by Bruce Meuli, Global Business Solutions executive, and Jonathon Traer-Clark, Head of Strategy, Global Transaction Services, Bank of America Merrill Lynch
JTC Today more than ever, treasurers engage with, and therefore need to consider the motivations and objectives of multiple stakeholders – teammates, support functions, management, board, investors, bankers, lawyers and so on. At the same time, they have to operate within a defined risk framework and adhere to strict policies and processes. An additional, related dimension to treasurers’ decision-making is how to incorporate the demands and obligations associated with being a socially responsible organisation that considers the long-term impact of its actions and investments. So how can treasurers achieve this balance, particularly on occasions where these diverse objectives may appear to conflict?
BM Well, let’s look at investments, specifically those that are considered ethical. One of the early advocates of socially responsible investing was John Wesley, founder of Methodism, who advocated the basic tenet of “Look after your neighbour through appropriate business practises”. Today, there are a variety of investments geared to climate projects, medical facilities and many other social, cultural or environmental objectives.
JTC Indeed, the appetite certainly seems to be there and today, many firms have dedicated research departments that explore and evaluate investments. Key to note too is that in the US you can now add ESG (Environment, Social & Governance) funds to 401k plans. But how exactly does a treasurer assess these investment alternatives?