Global Treasurer, Aviva on ESG MMFs
U.K.-based publication Global Treasurer along with Aviva Investors published, "Striving Towards a Green Treasury: Integrating ESG into cash and liquidity management." It starts, "Despite a slow start towards treasurers fully embedding ESG into their cash and liquidity management strategies, signs show that this was pushed back by the pandemic and is now firmly back on many corporate agendas. In fact, our survey found that only 13 percent of respondents believe that ESG and climate-related issues are now firmly embedded in their cash and liquidity management strategies, with the rest admitting that more must be done. Nearly 70 percent did, however, acknowledge that achieving sustainable outcomes is an influential factor when investing cash, with some companies being proactive in embedding ESG into their cash and liquidity management strategies." It continues, "Meanwhile, according to Anthony Callcott, global head of liquidity client solutions at Aviva Investors, although there has been a growing momentum towards embedding ESG for many years, it was suppressed by the pandemic. Today, interest in adopting it in cash and liquidity management is closer to 30-40 percent." On Europe's SFDR, they state, "Our survey also considered the importance corporates place on funds achieving compliance with Article 8 under the EU's Sustainable Finance Disclosure Regulation (SFDR), and whether they would write Article 8 and 9 into their own investment guidelines. Here, it found that the majority of survey respondents (60.8 percent) do place value on an Article 8 investment fund rating, with the proportion that did not attributing this to the need for a more defined SFDR framework for Article 8 funds. Consequentially, 41 percent of respondents said they would write Article 8 and 9 into their investment guidelines, while the rest said they would not (59 percent)." The piece notes, "Here, it found that security, liquidity and yield are considered more important than ESG when it comes to overall investment strategies, with security coming out on top. Liquidity, ranked second, achieving about half of the 'importance' level attributed to security, followed by yield and then ESG performance, with similar levels of importance attached to both.... MMFs were always set up to be seen as a viable alternative to bank deposits as they met the three basic requirements of security, liquidity and yield as well as offering some diversification, but today ESG is coming through as a fourth factor in investment strategies. This includes ensuring an Article 8 classification under SFDR." It adds, "Our survey examined where corporates are investing their short-term cash in today's low interest rate environment, and the impact of central bank tapering. Here, it found that many companies have left their short-term investment strategies largely unchanged, although some have diversified their investments slightly. 'We did shorten maturities in our portfolio during Covid-19 and now that interest rates are rising, and the Bank of England is expected to increase rates again, we are staying with short maturities,' says [Tideway's] Faden da Silva, stressing that her treasury invests cash primarily in MMFs, as well as having bank deposits, and that little has changed in its approach." In related news, Fitch Ratings published a "U.S. ESG Money Market Fund Update (Q1'22)," which says, "On Feb. 28, 2022, Dreyfus announced a partnership with Howard University with a new Black Opportunity for Learning and Development diversity and inclusion share class for the Dreyfus Government Cash Management Fund, according to Fitch Ratings. This is the first announcement in the diversity and inclusion space since the SEC announced its money market fund (MMF) reform proposal in December 2021. As of Mar. 31, 2022, total U.S. environmental, social, and governance (ESG) MMF assets under management (AUM) were $9.4 billion. The AUM increased by $396 million in 1Q22, or 4.4%, while overall prime MMF AUM increased by 4.7%." (See too Crane Data's March 1 News, "Dreyfus Announces New BOLD D&I Share Class with Howard University." Contact us to request our latest "ESG & Social MMFs" listing.)
