Unilever: Leading the way through ESG collaboration

As the third-largest consumer products company in the world in terms of revenue, Unilever operates roughly 400 global and local brands, including 13 billion Euro brands such as Dove, Lux, Axe, Rexona, Knorr, and Lipton. They’ve used their standing in the marketplace to become a force for good in environmental, social and corporate governance (ESG), actively working towards a green agenda for the last decade. Today the company takes steps to support the UN Sustainable Development Goals, which includes improving the health and well-being of people worldwide and working toward net-zero emissions in the making and use of their products by 2039. Unilever is also dedicated to enhancing millions of people's livelihoods with fairness in the workplace and inclusive business practices, most recently announcing further equality and inclusion measures to support more SMEs in its extended value chain, including minority-owned suppliers.

Treasury supporting a green agenda

According to Tuomas Raesaenen, Treasury Manager for Unilever, the company’s commitment to ESG trickles down to every area of the organization – including Treasury. “The goal is to operate in such a way that everything we do as an organization is consistent with our corporate purpose,” says Tuomas. “From a finance perspective, finding ways we can align with the corporate sustainability goals can be a challenge.”

They began by funding green initiatives, issuing their first green bond in 2014. However, Unilever also wanted to do something sustainable with their cash– and that’s really where they found a lack of opportunity. “We were looking for a vehicle that would help us hit our targets of safety and yield but at the same time support green investments and give us access to liquidity if we needed it.” So Unilever turned to their banking partners, including HSBC, and challenged them to find or create a solution that would meet their needs.

Marking a world of firsts together

With a long relationship history, HSBC has a good understanding of Unilever’s needs. “The bank was very supportive of our goals, and being in many of the markets we operate in was critical,” says Tuomas. “The team really did their homework and delivered a solution that was pretty polished from the start, not just some ideas of what they might be able to do." This allowed Unilever to work with HSBC to further refine the solution, which had to ensure full transparency. "The reporting was critical. We needed an audit trail to evidence that the cash was going to fund green priorities and that the deposits were 100% sustainable.”

The result was a series of firsts in the industry. HSBC developed the first EUR 31-Day Notice Account green deposit in the UK to accommodate Negative Credit Interest (NCI) – and Unilever became the first UK headquartered global corporate to make an initial deposit. HSBC also brought to market an INR green deposit in India, as well as VND and USD green deposit in Vietnam, in which Unilever placed the initial investment. This made the bank the first to achieve a global approach to green deposits by using their extensive network to go green in the UK, India, and Vietnam simultaneously. “Many green deposits are concentrated in developed markets,” says Tuomas. “The fact that HSBC has included emerging markets is very helpful for us, considering our broad geographical footprint.”

Beyond the cash deposit solutions, Unilever was also the first to agree to work with HSBC to trial a digital and automated self-service experience. This gave them the ability to transfer deposits themselves for multiple geographies, including emerging markets, using their existing channels.

Collaboration leads to a better solution

“One of the reasons we challenged our banking partners was not only to meet our own sustainability goals,” says Tuomas. "But really to carve a path to help others see how Treasury can support corporate sustainability safely and profitably." The collaboration between Unilever and HSBC, he says, is an example on how to develop solutions that create a competitive yield whilst delivering positive impact towards our ESG ambition. "Together, we are investing in the future."

According to Gordon Elliot, Regional Sector Head, Global Liquidity and Cash Management, HSBC, the time is precisely right. “A reaction to the COVID pandemic we didn’t expect is that the green agenda seems to have grown in importance,” he says. “As we did a series of webinars in 2020 around working capital, Brexit and COVID-19 – green initiatives and ESG kept coming up. The pandemic seems to have brought focus on what we can all do to protect the health and well-being of the entire planet.” Tuomas agrees that these issues are increasingly top of mind for corporates. “More and more, clients want to do business with companies who are focused on sustainability.”

That's why it's crucial for banks and corporations to work together, says Michelle Arundale, Director, Sales, Global Liquidity and Cash Management, HSBC. "When we team up with clients, we can make a real difference," Michelle says. "Unilever is that kind of client, working with us over the years to develop several scalable new products, including our green deposit offerings, that others in the marketplace can now take advantage of."