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Green Hedging: Interview with Alex Lawson, Regional Director at WUBS, UK & Europe

By Joy Dumasia

December 08, 2021

  • A Market
  • Derivatives
  • ESG
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Alex Lawson, Regional Director at WUBS, UK & Europe

Western Union Business Solutions, the payments arm of The Western Union Company, a global leader in cross-border, cross-currency money movement and payments, has partnered with climate and sustainability pioneer Gold Standard to provide a Green Hedging offering for all types of organisations. The partnership will enable Western Union Business Solutions customers to financially support sustainable initiatives as part of their hedging strategy, empowering them to make a positive global impact with ease.

The offering will allow businesses to select from a range of Gold Standard-certified climate and sustainability initiatives, supporting chosen projects at the cost of just 0.1% in addition to the notional trading amount. Western Union Business Solutions will then match this fee, contributing a total of 0.2% to the cause and donating it in full in the customer’s name.

With more than $25 billion in shared value already created for climate action and sustainable development, Gold Standard initiatives are designed to quantify, verify, certify, and maximise progress towards the UN’s Paris Climate Agreement and the Sustainable Development Goals. Gold Standard’s experts will work with Western Union Business Solutions to provide participating customers with insight on the projects they have supported using customised safeguards, requirements, and methodologies to measure and verify impact.

IBS Intelligence interviewed Alex Lawson, Regional Director of Hedging – UK and Europe at Western Union Business Solutions, to further discuss the company’s commitment to greening its offering.

Could you tell us about Western Union’s hedging strategies and the new green initiatives that are going to be implemented? 

Western Union acquired several different entities a little more than 10 years ago and created Western Union Business Solutions. The idea here was to focus on the business-to-business aspect of money transfers and payments. In terms of our approach to sustainability, we at Western Union are very proud of the ESG report that we have recently released and the Western Union Foundation’s work in this area.

What’s the impact that you are looking at for this move? 

This partnership will enable our customers to financially support sustainable initiatives as part of their hedging strategy, empowering them to make a positive global impact in a really simple way. Our customers who may be intrigued by this slightly different offering can get a forward or options contract by trading here through Western Union Business Solutions.

From the hedging perspective, the offering will also enable us at WUBS to reach new parts of the market we haven’t penetrated until now. The main hope from us is that this becomes a vehicle to acquire new customers to whom we can then show all the different services and benefits that we offer. We’ll be following up with the rest of Europe reasonably quickly in the next couple of months, but also APAC and North America will follow. We expect a good take-up in many of our geographies.

Lastly, the partnership helps us bring focus on our own ESG topics and to magnify the benefit, which is why we promise to match every penny paid by our customers for this cause.

Does profitability play a role in restricting companies from taking steps towards sustainable finance and adopting green methods for business?

In some ways, it’s about a lack of time and resources and not knowing where to begin. Many businesses are increasingly aware that consumers are being more specific about mainly who they want to deal with. From the perspective of younger generations, they look for businesses who share their values and are looking at climate change topics, so companies that are not mindful of that may lose business until they take these steps. Adapting to these new standards might require an investment now, but it might be more expensive trying to leave it for a few years.

Can governments help to promote green finance? Do conferences like COP26 and the UN Paris Agreement speed up the path to Net-Zero? 

The Paris Agreement was probably the watershed, and I think what we’ve seen in Glasgow has reconfirmed that. But in a lot of the investments, the money is all going towards green projects and companies involved in climate awareness, so I think that the market is very much aligned in that sense now. After all, market forces will always be more powerful than the government regulation. The financial markets, in particular, won’t wait for those regulations to come. They’ll innovate ahead of time which we’ve seen happen before. But the UK Government can, perhaps, undertake a more reward-centric approach that enables people and businesses to innovate the solution that works for them better and still achieve results.

What does the future hold for Western Union and Western Union Business Solutions?

The Western Union Business Solutions is being divested by Western Union and will be sold to investors. That process is ongoing, and part of it looks to be complete by Q1 of next year, then wrapping up fully later in 2022. The green hedging product is part of our Business Solutions arm, however, and will be coming with us. Our support and counsel for clients will continue as normal throughout the process.

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