00;00;00;21 - 00;00;35;01
Unknown
What are Treasurer's main priorities and concerns for this year? Is artificial intelligence the hottest topic in Treasury management? And what is the impact of so-called FX narratives? Welcome to CurrencyCast! My name is Agustin Mackinlay, I’m the Senior Financial Writer at Kantox and your host. In this episode, we have the pleasure to welcome Eleanor Hill, Treasury storyteller, podcaster, editor, moderator, innovator. Eleanor Hill,
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Unknown
a very warm welcome to you and thank you for joining us in this episode of CurrencyCast. Mack, thank you so much. It's a real pleasure to be here, even if it's a little bit uncomfortable for me to be on the other side of the microphone, not in the interviewing chair this time, but so great to be here with you.
00;00;52;26 - 00;01;23;22
Unknown
And I know we've got loads lined up to chat about. That's all right. Well, Eleanor Hill, needs no introduction. She's a well-known figure in the global Treasury community, but let's ask her nonetheless. Eleanor, please introduce yourself to our audience. Thank you, Mark. So as you said, I am known as the Treasury Storyteller now. So this is my own company, which I've been running since September 2024 doing content creation and getting Treasury stories out into the world.
00;01;23;22 - 00;01;50;06
Unknown
But most of you will probably know me from my previous role. I was editor of TMI, so Treasury Management International, for six years. Also worked as editor of Treasury Today, and I've been writing about Treasury for 17 years now. Even though I have a degree in French and Italian. So nothing to do with Treasury or Finance. But I love working in this world and there's always a really good story to tell.
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Unknown
All right. Let's start our discussion, Eleanor. Leaving AI aside for a moment, what do you see as the priorities for treasurers this year? Yeah. Mack, there's so much going on, isn't there. I mean there always is. But like you say, we’ll come to AI in a minute. Obviously, that is a big thing. I think the fundamental priorities in Treasury actually probably don't change that much from year to year.
00;02;18;01 - 00;02;56;05
Unknown
There's always those underlying priorities. The fundamentals, cash and liquidity, working capital, those will always be there. There's obviously little things that change. There's big things that change as well. Regulatory issues. Then we've got the election outcomes from 2024. So the geopolitical environment is changing, it's a real challenge. With Trump's victory in the US, treasurers have got a landscape of heightened protectionism, there’s a shifting trade landscape, reshaping supply chains, it's impacting liquidity planning and of course, FX all rolled into that.
00;02;56;08 - 00;03;15;22
Unknown
So there's a lot of volatility around, the question of the dollar and its role as a reserve currency. How is that changing? We've also got things like CBDCs out there developing. So there's so much going on for treasurers to think about. And I think it does come back to those real fundamentals. It's those things that we talk about all the time.
00;03;15;22 - 00;03;41;23
Unknown
It's resilience, it's agility, it's proactive liquidity management and a lot of that also feeds into the tech discussion because there are all of these technologies out there that are developing that are coming on, that are becoming more accessible, that can help treasurers to do this. But of course, those things like and particularly in the FX space, it's looking at being on top of your hedging strategies, which I'll know we'll talk about a little bit more.
00;03;41;23 - 00;04;03;25
Unknown
So it's again, it's the Treasurer wearing all of these different hats. It's something that we've got used to the Treasurer being much more strategic, being much more stretched across different areas. I'd also throw in ESG in there, which we might have time to talk about a little bit later, but it's I'm hopeful for 2025. So for this year it will make a bit of a resurgence.
00;04;03;25 - 00;04;34;24
Unknown
I think it was a little bit quiet in 2024, but that's my quick rundown of things. All right. Look, when we discuss priorities for this year, sometimes those surveys present them as if we could neatly make a separation between priority number one, number two… And now we're discussing this with, among others, with François Masquelier and doubt that you can neatly separate those priorities one from another.
00;04;34;26 - 00;05;09;19
Unknown
But let's discuss a little bit more the place of foreign exchange risk management. On the one hand, we have some surveys like EACT that put foreign exchange risk management in a, maybe, in a not as a top priority. On the other hand we have more global services like the HSBC financial risk survey for 2024 that says well, is that top priority as 47% of CFOs and treasurers see that way.
