# Sustainable businesses: A £9 trillion investment opportunity Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2019-04-02 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: How Sustainable Practices Drive Commercial Success Meta Description: Discover how embracing sustainability can lead to financial success for businesses. Frontier Development Capital supports green initiatives for a profitable URL: https://financedigest.com/sustainable-businesses-a-9-trillion-investment-opportunityhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd250518-5-1736839073685-compressed.jpg) By _**Sue Summers** is CEO of_ [_Frontier Development Capital_](https://www.frontierdevelopmentcapital.com/) _._ ‘Sustainability’ is the business community’s latest buzzword. Sustainable practice, sustainable products, sustainable supply chain. The list is endless. Behind the veil of PR, the shift from [businesses towards sustainability is grounded in commercial benefits](https://www.financedigest.com/how-choosing-the-right-mtd-for-vat-software-can-maximise-business-benefits.html "How choosing the right MTD for VAT software can maximise business benefits"). ![Sue Summers, CEO of Frontier Development Capital](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/sue-summers-ceo-of-frontier-development-capital-1736839074155-compressed.png) Sue Summers, CEO of Frontier Development Capital According to a recent study by the Business Commission, private sector companies could unlock more than £9 trillion worth of savings and revenue by 2030 through pursuing sustainable, low-carbon operating models. As firms begin to recognise the [opportunities that sustainability presents](https://www.financedigest.com/why-sustainability-presents-one-of-the-greatest-opportunities-for-the-financial-services-industry.html "Why sustainability presents one of the greatest opportunities for the Financial Services industry"), investors are also responding to the trend with dedicated products. Most recently, BlackRock, the world’s largest [asset manager](https://www.financedigest.com/french-asset-manager-amundi-posts-q3-outflows-of-13-billion.html "French asset manager Amundi posts Q3 outflows of billion"), announced six new sustainable equity exchange-traded funds. At Frontier Development Capital, we too have observed this shift and adjusted to it. By backing businesses with green credentials, we are future-proofing our portfolio – financing firms as they improve their sustainable product, [service or business](https://www.financedigest.com/philanthropy-is-an-underrated-tool-for-growing-financial-services-businesses.html "Philanthropy Is an Underrated Tool for Growing Financial Services Businesses") model. This approach is emblematic of a wider sentiment; companies who embrace sustainability now, will be those most likely to reap commercial rewards in the future. In the business-to-customer market this has become increasingly apparent. [Termed the ‘Blue Planet effect’](https://www.financedigest.com/ifrs-15-moving-away-from-short-term-fixes-is-vital-for-effective-compliance.html "IFRS 15: Moving away from short-term fixes is vital for effective compliance"), elements such as plastic usage and business pollution are now firmly in the spotlight. High-profile TV documentaries, [social media](https://www.financedigest.com/top-social-media-growth-companies-in-the-uk.html "Top Social Media Growth Companies in the UK") and the 24-hour news cycle are all playing a huge role in the increasing levels of scrutiny around sustainability. The business-to-business [market is under the same pressure](https://www.financedigest.com/world-u-s-share-markets-come-under-pressure-as-delta-economic-worries-mount.html "World, U.S. share markets come under pressure as Delta, economic worries mount"). Multi-national firms are now assessing their [supply chains and integrating suppliers who align with their own sustainability](https://www.financedigest.com/how-to-create-a-sustainable-supply-chain.html "How to create a sustainable supply chain") targets. The SMEs that can use their green credentials to tap into larger [supply chains](https://www.financedigest.com/eliminating-payment-barriers-the-future-of-supply-chain-payments-is-digitization.html "Eliminating Payment Barriers: The Future of Supply Chain Payments is Digitization") pose a huge opportunity for investors, with accompanying stronger order books making for a more attractive finance proposition. However, to [unlock the potential](https://www.financedigest.com/oil-firms-must-step-up-exploration-off-norway-to-unlock-potential-npd.html "Oil firms must step up exploration off Norway to unlock potential -NPD") associated with the shift towards sustainability, investors, need to adapt their approach to providing finance so that a business’s green credentials, and the subsequent impact on market position and strength, are considered at the time of an investment. In line with emerging regulations, the first step investors can take to embrace this approach is through incorporating sustainability into their commercial [due diligence](https://www.financedigest.com/why-due-diligence-is-so-important-for-direct-debit-customers.html "Why due diligence is so important for Direct Debit customers") process. By being alert to any current or forthcoming changes in environmental regulation, investors can identify barriers to