Sustainability: Difference between revisions

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imported>Doug Williamson
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imported>Doug Williamson
(Add additional information and quote: https://www.treasurers.org/hub/treasurer-magazine/what-cfo-should-know-green-finance)
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=====Environmental sustainability=====
'''''Environmental''''' sustainability involves making decisions and taking actions which expressly take responsibility for the impact on the environment, and avoid depleting or degrading natural resources such as soil, water, forests, and biological diversity.
Environmental sustainability involves making decisions and taking actions which expressly take responsibility for the impact on the environment, and avoid depleting or degrading natural resources such as soil, water, forests, and biological diversity.




=====Financial sustainability=====
'''''Financial''''' sustainability is achieved when an organisation is able to earn sustainable financial surpluses and generate cash in the medium and longer-term.
Financial sustainability is achieved when an organisation is able to earn sustainable financial surpluses and generate cash in the medium and longer-term.


For example in order to pay back borrowings, with interest, over time.
For example in order to pay back borrowings, with interest, over time.
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This proposition suggests that there need be no conflict between an organisation’s environmental and financial objectives, when a sufficiently long-term view is taken.
This proposition suggests that there need be no conflict between an organisation’s environmental and financial objectives, when a sufficiently long-term view is taken.
Sustainability is increasingly being used as a component in the purchase of loans/credit facilities. This has led to some credit rating agencies taking into account sustainability principles.
<span style="color:#4B0082">'''''Credit rating'''''</span>
:"European Commission’s Sustainable Finance High-Level Expert Group (HLEG) says that credit rating agencies should “systematically integrate” relevant environmental, social and governance (ESG) criteria into their credit-rating analyses, along with factors related to longer-term sustainability.."
:''The Treasurer, web exclusive, June 2019.''




Revision as of 14:42, 18 September 2019

Sustainability has two important dimensions in treasury and finance, environmental sustainability and financial sustainability.


Environmental sustainability involves making decisions and taking actions which expressly take responsibility for the impact on the environment, and avoid depleting or degrading natural resources such as soil, water, forests, and biological diversity.


Financial sustainability is achieved when an organisation is able to earn sustainable financial surpluses and generate cash in the medium and longer-term.

For example in order to pay back borrowings, with interest, over time.


Historically, it was generally considered that there was a conflict between environmental sustainability and financial sustainability.

Arguably though, it is perhaps only environmentally sustainable businesses which are fully financially sustainable.

This proposition suggests that there need be no conflict between an organisation’s environmental and financial objectives, when a sufficiently long-term view is taken.


Sustainability is increasingly being used as a component in the purchase of loans/credit facilities. This has led to some credit rating agencies taking into account sustainability principles.


Credit rating

"European Commission’s Sustainable Finance High-Level Expert Group (HLEG) says that credit rating agencies should “systematically integrate” relevant environmental, social and governance (ESG) criteria into their credit-rating analyses, along with factors related to longer-term sustainability.."
The Treasurer, web exclusive, June 2019.


See also

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