# ESG investment: Making your business a more sustainable place
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-11-11
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: The Impact of ESG Investing on SME Profitability
Meta Description: Explore how focusing on local investments with ESG principles can boost profitability and navigate SMEs towards a sustainable future.
URL: https://financedigest.com/esg-investment-making-your-business-a-more-sustainable-placehtml

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_By **Morgan Terigi,** CEO and Co-Founder of_ [_Incomlend_](https://incomlend.com/)

Historically, the main objective in business strategy was growth, to adopt an international approach and establish operations in foreign markets. However, that focus started to shift to more local surroundings over the past few years. The more local your investment and its subsequent positive impact, it is likely to increase profitability and allow your company to grow.

We have seen various forms of sustainable finance multiplying in recent years, with a growing number of institutional investors and funds incorporating Environmental, Social and Governance (ESG) in their investing approaches. While [financial performance remains](https://www.financedigest.com/survey-finds-regulation-remains-top-financial-services-priority-for-2017.html "Survey finds Regulation Remains Top Financial Services Priority for 2017") paramount, companies that have demonstrated ESG principles have a leading edge over competitors.

[SMEs have faced](https://www.financedigest.com/smes-facing-an-uncertain-future.html "SMEs facing an uncertain future") financial challenges in the past two years brought about by the pandemic. As businesses struggled to stay afloat, [ESG investment](https://www.financedigest.com/how-green-are-your-investments-why-esg-data-integration-is-key-for-financial-services-firms.html "“How green are your investments?” – Why ESG data integration is key for financial services firms") understandably fell by the wayside. With the current recovery journey, [alternative financing](https://www.financedigest.com/demystifying-alternative-finance.html "DEMYSTIFYING ALTERNATIVE FINANCE") offers them a way forward into an ESG-driven future.

Alternative financing, particularly invoice lending, offers investors the opportunity to purchase unpaid invoices at a [cut down price](https://www.financedigest.com/tesla-cuts-u-s-model-s-and-model-x-prices-between-4-and-9.html "Tesla cuts U.S. Model S and Model X prices between 4% and 9%").  It gives businesses quick [access to cash](https://www.financedigest.com/supporting-a-fair-and-resilient-society-by-protecting-access-to-cash.html "Supporting a fair and resilient society by protecting access to cash ") and, for investors, the promise of profits in the future. Invoice lending allows SMEs to [plan for the future confidently](https://www.financedigest.com/how-the-epa-plans-to-boost-confidence-in-the-uk-payments-industry-post-brexit.html "How the EPA plans to boost confidence in the UK payments industry post Brexit"). They can access capital financing quickly and efficiently without waiting for months for their invoices to be paid in full. It allows them to plan their supply chain in a more vibrant, [sustainable future](https://www.financedigest.com/applying-a-sustainable-lens-to-the-financial-industrys-future.html "Applying a sustainable lens to the financial industry’s future").  SMEs, who have used an invoice financing programme, have [already seen the benefits](https://www.financedigest.com/uk-tourism-sector-already-reaping-the-benefits-of-brexit.html "UK TOURISM SECTOR ALREADY REAPING THE BENEFITS OF BREXIT").

The [positive impact of ESG investment>](https://www.financedigest.com/liverpools-new-chinatown-perfectly-positioned-for-property-investment-this-chinese-new-year.html "Liverpool’s New Chinatown perfectly positioned for property investment this Chinese New Year")

[According to the latest report from the Global Sustainable Investment Alliance, sustainable investment in key markets, including the US, Australasia, and Europe, is actively growing, have reached $35.3 trillion this year, according to the latest report from the](https://www.financedigest.com/liverpools-new-chinatown-perfectly-positioned-for-property-investment-this-chinese-new-year.html "Liverpool’s New Chinatown perfectly positioned for property investment this Chinese New Year") [Global Sustainable Investment Alliance](https://gsh.cib.natixis.com/our-center-of-expertise/articles/latest-edition-of-the-global-sustainable-investment-review-confirms-strong-growth-of-esg-assets-all-over-the-world). The rise in ESG [investment has had several positive impacts on businesses](https://www.financedigest.com/credit-agricole-launches-china-ma-and-investment-banking-business.html "Credit Agricole launches China M&A and investment banking business") and corporations, their public image, stock price, and overall market profitability.

