Have you already joined the ESG trend and try to arrange your financial transactions in a way that takes a closer look at their impact on the environment (E = Environment), the social environment (S = Social) and forward-looking corporate management (G = Governance)?
Many companies are currently intensively engaged in determining their sustainability rating and ways to improve it. It is no longer just the pure numbers that determine a company's standing on the capital market. The so-called ESG criteria are increasingly influencing the possibility of cost-effective financing.
As an advocate for responsible investment, the PRI initiative (Principles for Responsible Investment. www.unpri.org) was founded back in 2006 with the support of the United Nations. Since then, almost 3,000 other companies have joined, which together manage more than 100 trillion USD in investment assets. The signatories, including some funds and insurance companies from Germany, have committed themselves to adhering to six principles by:
- integrating ESG issues into investment analysis and decision-making processes
- being active shareholders and consider ESG issues in their investment policies and practices
- encouraging companies and entities in which they invest to provide adequate disclosure on ESG issues.
- driving the acceptance and implementation of the principles in the investment industry
- working together to increase their effectiveness in implementing the Principles
- reporting on their activities and progress in implementing the Principles
This makes clear that companies seeking capital should take to heart and be able to demonstrate ESG criteria with regard to the environment, social issues and good corporate governance. This is because corporates that do not have a sufficient sustainability rating are increasingly being excluded from further consideration by PRI lenders as suitable investment objects.
Since 2017, European capital market-oriented companies have had to prepare special sustainability reports if they want to access low-interest capital. In it, they report on their key developments in the areas of environmental, employee and social concerns, but also on respect for human rights and the fight against corruption. To ensure comparability, they are guided by the German Sustainability Codex (DNK) or the Global Reporting Initiative (GRI).
The environment-related sustainability rating is issued by the well-known agencies, e.g. Standard & Poors, Moody's or Fitch. Contrary to the familiar procedure for credit ratings, however, they do this on the instructions of investors and not at the request of borrowers or issuers. As local providers are more familiar with national environmental regulations, numerous new service providers have also established themselves in the countries on this topic.
In Trinity TMS, companies can manage ratings on the one hand, but also classify their financial transactions as ESG-compliant and form corresponding portfolios. Planning data can be categorised as "sustainable" if, for example, they can be assigned to specific environmental projects. And in order to comply with corporate governance requirements, all cash flows can be verified with Trinity in an audit-proof manner and with exemplary transparency. "Best in Class" companies always know their financial circumstances and are therefore more likely to benefit from good conditions than non-transparent companies.
Trinity is not able to guarantee you a "positive screening", because qualifying for a green investment involves far more ESG criteria than a treasury system can provide. But: Trinity can actively support you in operating more transparently and sustainably and increase your chances of getting on the list of "green lenders".