Gathering Creates an ‘Avalanche of Green Questions’

The Polish Corporate Treasurers Association (PCTA) held its 28th annual meeting in October in Józefów, near Warsaw, which focused on ‘green trends in financing’.

More than 100 PCTA members, partners, guests, and bank representatives gathered for the first time since the pandemic and livestreams were also available for those unable to attend.

The chosen topic was green finance. We are all aware of the importance of environmental protection and the wide range of green goals and challenges that companies and individuals should concentrate on, regardless of location, types of business and personal circumstances.

We are also aware that green issues can be seen as both a challenge and an opportunity for businesses.

The European Commission identifies three main actions for sustainable economic growth:

• To focus channeling capital flows towards environmentally and socially friendly investments.
• Integrating sustainability into risk management.
• Promoting transparency and increasing incentives to implement long-term strategies for building corporate value.

The task of the European Green Deal is to shape the economic policy of the European Union (EU) in such a way as to skilfully combine the goals of sustainable development with the wellbeing of society. Through the activities included therein, the EU will strategically support the implementation of the 2030 Agenda for Sustainable Development. In connection with the introduction of the European Green Deal, the need to redefine the current functioning of the social and fiscal policy may be a challenge.

We are seeing that investors now pay great attention to climate and social issues when making decisions regarding business operations. These include financing, the green elements of day-to-day functions such as marketing and business strategy, and policies relating to reducing energy consumption, eliminating plastic in the workplace, and customer service.

Banks are increasingly demanding to see environmental, social, and governance (ESG) issues addressed in project funding applications.

The meeting saw constructive discussion between members and bank representatives on the topics of green financing and ESG. Key points included:

• Sustainable Development Derivatives. For example, vanilla derivatives (Interest Rate Swaps, Forward Rate Agreements, Cross-Currency Interest Rate Swaps), a separate ESG component in the price and a reference to a specific key performance indicator (KPI) or hedging of the underlying, which may or may not be related to ESG and may take the form of a separate contract.
• ESG rating spectrum, credit rating and ESG rating (sustainability instruments can be linked to an external ESG rating or internal KPIs).
• Green financing in the context of supporting companies in their transformation to a sustainable development model and documentation of green financing based on ESG and sustainable indicators.
• The evolving role of corporate treasury in delivering ESG strategy and ESG in capital expenditures (CapEx) financing.
• Energy Efficiency Financing Programme – the main challenges in financing green energy and considering where the green energy financing market is going.

The wide-ranging topic of the meeting created an avalanche of questions, so we will address these issues again next year, during which the PCTA will celebrate its 15th anniversary.

The whole year will be dedicated to celebrations and events held to share treasury knowledge and support the PCTA community, through participation in sports and social activities. Green topics will continue to be a theme at PCTA events for some time to come.

By Aleksandra Filipowicz, Secretary, EACT and Board Member, PCTA