According to the findings of recent independent research that was commissioned by Amazon (NASDAQ:AMZN), early-stage investors in the United Kingdom are rewarding firms for having good sustainability credentials. In April 2023, FTI Consulting carried out a study in which 509 individuals from all around Europe who invest in new businesses either on a professional basis or on a personal level participated as respondents.
Investors in UK venture capital and private equity claim that those companies can get a 15% valuation premium. This demonstrates the opportunity that exists for business owners who are producing products and companies that are more environmentally friendly. Instead, a reduction in valuation of up to 4% could occur for start-up companies that have a poor track record of sustainability.
Over the course of the past year and a half, more than two thirds of investors have asked for further information regarding the sustainability credentials of the companies in which they are investing. These investors cite personal beliefs and the ESG commitments of their own organizations as the primary motivating factors. More than half of them had turned down an opportunity to invest in a startup company within the past year because they were concerned about the legitimacy of the company’s commitment to sustainability in areas such as their logistics throughout the supply chain and their utilization of responsible waste management procedures.
Additionally, seven out of ten think the number of existing and forthcoming ESG regulation is discouraging them from investing in sustainability-focused startup companies. Eighty-three percent of respondents believe that new businesses require improved support to incorporate environmentally sustainable practices, and the same percentage of respondents believe that more than half of the new businesses they see lack the appropriate technology and know-how to function in a more sustainable manner.
