Funding is as Easy as E+ S+ G

Funding is as Easy as E+ S+ G

Let’s talk about ESG. It’s here to stay. ESG is no longer a buzzword for companies keen to show off their sustainability credentials. It is a set of principles for any company who wishes to do business both now and in the future as the wider social, economic and cultural shift towards sustainability gains a new level of transformative momentum. It’s important not only from the demand side looking at which companies customers want to buy from but also from the supply side, looking at how companies are able to raise capital for the funds they need to thrive and grow.

Companies are increasingly familiar with the E of ESG; the need to take account of climate change risks on a company as well as a company’s impact on the environment and, hence, to pay attention to the resources it uses, its carbon footprint and its wider impact including on biodiversity. What is often less well understood, is that a sustainable approach requires companies to incorporate the ‘S’ and ‘G’ alongside the ‘E’.  The S of ESG or social aspect refers to how an organisation interacts with all of its stakeholders including its employees and local community. Few organisations truly grasp the imperative to create a sustainable people policy which includes its approach to diversity and inclusion. Organisations need not only to support diversity, for example, but also to ensure that they are, in fact, diverse or at least demonstrably work towards it. The G of ESG refers to an organisation’s approach to governance. This again requires the management team to reflect on diversity within the composition of the management and board teams, and it also reflects on how equitable and transparent its compensation arrangements are across the organisation. Millennials and Gen Z not only want to buy from companies which adopt strong ESG principles but they also want to work for them. Supply chain management with a focus on ESG is also critical for optimal business outcomes including identifying new sources of innovation and growth drivers. Companies need to diversify their supply chain partners and broaden their thinking here too. ESG makes business sense whichever way you look at it. 

We are all only too aware of the need for SMEs to adopt ESG if we are going to make viable progress towards a more sustainable future. In the UK, SMEs account for 99.9% of the business population contributing around 60% of all employment and at least 50% of turnover. Startups are also part of the solution towards this transformation and a move to adopting an ESG approach from the start of an organisation’s lifecycle is ever more critical. Mandatory sustainability reporting is being brought in for large companies in the UK this year, 2023 and will be extended to SMEs from 2025. Ambitious SME’s wanting to accelerate their scale up should already be anticipating this evolution by embedding their ESG commitments into their business practices.

At Beyond Blue, we are building an ecosystem where startups are the central engines of sustainability and change. Our fund is seeking to invest in those companies developing sustainable and circular solutions in the blue green economy. We are an ESG fund which means that we follow ESG principles in how we operate as an organisation as well as expect our investee companies to follow ESG principles and build sustainability into their business plans as they develop and grow. What’s more, we do this in a collaborative way so companies can stay focussed on the day-to-day running of their business.

Perhaps less well known is that change is taking place in the investment markets, and capital is increasingly seeking a sustainable home. Those companies following ESG principles are likely to be the most successful in receiving investment - if you want to increase your chances of funding, it will be as easy as E + S + G.


pH3Capital Ventures