If you’re running a SME in the UK, sustainability is likely becoming more important to your day-to-day operations. And it’s not just your customers who care—investors are paying closer attention to businesses that prioritise sustainability as well. But what exactly are they looking for when it comes to sustainable businesses?
According to Deborah Meadon:
“Sustainable investing is all about long-termism. The whole issue around sustainability for the planet is that we’re actually shortening our horizons because we’re doing so much damage. And in business, that’s a language we understand. So we just need to think about our businesses.”
Here are five key factors that could help your business attract the right kind of investment:
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Solid Financials
First and foremost, investors still want to see that your business is financially strong. This means showing solid growth in areas like revenue, profit margins, and return on investment. No matter how much you’re committed to sustainability, they’ll need to know that investing in your business makes financial sense. A balance between profit and sustainability is key.
We believe that Sustainability can positively support your financial performance if done right!
While sustainability may be a key focus for a business, investors also want to see that it is able to generate profits and provide a good return on their investment.
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Clear and Measurable Sustainability Goals
It’s not enough to say you’re sustainable. Investors want to see specific goals—like reducing carbon emissions or cutting down on energy use. But more importantly, they want to see progress. Regular updates and transparency are crucial here. It could be as simple as stating that you’ve reduced your waste by 20% over the past year.
According to a 2023 survey by PwC, 83% of UK investors consider ESG (Environmental, Social, Governance) factors when making investment decisions . This highlights how important it is to show actual progress, not just promises.
It’s important for businesses to be transparent about their sustainability efforts and to regularly report on their progress.
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Strong Leadership
Your management team plays a key role in how investors view your business. They’re looking for leaders who understand the sustainability agenda and can drive growth while implementing sustainable practices. A strong, experienced leadership team gives investors confidence in the business’s future.
Do you have someone in your leadership team who is responsible for the climate agenda or sustainability?
Read more about why your board needs sustainability expertise here.
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Innovative, Sustainable Products or Services
Offering unique, sustainable products or services can greatly enhance your business’s appeal to investors. With the rise in environmental consciousness, companies developing solutions like biodegradable packaging, carbon-neutral technologies, or energy-efficient services are seen as forward-thinking and profitable. Sustainability is becoming a core expectation, not just a bonus.
In fact, consumer demand for sustainable products in the UK surged by 30% in 2023, showing that people are actively seeking eco-friendly options. This shift in market behaviour proves that innovation in sustainability isn’t just good for the environment—it also presents a major commercial opportunity. Companies tapping into this trend have a dual advantage: capturing consumer interest and standing out to investors who are increasingly prioritising long-term value creation through responsible practices.
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Positive Social and Environmental Impact
Investors are becoming more focused on businesses that generate a measurable positive impact on society and the environment. This includes everything from reducing carbon emissions to engaging in fair-trade practices or supporting local communities. Such businesses demonstrate what’s known as the “triple bottom line”—people, planet, and profit—offering both financial returns and societal benefits.
A report from EY emphasised that 78% of UK investors are eager to support businesses that focus on the balance of financial returns with social and environmental contributions.
This highlights the growing importance of demonstrating that your business is not just financially viable but also contributing positively to global sustainability goals. Whether through providing fair wages, addressing inequalities, or making strides in eco-friendly production, showing tangible outcomes in these areas can make your business far more attractive to today’s conscientious investors.
Investors want more than just a financially healthy business. They’re looking for companies that have a clear sustainability strategy, a strong management team, and products or services that make a real difference. By focusing on these five factors, your business can not only stand out to investors but also contribute to a more sustainable future.
get in touch if you would like some help with your sustainability.