We were joined by Charlie O’Riordan, Investment Manager, Foresight Group, Jo Slota-Newson, Principal, IQ Capital Partners and Giorgia Longobardi, Founder and CEO, Cambridge GaN Devices.
Whilst the term was originally coined in 2005 (in a landmark study entitled ‘Who cares Wins’), its prominence has risen over the past few years, and it has become a critical influence in the success of businesses across all sectors.
We were able to hear about its importance from both sides of the deal room – from the investor and the entrepreneur.
I took away a number of reflections:
A company shouldn’t simply seek ESG ‘compliance’ for fear that this turns it into a tick-box exercise. Rather, as Giorgia expressed with evident passion, a company’s ESG strategy should be part of its DNA, led (and exemplified) from the top, but owned (and contributed to) by everyone within the organisation.
We were reminded that ESG is fluid and companies need to remain, as much as is possible, ahead of the curve – we’ve all recently experienced how geopolitical influences can have an immediate, and enormous, impact on an organisation’s markets and supply chains.
In a similar vein to green-washing, we heard a recent example of the gulf between a well-known company’s stated ESG ambitions and its recent practice – just talking about it and not doing it (or even doing the opposite) can throw up some very negative PR.
ESG strategy is synonymous with the qualities that we would expect from a successful, sustainable organisation – including, but not limited to; a care for the environment in which we live, a desire for all employees to have a meaningful and rewarding career, an appreciation of the importance of diversity, democracy and fairness. Also, that these qualities should extend up and down the supply chain.
Funders looking to invest in organisations will want to understand how well a company embodies ESG within its business – experienced investors will see beyond the quantitative measurement of ESG metrics and will appreciate the, often, more nuanced qualitative aspects.
Similarly, an entrepreneur with a passion for ESG will want to work with investors who share their passion and who appreciate that, at least in the short-term, it’s not always the lowest-cost route.
For both the entrepreneur and the investor, the positive impact that ESG can have on the longer-term financial performance of a company which can yield tangible financial benefits when exiting the business.
Finally, we discussed the vital impact that a positive approach to ESG can have in the public sector – both in the way that an organisation operates, both for and within its community, but also the way it interacts and enables excellence in the businesses within its area.