Expert View
THE TRANSFORMATIONAL POWER OF SUSTAINABILITY
by Ian Dixon Access to Finance
The drive to sustainability is transforming the way we all think about and, increasingly, live our lives. Specifically, from a finance and funding perspective, Environmental, Social and Governance (ESG) considerations are progressively dictating the shape of investment decisions.
Investor decision making is no longer a simple choice of maximising profitability whilst minimising risk. Sustainable finance is prioritising businesses that help the environment but also focuses on parallel issues such as inclusion and the adoption of ethical business standards.
In simple terms this means investing for impact where capital will make the world a better place.
Sustainable finance and investment cover a broad spectrum of activities, from green energy projects to companies demonstrating ethical supply chains or strong social values such as inclusion or female representation.
It is not an understatement to say the emergence of sustainable finance has a key role to play in the world’s transition to net zero
Announcing the loans, Paul Thwaite, NatWest’s chief executive of commercial banking, said: “Climate change is one of the biggest global challenges we face today, and SMEs have a critical role to play in helping the UK realise its green ambition.”
Meanwhile, a new green innovation fund has been launched to help Lancashire SMEs from all sectors transform their ideas into reality in the race to net zero.
Businesses, charities and social enterprises in the county can get up to 60 per cent funding towards projects worth £25,000 to help them deliver sustainable products, processes or services.
The £400,000 scheme is managed by Eco-I North West (NW), a £14m research and development programme connecting SMEs to the knowledge, research facilities and skills of six of the region’s universities, including Lancaster, UCLan and Cumbria.
The new grants will accelerate low carbon innovations from research to commercialisation
by channelling both private and public money into carbon-neutral projects, as highlighted at COP26.
Governments and both international and national regulators are prioritising calls to ensure that sustainable finance can deliver on the bold promises.
The challenge remains for funders, investors and businesses to demonstrate the ability of projects to generate the financial returns sought whilst supporting the planet and making society fairer and more inclusive.
Currently, the evidence base is thin although growing with some bold commentators claiming that sustainable businesses actually offer higher returns for investors.
For now, those businesses demonstrating a strong ESG rating point towards a positive long-term performance. Positive early indicators therefore continue to see capital attraction towards sustainable investment funds and an increasing focus from traditional SME lenders and private investors.
by match funding prototypes, pilots and demonstration systems.
Andy Pickard, manager of the Centre for Global Eco-Innovation, based at Lancaster University, which delivers the programme, says: “More than 100 enterprises from a wide range of sectors, disciplines and project themes are already collaborating with the partner universities and could double their potential return on R&D investment.
“These grants will further support those already working with the universities and expand the benefits Eco-I NW can offer to even more SMEs, to bring to market even more sustainable products, processes or services.”
Arid Agritec, a crop manufacturer based at Lancaster, is working with the programme to develop its algorithm-based technology to improve consumer safety and reduce waste in global fresh produce supply chains.
Director Dr Wagdy Sobeih says: “Eco-I NW has provided us with invaluable support via funding
Dr Wagdy Sobeih
and coding expertise which has allowed us to build a demonstration app that will allow us to secure full investor funding and bring our technology to the global market within the next two to three years.”
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FUNDING
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