeta Sharma, BlackRock".

Email This Article




Use a comma or a semicolon to separate

captcha image