Treasury Contrarian View: Should Treasury Own ESG Data and Reporting?
Environmental, Social, and Governance (ESG) reporting is becoming a critical expectation for companies worldwide. Regulators, investors, and stakeholders increasingly demand transparency. But here’s the contrarian question: Should treasury—not sustainability or finance—own ESG data and reporting? The Case for Treasury Ownership The Case Against Treasury Ownership A Collaborative Model Perhaps the best approach isn’t treasury owning ESG outright, but treasury playing a critical role: Let’s Discuss We’ll share perspectives from treasurers, CFOs, and sustainability leaders—join the conversation! COMMENTS Ricardo Schuh, Treasury Masterminds Board Member, comments: I believe that ESG should be led by a dedicated professional or function within the organization, given its scope goes far beyond financial reporting. While Treasury can add significant value in ensuring data integrity, governance, and technical alignment with financial markets, ESG encompasses a broader set of dimensions such as environmental metrics, supply chain ethics, and social responsibility. In my view, Treasury’s role should be to support and challenge the ESG function, ensuring that information is reliable, finance-grade, and presented in a way that meets the expectations of banks, investors, and rating agencies. This partnership creates a stronger framework where financial expertise complements, but does not replace, subject matter specialization. From my practical experience, banks increasingly place heavy demands on companies in terms of ESG-related disclosures, particularly when structuring loans, sustainability-linked instruments, or green financing. In these situations, Treasury often acts as the interface with financial partners, but our effectiveness relies heavily on the dedicated ESG team. Their expertise, agility, and ability to provide accurate content, supporting materials, and standardized forms have been critical in meeting external requirements on time and with credibility. This collaborative approach ensures that Treasury maintains its focus on financial strategy while ESG professionals drive the broader agenda, together reinforcing the company’s overall transparency and sustainability positioning. Eleanor Hill, Founder, Treasury Rebel, comments: From what I’ve seen in the market, this very much depends on the company and their organisational structure (including whether there is a standalone sustainability team). Interestingly, a couple of years ago, I did see one or two treasury teams being tasked with ESG oversight and reporting – admittedly quite rare cases. But I haven’t encountered any others since then. The current political climate and rhetoric around ESG certainly isn’t helping, either. If I had to come down on one side, I’d probably say treasury should support ESG reporting rather than own it outright. Treasury teams already have a tremendous amount on their plates and adding full ownership of ESG reporting could risk spreading precious resources far too thinly. It would also require some upskilling in most treasury functions as the ins and outs of a niche area like sustainability can be complex. That said, I do believe that (where they can and want to) treasury professionals have a valuable role to play, particularly in pushing banks and vendors for better reporting on the sustainable aspects of their products and services. Treasury leaders – especially in large organisations – are well positioned to make those demands, given their relationships and the commercial leverage they hold. I’d love to see more treasurers asking for greater ESG transparency and accountability from their counterparties going forward – and this should help increase the value that treasury can bring to ESG reporting. A virtuous circle! Royston Da Costa, Treasury Masterminds Board Member, comments: Treasury should not be the sole owner of all ESG reporting. But Treasury should be a co-owner and the lead steward for finance-linked parts of ESG reporting — especially anything that affects capital markets, debt instruments, financed emissions, financial disclosures, assurance-ready controls, and the numbers that feed investor/creditor decisions. The best practical model is a clear cross-functional (hub-and-spoke) model where Sustainability owns operational ESG strategy and data collection, Finance (CFO/Controllership) owns integrated reporting controls and accounting alignment, and Treasury owns the finance-market, funding and financed-emissions disclosures and assurance controls that relate to capital, liquidity and counterparty exposures 1) Why this question matters to Treasury 2) Key external standards and rules 3) Ownership models — what they look like and how they affect Treasury Recommendation: adopt the hub-and-spoke with explicit RACI for each reporting element (I = Information owner, R = Responsible lead, A = Approver, C = Contributor). 4) Dimension-by-dimension breakdown — who should lead, who should contribute, what Treasury must do I’ll go through the main dimensions and for each say: Lead, Treasury role, Why it matters. A. Strategy & targets (net-zero, ESG strategy) B. Governance disclosures (board oversight, committees) C. Metrics & targets (GHG, KPIs, financed emissions) D. Data collection & systems E. Accounting & financial statement alignment F. External reporting (ESG report, investor presentations, bond prospectuses) G. Regulatory compliance (CSRD, ISSB/IFRS S1 & S2, local rules) H. Assurance & controls (internal and external) I. Investor relations & credit markets J. Capital products (green bonds, SLBs, loans) K. Risk management & scenario analysis (transition & physical risk) L. Incentives & remuneration linkages M. M&A, due diligence & disclosures 5) Practical RACI (example) — core reporting components (Abbreviated; expand for your organisation) 6) Pros & cons for Treasury owning ESG reporting (straightforward) Pros Cons Net: Treasury should own finance-linked ESG reporting and be a core co-owner of consolidated reporting. Not the only owner. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