00;05;09;19 - 00;05;36;12
Unknown
So what do you think? So what are treasurers' views this year in terms of the role and importance of foreign exchange risk management? Yeah, it's such an interesting question and when you get to the survey stats, there's always contradiction somewhere to be fair. To be clear, I love a good survey, I really do. I think they're great. I think they can give you some amazing insights, but it depends so much on the respondent pool.
00;05;36;15 - 00;06;00;23
Unknown
You know, if you got 96% of people saying their favourite colour is red and then it turns out you did the poll outside a Manchester United match, you know, this is how things happen. I think you have to take them with a little bit with a pinch of salt. As much as they give a barometer of what's going on in the market, and as you say, so many of those trends overlap and intertwine that then it's not necessarily a clear one, two, three.
00;06;00;27 - 00;06;26;13
Unknown
For me, from the conversations that I had last year and the conversations that I'm starting to have this year, FX risk is absolutely critical concern for Treasurers. I would say its prominence obviously depends on the company, its operational model, its market exposure. But there's so much more cross-border business happening these days. It's so easy with e-commerce, with marketplaces that people have exposures that they didn't have before.
00;06;26;13 - 00;06;49;01
Unknown
We've also got the shifting supply chains that I spoke about earlier. We get to the bigger corporates. They've quite often got very well-established hedging strategies, you know, but they've also got a lot more geopolitical uncertainty. So they're rethinking those. The HSBC data, I think probably resonates with Treasurers operating globally. It's got all of those unpredictable FX swings going on.
00;06;49;03 - 00;07;10;21
Unknown
Some of the smaller companies that I speak to are now finding they've got a lot more FX exposure than they used to have, specifically for the reasons I mentioned. That they're just dealing with counterparties in new countries and new currency is unavoidable, all part of expanding, but they don't have the resources in-house to manage it or the knowledge to in-house to manage it.
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Unknown
So they're increasingly turning to technology. And I, you mentioned that, I you know, I travel a fair bit for work. And I was in India last year and we were running a panel on hedging and there this is kind of maybe a little bit behind what we would have in Europe in terms of where they are with hedging.
00;07;31;12 - 00;08;03;24
Unknown
And there's a lot of discretionary hedging still, rather than more hedging, but a real keen interest to implement some of those automated hedging strategies, leveraging data analytics, a lot more, and also aligning FX management with broader liquidity plans to ensure you've got adequate buffers, etc., etc.. So, seeing real focus among all sorts of companies and all across all countries really on just getting a better handle on what their FX exposures are and how they can manage them in various different ways.
00;08;03;24 - 00;08;34;23
Unknown
But definitely see tech coming into the picture more and more, which I'm sure will be nice for you to hear. But I mean, what are you seeing from this side of things? Yes, well, absolutely would say, just like you mentioned, on the one hand, maybe the small to medium-sized companies getting more exposure to currencies either on the contracting side or on the revenue side or on both sides,
00;08;34;23 - 00;09;20;06
Unknown
indeed. And that's a major trend. But we also see amongst the large companies you mentioned that they have their FX hedging strategies already well in place, and that is the case as well in terms of their policies. But maybe that luck is still in on so improvements in terms of automation. To give you an example, I still see many companies among the largest ones saying that a good layered hedging program starts with or goes from a 20% hedge ratio to an 80%, sorry to a 60% and then to an 80%.
But
00;09;20;06 - 00;09;52;05
Unknown
that's completely arbitrary. And that was in an age before those automated tools like currency management automation and maybe others allow you to calibrate your hedging with much more precision. So, yes, indeed, we see those trends at play. Eleanor, let's discuss a little bit AI in Treasury management. I remember a couple of months ago the CFO of Palo Alto Networks in California.
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Unknown
stated that because in finance we strive for precision that they had not seen AI or Gen AI really so having an impact in Treasury operations. But things seems to change very, very fast. I was there last year in June 2024 in Brussels, and I think you were moderating this discussion, when the Treasury team at ASML, the Dodge Semiconductor Company, literally mesmerised the audience with the presentation of a tool that would allow them to improve their cash flow forecast accuracy from about 70% to 96%.
00;10;46;05 - 00;11;28;29
Unknown
So I would start with the following question, a very general one. I think we both read Ethan Malec’s book Co-Intelligence. And what is Gen AI, Eleanor, and tell us in the broadest term are we going to all become cyborgs ofl sorts? Is a great question. I mean there's so much going on with AI and Treasury generally you're right and that the ASML case was amazing and they won all sorts of awards for it. And I highly recommend that anyone listening has a good look on the internet for it. Is on my former employer team TMI’s website.
