Dr Marc Kahn, Chief Strategy and Sustainability Officer, Investec, shares why sustainability is a commercial decision all business founders need to embrace.
Running a business requires adapting to new challenges on an almost daily basis. One of the most prominent current issues is how best to address sustainability in their corporate strategy. This is not just a moral or regulatory challenge, but also a commercial one.
“Today's markets are being disrupted because the world faces existential challenges not previously encountered” says Dr Marc Kahn, Chief Strategy and Sustainability Officer at Investec Bank. “Governments across the globe have realised that rising inequality and climate change must be addressed, or human beings are soon going to find themselves in a dangerous and unstable world. As a result, they are introducing regulations and constraints into the economy that aim to redirect capital flows and resources toward combatting these challenges. For businesses this means commercial strategies need to be adjusted to manage new risks and take up new opportunities for growth. Can a business simply carry on what it’s been doing in the past in face of such a significantly disrupted market and still expect to grow into the future? It’s unlikely.”
Stakeholders demand businesses help tackle challenges
For over two decades, Investec has been exploring how to have a lasting positive impact on people and the planet. Its recent survey of 500 mid-market UK business leaders revealed how they are tackling sustainability. According to the research, the majority believe that a good sustainability strategy can contribute to revenue growth, improved relationships with partners and suppliers and access to finance.
Overall, 55% of leaders of companies with a turnover of more than £10m said a sustainability strategy was ‘business critical’. Forty-one per cent think customer buying decisions are influenced by environmental, social and governance (ESG) activities; while 45% believe ESG factors play a role in the procurement and tender process.
Commercial opportunities that address sustainability challenges
There are many opportunities for investment and development in vital sectors. The UN has identified 17 Sustainable Development Goals that it believes are needed to ensure peace and prosperity in 2030 and beyond. These include affordable and clean energy; clean water and sanitation; and industry, innovation and infrastructure.
Investec is currently helping a business with its aspiration to become the largest electric vehicle car charging network in the UK. “In line with government emissions targets, by 2030 it is estimated that there will be up to 11 million hybrid or electric vehicles in the UK. This upscaling will help to ensure that owning an electric vehicle is a positive experience for individuals and the environment,” explains Marc.
Capital flows directed to products and services with a positive impact
When it comes to seeking support for your own ambitions, you may find that your bank starts to make lending decisions based on its own sustainability targets. More than 140 global banks have joined the Net Zero Banking Alliance which aims to ensure the net greenhouse gas emissions from their lending and investment portfolios reaches net zero, by 2050 or sooner.
In addition, private equity firms have stated that ethical considerations heavily influence investment decisions in a portfolio company in this Private Equity Trends research.
“At this time, joining forces with likeminded financial partners can help provide valuable support,” says Marc. “This is important for entrepreneurs who are already navigating the highs and lows of running a business and want to ensure they have a sustainable relationship with the communities in which they operate.”
If you’d like to discuss how Investec could help you support the growth of your business or provide personal banking and networking opportunities for entrepreneurs, please do get in touch with Investec Private Banker Eileen Redmond-Macken at Eileen.Redmond-Macken@investec.co.uk.