entry and potential [competitive advantages](https://www.financedigest.com/ai-holds-the-key-for-both-competitive-advantage-and-risk-mitigation-in-2022.html "AI holds the key for both competitive advantage and risk mitigation in 2022") to the investee business’s industry. Beyond reviewing new and existing prospects, investors should also remain attuned to working with firms who have made steps to becoming green in the long-term – acknowledging the impact [sustainable business](https://www.financedigest.com/nfts-live-streams-sustainable-businesses-and-social-shopping-what-to-prioritise-in-commerce-this-year.html "NFTs, live streams, sustainable businesses and social shopping – what to prioritise in commerce this year") practices can have on reducing costs, increasing sales and, ultimately, bolstering the bottom-line. The challenge for sustainable SMEs when approaching [investors for funding is that green services](https://www.financedigest.com/credit-agricole-and-caceis-to-buy-rbc-investor-services-europe-unit.html "Credit Agricole and CACEIS to buy RBC Investor Services’ Europe unit") and products are historically priced at a premium. While consumers are becoming more environmentally conscious, businesses must be wary that if the current [economic uncertainty](https://www.financedigest.com/combatting-economic-uncertainty-in-2023-with-the-payments-sector.html "Combatting economic uncertainty in 2023 with the payments sector") continues, the green agenda will become less of a priority, as consumers inevitably look to reduce costs. While traditional lending can be hard to access, especially during a downturn, there are [alternative funding options available for green businesses seeking finance](https://www.financedigest.com/demystifying-alternative-finance.html "DEMYSTIFYING ALTERNATIVE FINANCE"). [Consumers are now more aware](https://www.financedigest.com/increasing-consumer-awareness-to-fuel-adoption-of-trailer-suspension-system-market.html "Increasing Consumer Awareness to Fuel Adoption of Trailer Suspension System Market") of and willing to criticise the impact a business has on the environment, and a flexible approach to funding can help businesses address the commercial implications of this growing vocalisation. With such a diverse range of investment now offered, what types of funding should [sustainable businesses](https://www.financedigest.com/metal-cans-and-glass-jars-market-demand-from-food-industry-to-grant-sustainable-business-prospects.html "Metal Cans and Glass Jars Market – Demand from Food Industry to Grant Sustainable Business Prospects ") be pursuing? [Debt finance](https://www.financedigest.com/understanding-company-debt-finance.html "Understanding company debt finance") can offer needed levels of flexibility. This makes it well suited to meeting the short-term spikes in demand for working capital often experienced by [sustainable firms when carrying out research and development](https://www.financedigest.com/nano-one-awarded-10-million-from-sustainable-development-technology-canada.html "Nano One Awarded million from Sustainable Development Technology Canada"). It also avoids [business owners](https://www.financedigest.com/carbon-zero-what-it-means-for-business-owners.html "Carbon Zero: What it Means for Business Owners") having to forego any equity stake. Another viable option, particularly for [sustainable firms posing higher risk](https://www.financedigest.com/bafin-guidance-on-sustainability-risks-a-practitioners-view.html "BaFin Guidance on Sustainability Risks – A Practitioner’s View") to investors, is mezzanine finance. This allows investors to bolster their security by using equity as a form of collateral, while providing larger deal amounts and extended repayment terms which can be beneficial to green firms whose success may be realised over a longer period, especially when absorbing initial [costs such as sourcing](https://www.financedigest.com/caixabank-proposes-sector-wide-freeze-in-variable-mortgage-costs-source-says.html "Caixabank proposes sector-wide freeze in variable mortgage costs, source says") sustainable materials. Most importantly, investors must approach sustainable [businesses ready to cultivate staged growth](https://www.financedigest.com/uk-needs-to-make-politically-unpopular-reforms-to-boost-growth-business-group-says.html "UK needs to make politically unpopular reforms to boost growth, business group says"). There are, of course, risks associated with this and just because a business is committed to being green does not necessarily mean that it will succeed. However, by incorporating both strong investor support and a robust roadmap for transition to sustainable practices, [growth potential](https://www.financedigest.com/modified-starch-market-potential-growth-share-demand-and-analysis-of-key-players-forecasts-to-2032.html "Modified Starch Market Potential Growth, Share, Demand and Analysis of Key Players – Forecasts to 2032") can be maximised. A £9 trillion [opportunity awaits and it is the investors who show the ambition to back sustainable businesses](https://www.financedigest.com/thoracic-drainage-devices-market-rising-new-business-opportunities-for-investors.html "Thoracic Drainage Devices Market Rising New Business Opportunities for Investors") now that will thrive in the long-term. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---