00;11;29;02 - 00;11;52;03
Unknown
But it's very interesting that's various different branches of AI that it's worth being aware of and machine learning comes into that. And there's a lot of terminology that's thrown around. Sometimes it's useful just to have the basic understanding. Sometimes you just need to know what it can do for you. GenAI You ask what the definition of, is a branch of AI that's essentially capable of creating content.
00;11;52;03 - 00;12;17;18
Unknown
So that might be text, it might be images, it might be writing code. So you can ask generative AI engine, so like ChatGPT or we've got Claude, they can write Python code for you. It might not always be perfect, but it can do these kinds of things for your needs. It learns patterns from large datasets. It's slightly different from the precision AI and the predictive AI, which focuses more on the automation activity in tasks.
00;12;17;20 - 00;12;41;15
Unknown
But it's all about opening the door to creativity and problem-solving. And there's so many different ways that Treasurers can apply it. You can ask it to write a Treasury policy for you. It might not be 100% and you can tweak it afterwards. But I know someone who's done it and it worked very well and there's various other things you can use it for, like scenario generation, you can use it for presenting.
00;12;41;15 - 00;13;03;07
Unknown
We'll talk all about that a little bit more later. So I wanted to come back to your cyborg comment. So this comes from for free, from Professor Ethan Malec, who's a great person to follow on LinkedIn, by the way, if you want to know about AI. And he has this sort of theory that there's different ways that you can start to use an AI for work, particularly.
00;13;03;09 - 00;13;26;09
Unknown
So the two different ways are you become a centaur or a cyborg. So centaur, I'm sure everyone now is the mythical creature and it has the human torso and then it has the body of a horse. And there's a very clear distinction between those two parts. So the analogy there for using AI is that you've got kind of a strategic division of labor.
00;13;26;11 - 00;13;49;09
Unknown
So you have the AI doing some tasks and the human doing other tasks and they don't really meet and intertwine. And then the cyborg, which I'm sure we all have a picture in a head from sci-fi, that kind of thing is very much a blend of a machine and a person, so it really integrates the AI and the human side of things.
00;13;49;09 - 00;14;08;26
Unknown
So it's not just delegating tasks to A.I., it's really intertwining those efforts, and it's kind of the embodiment of what the trend that we see, which is called human plus AI. So it's almost, it's using AI to enhance your human skills and to make you better at work. And there’s all kinds of different ways that you can do this.
00;14;08;26 - 00;14;30;05
Unknown
And in Treasury, you can use it to look at your cash flow forecast. You can use it to automate reporting, optimise hedging strategies. But ultimately there's always still a human in the loop. And I think that's the really important thing when you're looking at AIs that you've got to have that responsibility and accountability and a backstop. So that's where the blend comes.
00;14;30;06 - 00;14;57;02
Unknown
But it's a fascinating read that book for anyone who hasn't read it. Ethan Malec's latest book. Just have a look at it, have a read. There's all sorts of great stuff in there about. Yes, I fully agree, though, Eleanor, you travel across the world, you come from well, you've been to the Middle East, to Asia, to India, to so many places.
00;14;57;04 - 00;15;26;11
Unknown
Are perceptions different according to what part of the world you are in, regarding the use of GenAI in Treasury operations? Yeah, I am. I see actually a lot more interest in AI generally, including Gen AI, in the APAC region. In India, it was such a hot topic when I was there last year. Everyone is interested in how to leverage it properly.
00;15;26;14 - 00;15;53;14
Unknown
I would say within some of the more Western European countries there are a few treasurers who are really far ahead. They're really embracing it, getting on with it. I see a lot more skepticism. I don't know if that's kind of the European mindset, particularly looking at stereotypical countries like the UK. Some of the UK treasurers I speak to are maybe a bit more cautious about adopting AI.
00;15;53;16 - 00;16;26;12
Unknown
And there's one Treasurer I speak to from Germany who likes things to be very rigid and set out in a certain way, and I think AI it's potentially a little bit scary for them. So I do see some differences between regions. I think it's also very different between personal use and business usage. So I looked at some stats from last year from Forbes and the adoption rate for AI for organisations actually highest in India, as I mentioned.
