Public finance and corporates in the rise of sustainable investing

The UK Business Angels Association tracks their investment community’s belief that public finance needs to play an important supporting role to private finance when it comes to getting change off the ground.

UKBAA members identify the need for the government to take action in applying derisking mechanisms, whether in the form of listing tax credits, loan guarantees or cornerstone investment for green banks.

In a similar vein, UKBAA’s research found the need for government and government-funded organisations to be proactive in connecting with investors, in order to ensure policy is well suited for purpose and will effectively reach the market.

While government subsidies have been seen to be constructive, there have been suggestions from those already working in the sustainability space, that more needs to be done in terms of penalties given to those who fail to stick to existing legislation.

This sentiment is expressed by the founder and managing partner at Clean Growth Fund, Beverly Gower-Jones Fei, who says “it needs everyone to invest […] It’s also about the whole finance sector investing in gree projects and actually starting to count the cost of carbon in the thigs that they do. I think the government has a role in making sure that happens”.

Corporates can also play a part in accelerating the shift to sustainable investing.

This can mean acknowledging the opportunity that aiming for net zero provides and investing as a result, or encouraging independent values, such as providing frameworks and government-led initiatives, which can have an important impact.

But it looks like there is still a way to go in terms of the number of corporates on board for the journey to net zero, as according to a PwC report centered around the ways in which business can work to achieve net zero, only 8% of the world’s largest companies represented by the Global Fortune 500 have pledged to become net zero.

Oliver Finch, a partner at Maersk Growth, a company established to digitise, democratise and decarbonise supply chains by supporting new business models and tech, shares with UKBAA that consumers and companies throughout a multitude of industries are looking for more from their suppliers, namely, a genuine commitment to decarbonise.

Finch adds, “corporates have a meaningful role to play in getting to net zero – driving change and responding to changes in underlying demand. This is a complex relationship between consumers, companies across industries and the regulatory environment stimulating and supporting change, and establishing new areas of competitiveness”.

Across different sectors, it is becoming increasingly clear that customers are starting to consider cleaner transport and logistics solutions in the same way that they might consider general speed or cost.

This is clearing the way for more market transitions into sustainably delivery solutions and investments going forward, with major players investing important sums into the space and setting commitments to reduce carbon along specific timeframes.

Jamie Rowles, Co-founder of Planet Fund, an environmental fund that has invested in 25+ startups, stated that many corporates can easily afford to take risks on technologies that might have previously been thought of as being too risky.

Rowles refers to Bill Gates, coining it the “green premium”, creating an important opportunity for startups.

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