Despite the headwinds, successful tech investors will stick with ESG, according to Simon Hombersley, Chief Executive Officer of Xampla, a Cambridge-based manufacturer of natural alternatives to plastic.
Venture capital focus on ESG
Over the past decade, capitalism has taken on a new and more progressive form. The smart money in venture capital is for funds that see both the future of the planet and the happiness of their workforce as the cornerstone of a healthy business.
Those who take this stand have been rewarded. Long-term research from data agency Morningstar has shown that most sustainable funds have delivered higher returns over the past decade than comparable conventional funds. Green investments are also generally better insulated against market shocks.
In fact, sustainable funds have a much higher survival rate than non-ESG vehicles. 77 percent of the ESG funds available in 2012 still exist, compared to just 46 percent of traditional funds.
Companies that take a step back
However, no one could predict the economic effects of Covid. Now there’s a sense of ‘running out of money’ – as a result, some venture capitalists prefer to play it safe and go for short-term gains over long-term sustainable ROI.
If ESG is written off as a meaningless label, there is a risk that companies will step back, while many of us want the big brands to go further and faster, especially in the fight against plastic. Indeed, our position at Xampla is that the old way of doing things will ultimately carry a higher risk.
As government and regulation continue to focus on outdated and less and less successful recycling techniques, ESG venture capital in the plastics field is rightly realizing that it is newer and deeper technology that will push the button and rid our daily lives of the plastic that hate everyone so much. Those who recognize this are picking up a global megatrend that people like Smith may despise today, but will be rewarded tomorrow.
For potential investors, Xampla, the UK’s first B-Corp, appeals to the heart and mind: the market says such companies will do well, and by helping them do well, it helps everyone else in the world. buy.
Now that the world is (eventually) coming out of Covid, the very worst reaction would be to look back through rose-colored glasses on the days of quick profits and quick money. Instead, as never before, ESG investing will be the foundation of any strong technology portfolio, using capital to shape a brighter future.