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ESG in Company Development and Impact Investing

April 21, 2022

The following post was written by Cleantech Program Manager, Burak Evren, based on trends he’s noticed and lessons we’ve gathered from running the Alacrity Cleantech Program. 

Getting familiar with ESG

New financial tools to support cleantech, sustainability, and environmental protection have recently become an important piece of company operations. While Corporate Social Responsibility (CSR) principles have become a standard practice for many companies, a new, more rigorous level of standards is being created through environmental, social, and governance (ESG) practices. With an agenda to reduce carbon emissions while protecting existing jobs and industries, this shift is becoming a higher priority for governments, institutions, and private actors worldwide. Until recently, it was difficult to convince investors to put money into these areas, but as the transition to net-zero by 2050 inches closer, the trend is changing at a rapid pace.

As seen in the web boom of the early aughts, green energy companies became the darlings of investors. Today, new developments in technology and the urgency needed to address the climate crisis has put sustainable industry applications and greener technologies at the forefront of investment interest. 

Environmental, Social, and Governance Policies in Cleantech

Although awareness about ESG is growing, there is still a big gap across industries to develop the right policies, including things like ensuring sustainable supply chains from end to end, hiring practices that address diversity, equity, and inclusion, and business engagements that also have a positive community impact. These policies will not only make companies great places to work, attracting more talented people that make better products and deliver stronger services, but will also add to their credibility and fit for impact investment.

ESG is becoming an essential factor for investors as governments are increasingly pushing companies to be more responsible for their impact on society, the environment, the community, and their business partners. Raising customer awareness around these policies also motivates investors to emphasize these areas when deciding on a new investment. Technologies with high environmental impact will no longer be as attractive to investors and every early-stage company from now on will need to consider an ESG framework for their products and services before moving on with their development. Going above and beyond, certifications that prove this impact through quantifiable, verified sources could be even more effective.

Where we fit in

The Alacrity Canada Cleantech Program is helping cleantech entrepreneurs take the next step in their growth. These efforts require a good understanding of sustainable business practices, responsible consumption, and building business models that can positively impact the planet and the people on it, while also being commercially successful. Our dedicated team works with cleantech entrepreneurs to help them reach the level where investors can find the best fit for their next investment.