Digitalisation is not only changing financial products and services, it is also shaping new roles and responsibilities of internal teams, pushing businesses to rely more heavily on treasurers to manage their company’s environmental, social, and governance (ESG) KPIs, according to speakers at the ACT Middle East Treasury Summit.
As sustainability becomes more significant, especially this year, with the International Sustainability Standards Board (ISSB) releasing its first global reporting systems and the EU implementing mandatory sustainability reporting, integrating ESG targets with finance is a growing trend. As a result, organisations are increasingly recognising that environmental and ethical practices play an integral part in a company’s long-term success, with ESG factors impacting the company’s bottom line, through reduced operational costs, improved energy consumption, or increased consumer loyalty.
The ESG KPIs have to be business-relevant as well, so it makes sense for the treasury to be involved
“We have been doing lots of sustainability initiatives for a long time, but the question came up – how can finance help in the journey?” asked Shabbir Ahmad, head of treasury for the major Dubai-based retail and hospitality-focused Landmark Group (above, second on right), during the opening day of the ACT Middle East Treasury Summit 2023, held in Dubai.
“We had a vision that anything we implement has to be sustainable, so now we have a tie-up with a third party that ranks suppliers based on their ESG,” he said. “And we speak to the banks to get preferential pricing based on our suppliers’ ESG. The ESG KPIs have to be business-relevant as well, so it makes sense for the treasury to be involved.”
In 2020, 53% of green claims were misleading, whether intentional or not
Ahmad was speaking during a How can a treasurer support their business’s ESG journey? panel discussion at the summit. Also on the panel was Nader Aboushadi, group treasurer for Dar, a multinational with design offices in Amman (Jordan), Beirut (Lebanon), Cairo (Egypt), London (UK), and Pune (India), who said that Dar’s ESG KPIs are also handled by treasury staff in his company.
However, sustainability reporting is handled by specialists – and for good reason: “Reporting is important and if you don’t have real professionals working on it, and you just leave it to finance, how can you be sure you’re not greenwashing?” asked Aboushadi.
Fellow panellist Vishal Tikyani, executive director and cash product lead, UAE, for banking group Standard Chartered, stressed the increasing prevalence of rules and regulations designed to ensure a company’s ESG figures are accurate and compliant. He said that businesses can fall foul of greenwashing without realising, if they are not careful: “In 2020, 53% of green claims were misleading, whether intentional or not. If you are claiming a product is sustainable you need to ensure the supply chain is also sustainable and there is a proper corporate governance around it, so you stay away from greenwashing. Businesses need to properly educate their teams of what greenwashing is and what ESG principles are to stay clear of it.”
The two-day event held at Dubai’s Madinat Jumeirah, opened with remarks from Annette Spencer, chief executive, ACT, who has been in her role since September. She said: “With instability, high inflation and trade wars affecting much of the world, the Middle East remains a centre for opportunity and development with sustained growth and progress across society and businesses alike, both in technological advancement and the transition to net zero.”
Other panel discussions on the conference’s first day ranged from topics including: Treasury in new age business, Managing working capital – what should a treasurer consider? and Risk management in the age of volatility: Strategies for identifying and mitigating financial risks. In total, 730 people attended the ACT Middle East Treasury Summit 2023, with 69 speakers taking to the stage.
Nick Watkins is a freelance business journalist based in Dubai