Investec Study: 70% of mid-sized businesses aligning with sustainability

Investec Bank’s recent research reveals that 70% of mid-market companies are actively pursuing or have already adopted sustainability strategies. Even more notably, 90% of these businesses plan to sustain or increase their investment in sustainability initiatives, driven by the belief that robust ESG (Environmental, Social, and Governance) performance enhances their appeal to potential investors, acquirers, and partners. Nevertheless, resource and funding constraints pose significant challenges.

This study, which surveyed 500 mid-market companies encompassing public, private, and private equity-backed entities, highlights how these businesses view ESG as a pathway to strategic growth, increased access to funds, and heightened investment attractiveness. Approximately 63% recognise that robust ESG performance bolsters their appeal to potential partners and acquirers, while 58% see it as a magnet for potential investors. Crucially, 61% acknowledge that lacking a sustainability strategy weakens their position when negotiating financing.

Furthermore, companies with well-established sustainability strategies reap substantial benefits that positively impact their bottom line, including improved brand reputation (44%), operational enhancements and efficiency (39%), and robust risk management (37%). These findings serve as aspirations for those businesses in the process of developing and implementing their own sustainability approaches.

As financial ties to sustainability grow stronger, what is currently a competitive edge is likely to become the standard practise.

The biggest concerns raised, by 1 in 3 (31%) of respondents for holding back their efforts, were lack of resource and funding, a situation that has worsened over the past two years as a result of rising costs. This trend is particularly prevalent among smaller companies: 2 in 5 (40%) businesses with revenues of under £20m flagged a lack of resource and funding as a hurdle as did those with revenues in the range of £20-50m (37%), compared to 1 in 4 (25%) of the largest companies with revenues of >£250m. This infers smaller organisations are struggling to fund their sustainability aspirations and are at risk of falling behind their larger peers.

Callum Bell, Head of Direct Lending and Executive Sustainability Sponsor at Investec Bank plc, said:

“We are encouraged by the actions mid-market companies are taking to incorporate sustainability into their business models. But it is evident that they need support. Collaboration will be key to establish the right financial and strategic solutions to generate sustainable growth. At Investec, we are increasingly in dialogue with clients about growing their businesses by identifying opportunities in sustainability and research like this bolsters our ability to offer solutions and products tailored to their evolving needs”.

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