This article features as part of IFA Magazine’s celebration of World Earth Day
By Ricky Margolis, Investment Manager, ARIE Capital Group
A Trend With Substance
Anyone who works in the venture capital space can tell you that barely a month goes by without some new buzzword or trend assaulting our ears every time we attend a conference or scroll through LinkedIn.
And so I didn’t worry too much when, one lockdown morning back in 2020, I rolled out of bed and, still half-asleep, logged in to an online conference only to be greeted by a flurry of terms that sounded familiar but to which I’d never paid that much attention previously such as “ESG” and “impact investing”.
What the hell was everyone talking about? Was ESG just another acronym to throw on the pile, another fad that would disappear as quickly as it came only to be replaced by another one?
I soon realised that this time it was different. This wasn’t transient or superficial. As I listened to a series of passionate founders and dedicated investors discuss how they’ve created a business to tackle the climate crisis or pivoted their strategy to achieve certain social goals, it became clear that ESG was more than just “an inconvenient truth”. This was the future, and many people (including myself) were soon scrambling to figure out what it really meant, whether we were doing it correctly, and how we could implement it into our business models. The genie was well and truly out of the bottle, and we couldn’t ignore it even if we wanted to.
Undoubtedly, ESG became one of the buzzwords of the pandemic. But, for once, this was a trend with some substance. And even if some of us only became aware of it recently, many people had already spent years giving life to businesses that were not only ESG-based but were also amazing solutions to everyday problems. They showcase the very best of the startup community, promoting innovative technologies that are environmentally- and socially-conscious as well as being incredible business prospects.
Because, as I learnt at that conference and practically every day since, we can have it all. Investing in our planet and society isn’t just altruistic, it’s profitable too. Investors don’t have to sacrifice good business opportunities for good causes.
A Chance To Step Up
ESG is important because it’s not some futuristic tech trend that only geeky developers and radical investors can identify. ESG comes from a necessity borne out of a crisis. We are talking about the very future of our planet and man’s ability to exist on it. This affects every last one of us, and the stakes couldn’t be higher.
We’ve heard plenty from the UK government about what they’re doing to tackle the climate crisis and achieve their mythical goal of “net zero”. Naturally, they have obstacles to face when promoting this: political in-fighting, party considerations, and translating policy into action.
Meanwhile, most individuals want to do their bit to help the environment and increase opportunities in society but find themselves overwhelmed by more immediate concerns such as the cost of living and the current health crisis. There’s only so much any one person feels they can do.
It is therefore the private sector – including both the startup and investment communities – that is perhaps best-placed to enact change here. Not only do we have an opportunity to lead the way here, but I would argue we have a responsibility to do so.