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Hedging or Gambling: A 300-Year-Old Lesson for Modern FX Markets
This article is written by HedgeFlows “I’m not gambling, I’m hedging!” How many times have you heard this in the world of Foreign exchange? The confusion between hedging and speculation isn’t new—it nearly destroyed the insurance industry in the 1700s. The Modern Confusion Walk into any corporate treasury department today and you’ll likely hear heated debates about FX hedging strategies. Some CFOs swear by natural hedges and forward contracts. Others worry their treasury teams are essentially running a side business in currency speculation. The line between prudent risk management and gambling can seem frustratingly blurry. Sound familiar? This exact same confusion plagued London’s financial markets 300 years ago—and the solution developed then holds the key to understanding hedging today. Lloyd’s Coffee House: When Insurance Met Gambling In the 1750s, Edward Lloyd’s Coffee House had become London’s center for maritime insurance. Ship owners could protect their investments, merchants could secure their cargo, and underwriters could earn premiums for accepting these risks. It was the birth of modern insurance—and it was working beautifully. Until it wasn’t. By the 1760s, the coffee house was overrun with gamblers masquerading as insurers. When newspapers reported that prominent figures were seriously ill, bets were placed at Lloyd’s on the anticipated dates of their death. People with no connection to ships were taking out “insurance” policies on vessels, essentially gambling on whether they’d sink. The line between legitimate risk management and pure speculation had completely disappeared. The respectable underwriters were horrified. As one historian noted, Lloyd’s had become infiltrated by “persons of dubious character, particularly inveterate gamblers” who threatened to bring discredit upon legitimate business. Parliament’s Brilliant Solution: The Insurable Interest Doctrine In 1745, Parliament passed the Marine Insurance Act—the first major intervention in insurance law. The solution was elegant in its simplicity: you can only insure risks you already face. The Act established that insurance was only valid when the policyholder had a genuine “insurable interest”—a pre-existing financial stake that would result in actual loss. No more betting on random ships. No more death pools disguised as life insurance. If you didn’t already face the risk, you couldn’t insure against it. The Life Assurance Act of 1774 extended this principle, banning life insurance policies where the policyholder had no legitimate connection to the insured person. The message was clear: insurance protects existing risks; gambling creates new ones. The Modern Application: FX Hedging vs. Currency Speculation This 300-year-old principle perfectly explains the difference between FX hedging and currency speculation: True FX Hedging: Currency Speculation: Just like the 1745 Act required demonstrable insurable interest, legitimate FX hedging requires demonstrable currency exposure. No underlying business risk? Then it’s speculation, not hedging. The Ironic Twist: “Hedging Your Bets” Was Gambling Slang Here’s the historical irony that explains so much confusion: the phrase “hedging your bets” actually originated in 17th-century gambling houses, not agricultural fields or financial markets. The first recorded use appears in the 1670s, describing a betting strategy where gamblers would place offsetting wagers to limit losses—essentially the gambling equivalent of what we now call hedging. The agricultural metaphor of protective boundaries came later, as the financial meaning evolved. No wonder people are confused! The term literally started as gambling terminology before becoming a cornerstone of risk management. We’ve come full circle from gambling slang to legitimate risk management and back to gambling again when misapplied. The Practical Test: Ask These Questions Before any FX transaction, ask yourself the Lloyd’s Coffee House test questions: If you can’t answer these clearly, you’re probably speculating rather than hedging. Why This Matters More Than Ever The Lloyd’s Coffee House crisis teaches us that the distinction between hedging and gambling isn’t academic—it’s fundamental to market integrity. When speculation masquerades as hedging: The 79 respectable underwriters who broke away from Lloyd’s in 1769 understood something crucial: true professionalism requires clear boundaries between risk management and speculation. The Bottom Line The next time someone claims they’re “hedging” a currency position, remember Lloyd’s Coffee House. The distinction that saved the insurance industry 300 years ago remains the gold standard today: Insurance and hedging protect risks you already face. Gambling and speculation create risks you don’t need to take. The irony that “hedging your bets” started as gambling slang just proves how easily the lines can blur. But the principle established in 1745 remains crystal clear: link it to underlying risk, or call it what it is—speculation. The ghost of Edward Lloyd would be proud to see his coffee house principles still working in modern treasury departments. The question is: are you following them? Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.