Sustainable Success: The Advantages of ESG Investing for Small Businesses
A greater focus on sustainability is permeating its way into almost every aspect of modern society. It’s impacting the way we build our homes, the transport we use, the food we eat, and much more. And the effects are being felt across the business world, too.
There are already many challenges facing small businesses, such as sourcing loans to fund growth, increasing brand awareness, and building a stable customer base. And in recent years we’ve seen an additional dynamic in that there are now greater expectations on companies to embrace Environmental, Social, and Governance (ESG) strategies.
This requires investment, but the long-term benefits can far outweigh the hit taken on an initial outlay. Read on to find out more about the advantages of adopting a robust ESG policy.
Enhanced corporate reputation
Engaging in the conversation around ESG can help to burnish your reputation. By adopting sustainable practices in terms of how you source materials as well as your production, transportation, and waste management methods, you can establish yourselves as a socially and environmentally responsible organization. This in turn can help to build trust with your customers, your employees, and the local community.
To survive and then thrive, chances are your small business is going to need to bring in capital from outside investors. First and foremost, of course, these investors will be seeking a return on their outlay. But there are many who are also looking to make a positive societal impact by helping out organizations with a strong ESG mission statement. And once you get one group of investors on board and demonstrate your value, you’re more likely to attract additional capital to continue to fuel your growth.
Any successful business needs to keep its people happy, because retention breeds consistency and solid working relationships. There are various recent examples of staff stepping down from roles where they felt their employers’ values didn’t match their own. As the issue of climate change moves into ever-sharper focus, an increasing number of current and prospective employees will demand to know the details of your ESG strategy.
Regulatory compliance and risk mitigation
As the regulatory landscape continues to shift – particularly within the context of sustainability – your ESG policy needs to do the same and keep pace. By investing now, you can get ahead of the game and help to futureproof your business against any changes that may occur. Falling foul of regulations can lead to significant financial and reputational damage, so it pays to have the appropriate ESG practices in place from an early stage.