In a study earlier this year, UK [Butterfield Mortgages Limited](http://www.wealthadviser.co/2021/06/04/301381/quarter-uk-investors-plan-make-esg-investments-2025) (BLM) found that approximately700 UK investors surveyed, a quarter had plans to make ESG investments by 2025, with over fifth planning to do so within the year. Meanwhile, 3 out of 10 [investors were willing to accept lower returns](https://www.financedigest.com/investors-seek-higher-returns-as-catastrophe-bond-issuance-slows-during-q2-according-to-aon-study.html "INVESTORS SEEK HIGHER RETURNS AS CATASTROPHE BOND ISSUANCE SLOWS DURING Q2, ACCORDING TO AON STUDY") if it meant that their money had a positive social or environmental impact. Similar findings were reported by [Deloitte](https://www2.deloitte.com/xe/en/insights/topics/strategy/cfo-benefits-esg-investment.html). Their research found that most investors indicated that [sustainability efforts had positively impacted their revenue and position within the international investment](https://www.financedigest.com/closing-the-sustainable-investment-gap.html "Closing the sustainable investment gap") landscape. Over half of those surveyed said that their [sustainability efforts positively affected revenue growth](https://www.financedigest.com/which-kpis-should-a-budding-business-focus-on-for-sustained-growth.html "Which KPIs should a budding business focus on for sustained growth?") and overall company profitability, while 48% reported increased customer satisfaction.

Intriguingly, however, it wasn’t only among shareholders and customers that such impact was felt, as 38% reported that their efforts to be more environmentally and socially [sustainable led to an increased ability to attract](https://www.financedigest.com/cobots-in-the-financial-workplace-reducing-costs-attracting-talent-and-enhancing-sustainability.html "Cobots in the financial workplace: Reducing costs, attracting talent and enhancing sustainability") and retain staff.

These findings were supported by a report from [Trillium Asset Management](https://www.jhinvestments.com/viewpoints/esg/strong-esg-practices-offer-advantages) whereby ESG investment was found to provide customers with a complete sense of the company’s value and values. ESG [investment had been found to lead to greater operational performance](https://www.financedigest.com/three-fundamental-tips-to-enhance-your-investment-portfolio-performance.html "Three fundamental tips to enhance your investment portfolio performance") in 88% of cases and increased stock prices in 80% of organisations. This positive change was also noted in the running costs of organisations, with 90% of those surveyed [reporting lowered capital costs following ESG investment](https://www.financedigest.com/manchester-united-tanks-on-report-glazers-may-avoid-sale-with-new-investment.html "Manchester United tanks on report Glazers may avoid sale with new investment").

**_Looking ahead to 2022_**

Overall, this highlights several quantifiable [reasons why investors are turning more and more to ESG investment](https://www.financedigest.com/5-compelling-reasons-that-you-should-invest-in-branding.html "5 Compelling Reasons That You Should Invest In Branding"). Not only does it lead to [profitable returns](https://www.financedigest.com/lufthansa-expects-further-significant-improvement-after-return-to-profit.html "Lufthansa expects further ‘significant improvement’ after return to profit"), but it also increases public receptiveness to their organisation, increases customer satisfaction and makes employees feel valued within a company. Combined with invoice financing to increase cash flow at crucial moments within a company’s development, ESG [investment provides a platform for SMEs globally](https://www.financedigest.com/volkswagen-to-invest-in-mines-in-bid-to-become-global-battery-supplier.html "Volkswagen to invest in mines in bid to become global battery supplier") to grow and develop both within and beyond their community.

As governments worldwide battle the impact and the potential fallout from climate change, ESG investment gives SMEs the peace of mind to [know that they are doing the right thing](https://www.financedigest.com/3-things-you-didnt-know-about-trading.html "3 Things you didn’t know about trading") to make the world a better and more sustainable place. With ESG assets predicted to reach $53 trillion by 2025 (a third of global AUM), according to research by [Bloomberg](https://www.bloomberg.com/professional/blog/esg-assets-may-hit-53-trillion-by-2025-a-third-of-global-aum/), the time to invest is now.

**About Incomlend**

[Incomlend](http://www.incomlend.com) is an invoice financing marketplace giving SMEs access to tech-enabled working capital solutions worldwide. With a vision to narrow the finance trade gap underserved by traditional financial institutions, our tech-enabled and secure platform serves as a global invoice [financing marketplace to match proven exporters and importers with world-class institutional investors](https://www.financedigest.com/optable-closes-20-million-series-a-financing-broadens-investor-syndicate-in-new-round.html "Optable Closes  Million Series A Financing, Broadens Investor Syndicate in New Round"). Founded in 2016, the Singapore-based fintech company is a trusted and reliable partner for its clients, financing over $500 million in trades in over 50 countries. For more information, please visit [www.incomlend.com](http://www.incomlend.com)


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