Johanna Hyttinen sees a natural progression in her career. Her early roles provided her with solid experience for her current one – vice president for international funding and banking relations at Unilever.
It is a role that affords a great vantage point both onto a large multinational shaping debate and direction on sustainable business practice, and a financial community evolving its response.
Hyttinen sees treasury as her second career. Having weathered the financial crisis in banking, she was keen to put her financial markets experience to work in the real economy.
When a treasury role came up at Network Rail, she took the helm of its bond issuance programme for UK rail infrastructure, learning first-hand how a treasury operates and studying towards Association of Corporate Treasurers (ACT) qualifications.
After two years at Network Rail she moved to UK supermarket Tesco – and at a challenging time, in the aftermath of an accounting scandal, a ratings downgrade and in the face of falling market confidence.
But with a new management team and group treasurer set on change, the challenge began to look exciting.
“When you work in a company that is going through challenges you can learn a lot more than when times are easy,” she says. “There were multiple issues to address, whether it was the balance sheet, pension or lease liabilities, or just getting the credit ratings back on track.”
Sustainability… permeates everything that we do
When Hyttinen was subsequently approached about her current role at Unilever, a lot of things clicked into place at once: “Moving on to a truly global company like Unilever where the scale is just staggering – to me it felt like the building blocks were all there.”
She explains: “I grew up in an international school environment. My family moved around a lot. I studied at the London School of Economics. And still I would say Unilever is the most international placed I’ve landed in.
“The treasury team alone has more than 15 nationalities – and on any given day you can come into an active conversation about pretty much any corner of the world. It might be a devaluation in Zimbabwe or situations in Argentina or China. It really creates a more global mindset.”
Another common thread has been the motivation Hyttinen gains working for organisations that have a strong sense of purpose.
“At Network Rail we were all about getting people home safe every day,” she says. “At Tesco it was about serving customers. Unilever’s purpose is making sustainable living commonplace. I think it makes things more interesting when you can relate to the business, understand its dynamics and feel passionate about it.”
Unilever’s ESG credentials are well known. It’s 10 years since former CEO Paul Polman launched the Unilever Sustainable Living Programme (USLP) with an aim to halve the environmental footprint in manufacturing and impact of Unilever products by 2030.
Last year it announced another ambitious pledge: to halve use of new plastics by 2025, followed by further commitments in June 2020 for net zero emissions by 2039 and a deforestation-free supply chain by 2023.
Alan Jope, CEO since January 2019, has said he will sell off brands that don’t serve a clear social or environmental purpose.
EcoACT, a sustainability consultancy, has rated Unilever as the top performer among FTSE 100 companies in terms of its sustainability reporting. And while the company still draws fire on plastics and palm oil use, few can doubt its leading role as an advocate and actor for change across ESG matters.
Indeed, sustainability has always been part of the story. “Sustainability is in Unilever’s DNA. It permeates everything that we do,” Hyttinen says.
As the USLP reached its 10-year mark, Jope introduced the Unilever Compass, an integrated business strategy that embodies ESG through three core principles: Brands with Purpose Grow; Companies with Purpose Last; and People with Purpose Thrive.
“The idea is that there is one integrated strategy that is built around purpose – aiming to drive sustainable business and generate financial returns,” Hyttinen says.
When she moved to the company in 2019, Hyttinen caught the tail end of the corporate world’s first green financing – Unilever’s 2014 green bond.
She attended closing audit meetings that had been set up to track performance against water usage, carbon emission and waste targets – created as part of the original financing and audited by an external verifier.
The transaction was groundbreaking – and justly a source of pride for the team, she explains: “It was very tangible. By measuring something like water usage the team felt they were contributing to better outcomes.
“With hindsight, some of the lessons learnt were that it was quite labour-intensive, particularly for the treasury team. This was a £250m transaction, which in our debt portfolio of in excess of €25bn is not large.
“So, we are mindful that a green use-of-proceeds instrument of that kind isn’t necessarily scalable for an organisation like ours, which doesn’t undertake large capital expenditure projects.”
Meanwhile, the market is evolving. Green bonds have attracted other issuers and have developed. Social and sustainable bonds have become part of the landscape and we’ve also seen the emergence of bonds linked to the UN’s sustainable development goals (SDGs), such as the one issued last year by Italian energy company Enel.
Investors and rating agencies are looking on.
“At the end of the day,” Hyttinen says, “investors are increasingly focused on the ESG credentials of a company. Not just an instrument, but the overall company strategy and sustainability of its activities.”
Last year Hyttinen spearheaded Unilever’s participation in the Standard & Poor ESG rating project, on the basis that traditional credit rating providers are well placed and used to working in a regulated environment.
S&P’s approach – looking not just at numbers and data, but overlaying it with discussions around strategy – makes sense to her in a field that is crowded with independent players and myriad approaches.
Indeed, the lack of harmonisation in the field of external ESG evaluation is an issue. Currently, it is possible to find wide-ranging and even polarised scoring on companies for their ESG standing.
Hyttinen notes: “I think that is where the key unlock will be – when we agree on a consistent harmonised approach on what constitutes strong ESG credentials versus weak.”
Financial incentives also prompt hard questions.
“For corporates to issue a green bond takes time and resources,” Hyttinen stresses. “We experienced that first-hand. It’s more costly for issuers. But at the same time, you have to acknowledge that a green bond is just a proxy.
