What is ESG investment?

The investment under ESG criteria (environmental, social and government) responds to a need to be increasingly responsible in investments, which venture capital funds apply in their day to day. It is about seeking a positive impact in terms of environment, social impact and corporate governance every time we choose a company to invest, according to Andrés Dancausa, from The Venture City (TVC), has told us.

In fact, this is one of the investment firms that see this model as a trend in the financial world. When establishing a “sustainable” investment strategy, it is taken into consideration whether the initiative in question is organizationally responsible, social and in line with the environment. But, how to evaluate such subjective terms? Thinking if this investment can improve the impact of companies with society.

Obviously, the cost effectivenessTherefore, the TCO evaluation (formula for evaluating direct and indirect benefits) is not neglected. Among investors who support this model, this mindset is believed to help generate stronger returns. In fact, according to The Venture City, ESG funds have managed to register a solid performance during the year 2020.

When a startup is committed to the environment and presents a business proposal, it will surely not see direct benefits. But every action that the businessman or entrepreneur does has an impact on nature and on all of us, as a society. The consumer is increasingly aware of certain values, at the collective level, and greatly influences their purchase decision.

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In other words, a sustainable startup does not only do it as a business strategy, which is fine, but because they have built their foundations on the need for diversity, equality and human rights. They also care more about their employees and partners, thus improving the governance of companies in terms of transparency and the rights of workers and shareholders, for example.

«The startups keeping this in mind, they will achieve a better society in which to function and therefore a better ecosystem for their businesses and fulfillment of the missions for which they were created.Andrés Dancausa tells us. “It is good for each and every one of us.”

How to go “green”

Let’s imagine that an SME, which has been in the market for some time, wants to become greener and more sustainable, has infinities of way to do it. The simplest to implement, and that would have a great impact, would be:

  • Control and reduce energy consumption, through intelligent shutdown systems, for example, or promote sustainable mobility in equipment. If feasible, you can also choose to use clean forms of energy.
  • Select suppliers, so that priority is given to those who exercise an environmental commitment. This is probably one of the best formulas to improve your industry.
  • Collaborate with social organizations. It is increasingly common to see how this is a business practice that not only retains talent but also educates and improves team behavior.

At this point, we wonder if sustainability could be a passing fad, as in their day were others, that to this day we do not even remember. However, the data is there, we are “loading” the planet. Therefore, more than a fashion, it is a need that we will surely never fully satisfy.

In some cases, such as The Venture City (TVC), ESG principles when investing are part of the company’s evaluation process and support or discourage an investment. «And we are currently working on ensuring that this not only occurs at the time of analysis of the companies but also in a policy that helps companies to be increasingly sustainable from a social, environmental and good governance point of view.«, Tells us its founder.

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