00;16;26;15 - 00;16;55;10
Unknown
Yeah, 59% and then followed by UAE, then Singapore, then China, and then Spain and France and all the rest are kind of quite far down. So it's really interesting. I think emerging markets also, you know, like we see with other technologies, they quite often leapfrog what we've done in the Western world. So some interesting things going on with AI in LatAm and there's various areas of innovation where it's all bubbling up.
00;16;55;10 - 00;17;17;24
Unknown
So I don't think it's unique. I don't think it's sorry, I don't think it's uniform in terms of how it rolling out. I definitely see those areas of innovation, but absolutely, I think everyone is on board with the fact that AI is coming and is a transformative force for sure. And that's right. That's really interesting that global view.
00;17;17;24 - 00;17;54;26
Unknown
Now, tet's go back a little bit to that last session at the EACT summit when the public was so, got so enthusiastic about those tools that it would allow for more precision in cash flow forecasting. And I say this because at Kantox we have a somewhat out-of-consensus view about the importance of having super accurate cash flow forecast when it comes to foreign exchange risk management.
00;17;54;26 - 00;18;32;26
Unknown
And that's because the programs that we create, either micro hedging programs for programs for firm sales or purchase orders or invoices, or even programs to defend the budget rate and layered hedging programs, well, they handle the problem of cash flow forecast accuracy pretty well. So leading that aside for a moment, tell us what we already mentioned a little bit, but give us a little bit more detail about all the potential applications in Treasury management.
00;18;32;28 - 00;18;51;10
Unknown
Yeah, you know what? You're so right, Mack, that everyone focuses on the cash forecasting. It's the thing that I think for as long as I've been writing about Treasury, everyone's been complaining about their forecast, everyone's been trying to solve it. So I kind of understand where they're coming from. They're looking at AI as a silver bullet, but I like a non consensus view.
00;18;51;10 - 00;19;16;16
Unknown
I'm just going to say that I love being a little bit different and I do think there's a lot of other things that treasurers can do with AI, a lot lower-hanging fruit and things that could potentially deliver more value. So actually you can look at other kind of exposures as well. So you can look at your FX exposures, you can analyze massive datasets, and recommend optimised hedging strategies.
00;19;16;19 - 00;19;39;14
Unknown
I did a survey last year among treasurers around what they're looking to do. They are and where they want to introduce it. And some of the other use cases were fraud detection. For instance, I did a very interesting case study where the Treasury function in the UAE that had built their own AI in-house tool just for looking at fraudulent payments.
00;19;39;14 - 00;20;06;08
Unknown
They're also looking for duplicate payments that were going out to suppliers, dumping those. So all kinds of interesting things going on there. Regulatory compliance, it can be really, really basic things. So, many of your listeners will be familiar with James Kelly, who was treasurer at Pearson and he's now running own AI company and he's in the middle of building a tool which it just fills in KYC forms for you.
00;20;06;08 - 00;20;33;00
Unknown
So it just pulls data from various different places and boom, for you just to reduce that workload. And there's all sorts of simple things that you can do there. There's lots that you can do around automated reporting and then there's really, really simple things like using AI essentially as a Treasury assistant. You can get it to schedule tasks for you, send automated replies to certain emails.
00;20;33;02 - 00;21;01;25
Unknown
It's just some super simple things that are really quick wins that essentially give you more resources within your Treasury Department because you are using AI as an extra coworker. Right. So yeah, you're advocating sort of also a bottom-up approach, not only that big picture, top-down approach to governance and treasury. Yeah, it's really easy, isn't it, to look at those enormous shiny prices and go, okay, yeah, that's good.
00;21;02;01 - 00;21;27;25
Unknown
So my cash flow forecasting problem, but yeah, that's going to take a very long time. And also the technology is still maturing as much as AI has actually been around for 50 odd years and we're just using it properly now within Treasury and the GenAI revolution has caused a lot of interest in it. It is still evolving. So if you're taking on a massive project like that, it's going to evolve during the course of it.
00;21;27;25 - 00;21;46;27
Unknown
But there’s, like you say, there's much quicker wins that you can just go in and then you get to know, I bet you get to test it and then you get to know the limits of it and also how you use it in terms of compliance, with data privacy, etc., because that's a huge angle when you're talking about any kind of AI.
