The global currency market is beginning to integrate the management of extra-financial risks (environment, social rights, governance) by companies.

The most virtuous are rewarded and the wrongdoers punished.

Hit for a decade by a series of scandals, from the City to New York, with the key to more than $ 12 billion in fines related to currency manipulation and hidden pricing, the currency market wants to turn the page and restore its image. Today, some banks are trying to promote more virtuous behavior of one of their customers, companies.

"Companies are increasingly aware of the challenges and problems of SRI (socially responsible investment)," says Bruno Laurier, Global Head of Foreign Exchange Sales and Corporate Investment Solutions at Societe Generale. In our hedge to pledge initiative, we offer companies that regularly trade their foreign exchange transactions with Societe Generale to round off the price at which they trade with us. We are committed to matching this small additional cost. The entirety will be donated to an association chosen by the company from a set of associations selected by Epic, an external partner. »

Bonus and penalty

In another approach, Siemens Gamesa (renewable energy) through BNP Paribas, Enel (electricity) with Societe Generale, Olam (food trading and brokerage), and Primetals (engineering and factory construction) through Deutsche Bank conducted foreign exchange transactions (hedging). with socially responsible investment (SRI) considerations. Respecting these precepts has reduced their costs. But if they fail, they have to pay penalties.

For example, Primetals has entered into a four-year agreement with Deutsche Bank for its foreign exchange options operations. If the metals group does not achieve certain objectives (reduction of greenhouse gas emissions, etc.), it will have to donate money to NGOs. The German bank also offered its client, Olam, preferential pricing conditions on derivatives on the Thai bath thanks to the satisfaction of certain criteria (respect for the environment, labor law, etc.).

Limited overall impact

However, businesses accounted for only 7% of the daily volume in the global currency market in 2019, behind banks (38%) and other financial institutions (55%) in the bank for International Settlements' (BIS) latest triennial survey. Companies intervene in the currency market to hedge their exchange rate risks , and to have currencies for their daily operation (cash).

In 2019, it was trading $6.6 trillion every day on the global foreign exchange market, according to the BIS. Only a tiny fraction is likely to convert permanently to socially responsible trading. The spontaneous creation of a kind of Tobin tax (financial transaction tax) "virtuous" for the climate, social rights ... is a very distant prospect on the largest market in the world.