ESG: Green Finance with Trinity Treasury Management System

ESG: Green Finance with Trinity Treasury Management System

Has your company already joined the ESG trend and is trying to arrange financial transactions in such a way that a closer look is taken at their effects on the environment (E = Environment), the social environment (S = Social) and future-oriented corporate management (G = Governance)?

Many companies are currently working on the determination of their sustainability rating and ways of improving it. It isn’t just the numbers that determine a company’s standing on the capital market. The so-called ESG criteria are increasingly influencing the possibility of competitive financing.

In the Trinity TMS, companies can manage the ratings on the one hand, but also classify their financial transactions as ESG-compliant and create corresponding portfolios on the other. Planning data can be categorized as “sustainable” if they can be assigned to specific environmental projects. In order to comply with corporate governance requirements, all cash flows can be verified audit-proof and with exemplary transparency with Trinity.

“Best in class” companies always know their financial situation and therefore benefit even more from good conditions than non-transparent companies. Of course, Trinity cannot guarantee you a “positive screening”, because qualifying for a green investment includes far more ESG criteria, but Trinity can actively support you in doing business more transparently and sustainably and thus increasing your chances of getting on the list of “green investors”.

Background

As an advocate for responsible investment, the PRI (Principles for Responsible Investment) initiative was founded in 2006 with the support of the United Nations. Since then, nearly 3,000 other companies have joined, collectively managing more than $ 100 trillion in assets.

The board, including some funds and insurance companies from Europe, have committed to complying with six principles by:

  1. Incorporate ESG issues into the investment analysis and decision-making processes;
  2. Be active shareholders and incorporate ESG issues in their investment policy and practice;
  3. Encourage companies and entities in which they invest to make adequate disclosures on ESG issues;
  4. Promote adoption and implementation of the Principles in the investment industry;
  5. Work together to increase their effectiveness in implementing the Principles;
  6. Report on their activities and progress in implementing the Principles.

This makes clear that companies looking for capital should be able to measure and demonstrate the ESG criteria with regard to environmental, social and good corporate governance.

Corporates that do not have a sufficient sustainability rating are increasingly being excluded from further consideration by PRI financiers as a suitable investment property.

Therefore, European capital market-oriented companies, have had to prepare special sustainability reports since 2017 if they wanted to get access to low-interest capital. In it, they report on their main developments in the areas of environmental, employee and social issues, but also on the respect for human rights and the fight against corruption. To ensure comparability, they are based on the Global Reporting Initiative (GRI).

The environmental sustainability rating will be assigned by, e.g. Standard & Poors, Moody’s or Fitch. Contrary to the known procedure for credit ratings, however, they do this on the instructions of the investors and not at the request of the borrowers or issuers.

Since local providers are more familiar with national environmental regulations, numerous new service providers on this topic have established themselves in the countries.