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Treasurers Ease Off ESG Pedal as Headwinds Take Their Toll

Tough times coupled with a raft of concerns over ESG, not least the cost of initiatives and the reputational risk of making mistakes, are causing treasurers to think twice before committing to debt financing in support of low-carbon projects.

Corporate engagement with ESG has surged over the past decade but there are now signs that hard times and growing circumspection over the merits of investing in ESG initiatives are leading to a cooling of interest in sustainable finance among treasurers.

Growing caution around ESG is one of the major conclusions to be drawn from a survey of treasurers at 88 large FTSE-listed UK corporates by law firm Herbert Smith Freehills (HSF) in partnership with the Association of Corporate Treasurers (ACT). The survey, Corporate Debt and Treasury 2023, is HSF’s latest annual snapshot of trends and the outlook for corporate debt and growth of ESG and sustainability in the debt finance space. 

Kristen Roberts, Partner, HSF, says that, as was the case with last year’s survey, ESG and sustainable finance is “the topic of conversation” in corporate treasury circles and one of the most likely to be discussed in any financing. The findings of this year’s survey, however, indicate a distinct “mood shift” on ESG among treasurers as they contend with a number of headwinds.