00;21;47;03 - 00;22;15;09
Unknown
So I think test the waters first. That's my advice. That's right. Then the knowledge part to gather the initial knowledge is so, so, so important. Exactly. You know, you define yourself as a Treasury storyteller. So let's go into that a little bit. What do you mean by that? What does it imply in practical terms? Yeah. It was one of those things where, you know, when you're trying to think of a good business name, right, well, what does it do?
00;22;15;11 - 00;22;40;29
Unknown
And then storytelling as a concept has become so big in the corporate world recently. People are realising how important good communication is. I think this has actually partly come off the back of generative AI. Interestingly, because people are increasingly using things like Chat GPT to tell narratives, we're now realising how important it is to have the human element and a unique element.
00;22;40;29 - 00;23;00;27
Unknown
Coming back to what you said about non consensus views, it's actually being someone different, being someone independent and bringing your own voice. That's what matters most and that's what it brings and most effective story to people. So yeah, when I was thinking of my business name, it's just kind of it all came together. well, this is what I do.
00;23;00;27 - 00;23;36;26
Unknown
I get stories out there on behalf of the Treasury community and on behalf of TMS providers, fintechs, banks, working with the Treasury community. So it makes complete sense in terms of the branding. But for the practical side of things, it's about transforming complex concepts into an idea, narratives that resonate with the different audiences. So sometimes it might actually be speaking to different audiences within the Finance function, it might be the Treasury team, it might be the CFO, it might be helping treasurers to communicate better with the board.
00;23;36;29 - 00;24;13;21
Unknown
It's simplifying complexity, it's providing context, making things tangible, understanding business outcomes. Is also humanizing things, I think this is so important. It's bringing case studies, bringing real stories, bringing analogies, just bringing things to life and helping people to get a bit of personality into Treasury and engaging stakeholders. But as I've gone along on this journey over the last few months, I've actually realised that a lot of my job is showing the Treasury profession some more love.
00;24;13;23 - 00;24;37;13
Unknown
It's one of the professions that tends to get lost. It's forgotten about, people don't know what it is like. If I speak to my friends about it now, idea of what corporate treasury is, they think something to do with pirates or, you know, strange analogies. And it really is about raising awareness of the Treasury profession and making sure that it counts and it gets the attention it deserves.
00;24;37;13 - 00;25;39;13
Unknown
So that's what is involved in too. Absolutely. Really interesting, that idea that treasurers need to improve their storytelling skills because they have to present their case to a variety of stakeholders. Eleanor, let’s discuss now that we're talking narratives and foreign exchange, one thing that caught my attention in recent months was the I called it the misleading British Peso narrative. In the sense that after the crisis in cable in I think in September 2022, so there this perception that the pound had become a, like an emerging markets type of currency right? And is that narrative took hold in a very, very negative way because it
00;25;39;13 - 00;26;26;03
Unknown
led many managers to neglect their foreign exchange hedging and as, surprise surprise, the British pound rose in 2023 and this year, so we have lots of FX headwinds. We're talking hundreds of millions of pounds and some examples include Burberry, DH Smith, Oxford Instruments, JDSports. So do you think these narratives can be so or why do they have such an impact on the public and on Treasurers?
00;26;26;06 - 00;27;00;05
Unknown
I'd love to know the exact answer to that. I do think people get caught up in a kind of herd mentality. It frustrates me so much as a journalist when narratives that are incorrect or biased get out there and cause this kind of fire almost. It spreads, you know, and it is uncontrollable. I think coming back to a UK topic that's a bit divisive, Brexit is one of those. I think, they did an absolutely dreadful job of informing people what the real impact around Brexit would be.
00;27;00;05 - 00;27;24;04
Unknown
And there were so many, so much misinformation that was spread that I think with any kind of narrative that you're looking at, whether it's a personal decision, whether it's a business decision, you've got to be verifying it yourself. And it's a sad state of affairs when that has to happen. But you can't necessarily rely on what is out there in the mainstream press, even the financial press.
00;27;24;04 - 00;27;47;07
Unknown
I think you've got to be doing your own due diligence. You've got to be doing your own research and making a decision based on what you think is best for you. Obviously, there's certain experts whose opinions you will factor in, but I really think that sort of trust and verify piece is missing in a lot of the narratives that go on and the way that their used.
00;27;47;07 - 00;28;30;08
Unknown
So, yes, the whole industry needs revamping, but that's a tough call for 2025. That’s absolutely right, but at least we have recently also very good news from Treasury teams that were not caught by that misleading British Peso narrative. And I'm referring to easyJet and to Jaguar that presented, so in the case of easyJet, a stellar earnings report and the so calling their attention to their layered hedging program, which means that in a disciplined way, they had already started
00;28;30;10 - 00;29;31;10
Unknown
hedging by nature years well before the materialisation of all of those exposures. So that's a disciplined approach. One that did not buy into that misleading narrative. Now speaking again of all narratives and FX, some people say that so let's say a threat based narrative or stories that are based on pain points are more effective when you discuss with Treasury managers than, say, a opportunity-based narrative that has no end in sight and that emphasises as we do, for example, the fact of well, manage your currency risk but for a bigger purpose.
00;29;31;13 - 00;30;00;02
Unknown
Embracing currencies, taking advantage of the margin-enhancing and competitiveness-enhancing opportunities of selling in the currencies of our customers, buying in the currencies of your suppliers, using forward rates to price more effectively. So I think there is also that more work needs to be done in polishing a little bit those narratives. What would you say?
00;30;00;04 - 00;30;22;26
Unknown
Yeah, it varies so much from audience to audience, of course, and perhaps the corporates at the bigger end of the scale will identify more with that opportunity side of things because they're much more used to managing the risks themselves. But at the same time, Treasurers are ultimately risk managers, so the negative side of things can work well as well.
00;30;22;26 - 00;30;49;23
Unknown
It just depends on the personality I think too. I'm a very traditional British person, and if you talk to me too much about opportunity, things that might happen positively, it seems like you're trying to sell me something and I therefore seem skeptical. But that's just an innate way of being for me. So I think the kind of negative story probably plays more to who I am.
00;30;49;23 - 00;31;20;15
Unknown
So I really think it varies from person to person. Right, you need balance, in other words. Yeah, and it's just about connecting actions to results, whether the result is reduced risk, whether it's increased efficiency or improved profitability. It's just making that narrative really clear with measurable outcomes. I think that's the most important thing. And using those real life examples and then making sure that people understand the why of the narrative that you're telling, What's the point of this?
00;31;20;15 - 00;31;37;13
Unknown
Why are we going down this road? I think those are the most important things and just making sure that it's really clear for people that's how you ultimately tell a good narrative. Of course, you're going to appeal to different people with different narratives. So yeah, you need to chop and change, I think, and see how it plays out.
00;31;37;13 - 00;32;19;14
Unknown
But always just making sure that it's relatable. That's the number one piece of advice. Absolutely. And measurable, as you said. Yeah. Eleanor let's bring the discussion to the topic of ESG, environmental, social and governance type of issues. And it seems the broadest thinking that ESG is in trouble, is that righ?. Well, you know, it's a really interesting point of view because 2024 I had fewer conversations about ESG than I've ever had in the last five or six years around ESG in Treasury, which for me was really disappointing.
00;32;19;16 - 00;32;39;11
Unknown
It was not on very many conference programs. Even at the big conferences like EuroFinance, there were one or two sessions on ESG. When you think about how many sessions there are, it was quite minimal. And I actually did a post towards the end of last year just saying, you know, has ESG tied, particularly with everything that's going on in the States with Trump?
00;32;39;13 - 00;33;05;01
Unknown
You know, is that going to be the end of ESG and Treasury, essentially? And there was some very interesting comments from the Treasury community, particularly from the EACT and some of the providers of ESG Solutions and Treasury Spring got involved in the conversation as well. Just saying actually, we feel like ESG is very much still there. It's just evolving in the way that it presents itself in business.
00;33;05;03 - 00;33;37;28
Unknown
So it's no longer at that hype stage where everyone's talking about ESG and we must be on it, we must be on it. It's kind of maturing, so it's slowly becoming part of the EU in certain areas. Obviously not for everyone. I think there is also caution around it, though. We've seen a lot of issues around greenwashing. So I do think it's people have pulled back in that sense, but still seeing a lot of treasurers doing some interesting things with sustainable supply chain finance, green bonds, sustainability linked loans, social bonds.
00;33;37;28 - 00;34;09;14
Unknown
You know, there's definitely a spread between the E and the S looking at things like carbon offsetting, carbon accounting even. I did a very interesting podcast on that last year. I think that there are interesting things happening. One area where I've seen less ESG is in FX. So a couple of years ago you probably remember there were some ESG-linked FX derivatives about and that was a a big innovative thing at the time that seems to have gone very quiet.
00;34;09;16 - 00;34;38;20
Unknown
But I definitely think it's still there as a theme. I'd love to see it be more prominent again in 2025. Yeah. Looking forward to see what everyone’s up to. You mentioned the E side, a little bit the S side. I’dlike to talk a little bit more about the G side. Yeah. governance. Yeah. I think foreign exchange automation has a very important message in terms of governance.
00;34;38;20 - 00;35;24;06
Unknown
You can select the type of governance of your FX risk management. So yeah, is it centralised, Is it decentralised? And what about so elements like key person risk and like, well, the operational risks that you avoid with automation? Is that part of the G side of the governance? Yeah, absolutely. It all comes under that. So everyone talks about ESG and I think they immediately have pictures of trees and children and, you know, that is all very fluffy, but it's very much about just getting those processes down.
00;35;24;09 - 00;35;57;01
Unknown
Making sure that risks are managed. It's having the frameworks and it's like you say, it's automation plays into that. It's just reducing the risk within any kind of process system absolutely falls under the G. And then because we're talking about FX, we have to mention that the FX code as well, and I know that's been talked about a fair bit recently, that there's a lot going on trying to get more corporates to sign up to the FX code and that absolutely falls on the G on taking the best practice boxes around your FX.
00;35;57;01 - 00;36;24;05
Unknown
So there's all sorts of things that people can do is things that they ultimately should be doing anyway. You know, this G side of things is not really new. It now just has a label to sit under. It's just about best practice and making sure that it's embedded throughout all of your flows and whatever guises that is, whether it's automation, whether it's reviewing who's got access to what, it's just making sure that things are in the right place and operating as smoothly as they can be.
00;36;24;07 - 00;36;50;11
Unknown
Absolutely. Do you think the new administration this year in the United States is going to have an impact on those ESG initiatives from the financial management point of view? Yeah, I do unfortunately think that it will probably be deprioritised and people have got a lot of other things to worry about now as well because of that with everything that's going on globally and potential trade wars.
00;36;50;11 - 00;37;11;09
Unknown
So I do have concerns that it is going to be pushed down. The post that I mentioned that I put up at the end of last year around ESG, there was an American treasury commentator on there saying that he thought it was essentially the the death of the E and S side of things in the US. So, yeah, I absolutely think it will have an influence.
00;37;11;09 - 00;37;33;22
Unknown
Unfortunately. But I'm sure that there are also some companies that are going to stand firm on it and lead the way regardless. Some of them are fairly well invested in ESG. I don't see them necessarily backtracking on it, so hopefully we can still make some progress. And obviously elsewhere in the world, we will continue to crack on. All right.
00;37;33;24 - 00;38;21;15
Unknown
Well, Eleanor Hill, Treasury Storyteller, editor, podcaster, moderator, innovator. We've been through many issues we discussed, we started out this conversation by discussing the priorities for this year for treasurers. Yeah. And what was the place on the role of FX management in all of that. We then continue with your very interesting views on all that is related to Gen AI and we discussed other topics such as also forecasting accuracy and all the applications of of Gen AI in Treasury management.
00;38;21;18 - 00;38;45;28
Unknown
Finally, this discussion of narratives and ESG. Eleanor, is there something you would like to add? Well, I think we've covered an awful lot in the time. It's been amazing. I would just say one of the other risks that I'm hearing a little bit more about is commodity risk and people looking more actively to manage that. And there's obviously ways that that intertwines with FX risk.
00;38;45;28 - 00;39;09;07
Unknown
So this kind of comes on the radar for 2025. And then my own the other piece of advice for treasuries, which is to debate is stay curious and keep an open mind, even if things like AI seem quite scary or maybe not even achievable for you, don't write them off because you never know what might be possible unless you go and have a look.
00;39;09;09 - 00;39;39;02
Unknown
Right. Now, I thank you for this comment on commodity price risk with a link to FX risk management, as was the case with easyJet, as they may apply layered hedging programs, I think both on the energy side of things and on the FX part. So. All right, Eleanor Hill, thank you so much for joining us in this episode of Currency Cast and
00;39;39;05 - 00;39;44;07
Unknown
I'll see you next time. Mack, it's been a pleasure. Thank you. Look forward to catching up again soon.