“There is a desire on the part of asset owners and asset managers to channel their investments into sustainable assets, but there’s a recognition by all parties that one kind of instrument is not the ‘be all and end all’; it ultimately is about the overall strategy.”
Green and sustainable bonds are a success in terms of drawing the attention of investors and the wider public to the possibilities around ethically and environmentally sound investment.
But the idea of ‘polluter pays’, where poorer stewards of ESG pay more for their financing, has yet to yield credible results in Hyttinen’s view.
“In a world with very low yields and very low returns, I struggle with it,” she says. “Without calling out particular issuers or sectors, when you see an issue from, let’s say, a polluting company and see it coming in at slightly elevated spreads and then attracting massive oversubscription, you start to wonder: ‘Yesterday we were saying ESG is important; today someone comes in at a higher spread and suddenly the investors pile in.’ You wonder about the consistency there.”
Similarly, there are challenges around sustainability linked loans and bonds where companies pay, for example, 25bps to the lender or investor when targets are missed, effectively rewarding backers for the failure of environmental or societal aims.
“I’m an economist at heart,” Hyttinen notes, “so ultimately pollution, climate change, emissions – they are all very much a market failure.
“There are not many times when I would say this, but I think regulation will be a key component. You can already see this happening with the development of the EU Taxonomy. This might be the only way as we try to correct these issues.”
In an evolving space, Hyttinen is reluctant to jump on the most immediate responses markets offer. Unilever’s announcement of its plastics target attracted offers to buy or arrange a bond.
“But given our role as a purpose-driven organisation,” she says, “we are very keen to ensure the things that we do are holistic and also scalable.
“In the meantime, I personally take the view that we have a very strong balance sheet and financing position. Access to financing is not a problem for Unilever. We are in a position of strength and it should be more about using that strength for good.”
The contradictions attract heated debate – not to mention initiatives aimed at countering them.
Within Unilever, Hyttinen has formed a working group across finance, sustainability, investor relations and reporting teams to stay connected on the latest developments in ESG and sustainability.
She has also joined an external working group focused on accelerating the integration of the SDGs into corporate finance through the development of innovative sustainable finance instruments.
Unilever has challenged its banking providers to pitch ESG-centred bank deposit products capable of serving as destinations for surplus cash.
Hyttinen explains: “We looked quite closely at the detail and we have declined products that we feel are a little bit too loosely defined, where we feel the bank is just using the deposit for general corporate purposes. There’s more work to be done there.”
Hyttinen has also been assessing the overall sustainability credentials of Unilever’s relationship banks: “For our primary lending group, in our annual review meetings, we specifically asked questions around sustainability commitments and we allocate time to discuss those with the banks – trying to integrate the idea that we want our core banking partners to share our values and commit to principles such as reducing emissions and fighting climate change.
“There are a lot of financial institutions that are genuinely committed to the global principles, putting their balance sheets to work and making some hard decisions around actually excluding certain lending activities.”
There is a sense that debate is becoming more fervid and credible, that heavyweight corporates and banks are aligning around good intentions and that gradually we are getting closer to meaningful actions.
Working for an organisation that is particularly vocal on ESG provides Hyttinen with a strong hand, and she has a positive outlook on change.
“I think you have to be positive,” she says. “It’s a fascinating debate to be involved in, because there are a lot of challenges and an urgent need for action. I think the biggest risk is getting stuck in the debate.”
WHAT I VALUE MOST ABOUT THE ACT IS… how it promotes treasury as a specialist expertise area that is distinct from the wider finance function and supports the development of specific treasury skills through both formal qualifications and ongoing events and networking opportunities.
When I completed my ACT qualifications, I found that although I had a lot of the technical grounding through my banking experience, the courses really helped me understand how it all came together in the practical day to day of a corporate treasury function.
WHAT I LIKE BEST ABOUT TREASURY IS… the wide range and scope of activities you can get involved in, with literally endless opportunities to learn something new.
In addition to managing the smooth running of day-to-day operations, treasury teams are drawn into all kinds of projects and initiatives, which can be anything from financing strategic acquisitions to reviewing a bespoke financing proposal in a local market or setting up bank accounts and documentation for a charity scheme.
Financial markets and instruments are constantly evolving, with ESG and sustainability a new emerging space that treasury teams need to get trained up on.
THE PERSON WHO HAS MOST INSPIRED ME IS… Unilever CEO Alan Jope in the context of his response to the COVID-19 crisis. For 16 weeks straight from March to July, Alan spoke directly to Unilever staff globally on a live video call where he was joined by another senior leader or executive committee member.
Jope opened and closed each call with his own perspectives and tackled the most loaded and emotive questions with an unwavering honesty and conviction. The calls (continuing biweekly after the summer) were a real highlight of each week and made me feel more connected to the management team than at any company I have ever worked for.
2019–present Vice president treasury, Unilever
2015–2019 Head of funding and balance sheet – treasury, Tesco
2013–2015 Head of corporate finance and funding, Network Rail
2005–2012 Executive director, debt capital markets, Nordic corporates, RBS/ABN AMRO
2003–2005 Associate, corporate finance origination, Nordic coverage, DrKW
2001–2003 Analyst, investment-grade debt capital markets, JPMorgan
• AMCT (2015)
• IRS Certificate in Investor Relations (2012)
• MSc Political Economy of Transition (2001)
Liz Loxton is editor of The Treasurer
This article was taken from the October/November 2020 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership