Can The Year of Green Finance Become the Year of Green Payments?

There are a lot of conversations about the renewal of our natural resources, and what we can do to take better care of our environment. But, “going green” has become much more than set of a personal behaviors, like recycling plastic bottles and receiving bank statements electronically: it’s on the global business agenda. Policies are being written to guide and govern the financial system toward a more sustainable future. Achim Steiner, Executive Director of the United Nations Environment Programme, says, “2016 is set to be the year of green finance. Across the world, we are seeing a growing number of countries aligning their financial systems with the sustainability imperative.”

Global Powers Mobilize

Efforts are being made to ensure sufficient “green” investment capital goes into helping the world business community address environmental and climate challenges in the years ahead. Two examples:

• The Paris Agreement on Climate was adopted by 195 countries at the Paris climate conference in December 2015. Due to be put in force in 2020, it’s the first universal global climate agreement of its kind setting out an action plan to put the world on track to avoid climate change by limiting global warming below 2°C. (European Commission)

• The Global Goals for Sustainable Development introduced by the United Nations in September 2015 represent the organization’s sustainable development It’s aimed at ending poverty, protecting the planet, and ensuring prosperity for all, and each goal has specific targets to be achieved over the next 15 years.

With world governments standing behind innovative solutions to protect our planet for future generations, corporate and non-profit stakeholders should follow suit. New regulations limiting resource use, for example, may force their hands in some respects, but it’s likely business leaders will be prompted to evaluate their organizations’ role in creating—and maintaining—a sustainable future as a matter of corporate conscience or competitive survival.

Toward a Greener Supply Chain

What about seeing green in business operations and bringing sustainability efforts a little closer to home? Paper and finance go hand-in-hand, yet finance and supply chain professionals are becoming more aware of the benefits of leaner (and greener) paperless processes. This is evident on the B2C end, where technology is enabling companies to transact with customers digitally—think mobile communications and online payments—and saving money and meeting consumers’ preferences in the process.

But in the B2B system, maximizing financial assets along the supply chain is critical—yet not always “green.” In Can You Be Green and Profitable? on SupplyChainQuarterly.com, analysts suggest that sustainability can indeed be integrated into supply chain optimization processes. To summarize their framework for achieving it, they recommend following this six-phase process:

1. Assemble the right group of stakeholders to charter the effort.
2. Gather the right data and create a baseline.
3. Optimize the current system and eliminate waste.
4. Evaluate the effect of existing business rules and assumptions on the metrics and achievement of goals.
5. Evaluate structural changes needed in the supply chain in order to meet goals.
6. Evaluate target scenarios over a wide range of future assumptions.

While it’s unrealistic to expect a quick uptake of such a massive initiative, companies can at least start the dialogue about such undertakings. There are resources emerging to help them explore more sustainable business practices. This article on GreenBiz.com explores, among other multi-stakeholder partnerships, Cargill and PricewaterhouseCoopers’ Responsible Supply Chain advisory service, designed to guide organizations’ efforts.

Green Payments

Drilling down to the corporate payments function, automation is underway across many organizations. Taking even small steps to digitize information, processes, and communications is helping companies achieve a smaller carbon footprint. This is addressed at length in Going Green: Another Reason To Go Paperless With Your Payables, but here are some tips from to nudge B2B payments into more sustainable waters:

• Perform a cost/benefit analysis of existing paper-based, manual system vs. automated processes
• Visit PayItGreen’s B2B PayItGreen Invoice to Pay Calculator to learn more about your organization’s unique opportunities to boost your business performance while helping the environment.
• Educate staff and shareholders (including vendors) on the organizations’ commitment to adopting greener business practices
• Communicate the benefits of automation to customers and suppliers

Whether or not your organization joins the Green Finance movement this year, keep learning about industry trends that are driving sustainable initiatives. Explore these articles to get started or brush-up on the top issues:

Millennials Drive B2B eProcurement Adoption

Four Barriers to E-Payments Adoption (and How Virtual Cards Overcome)

5 Things You Didn’t Know About Virtual Payments

Treasurers Purging Paper, Opting for E-Payments, According to New Study