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#9 – Investing in Sustainability

7 November 2019

Every week we take a look at a ‘Moment of Life’. In the final blog about our Moments of Life we talk about sustainability.

Sustainable entrepreneurship

Sustainability is a hot topic. More and more companies take into account their impact on the ecological, social and economic environment. Our research among Dutch entrepreneurs shows that 60% is willing to invest in making their business more sustainable. When not intrinsically motivated, today’s public and regulatory pressure force businesses to consider their footprint anyway. Therefore, a lot of businesses invest in becoming more sustainable.

The sustainability Moment of Life is a bit different from the other moments. Most moments are narrowed down to specific actions: a loan for transformation, for example, is used for a business makeover. But there is not one road to sustainability; there are multiple. Becoming more sustainable is not only about the environment, but also about social inclusion and integrity. A common way to group a business’ sustainable initiatives is by ESG:

  • Environmental: Investments in electric trucks by a logistical company.
  • Social: Investments in making the workplace a saver place to work.
  • Governance: Investments in a KYC team to fight money laundering.

At October, we’re happy to finance companies’ sustainable initiatives. When financing these, lenders have the chance to contribute, not only to growth, but also to a more sustainable environment. Sustainability is our newest Moment of Life, for which we only recently developed a product. So far, we have not financed this growth moment on October.

Analysis by the credit team

Companies which value and invest in sustainability think about durable entrepreneurship and how their business activities impact society. They have a future-oriented mindset and it shows that they take responsibility. From a credit perspective this is reassuring. 

Nowadays, company’s stakeholders attach more value to sustainability:

  • Consumers prefer sustainable products over unsustainable products,
  • Institutional and private investors demand a degree of sustainability in their investments,
  • People prefer to work for companies that embrace sustainability which helps to attract new talent,

Governments also offer benefits and support to sustainable businesses. Investments in sustainability are often encouraged by subsidies. These create the opportunity to, for example, reduce tax payments and therefore open up additional cash.

At October we embrace financing sustainable initiatives. During the credit process we look at multiple aspects of the investment. How is the sustainable investment impacting daily business? Does it generate extra income or does it reduce costs? Or is the company decreasing risk by investing in new safety measures? Whatever the investment, we look at the impact of the investment on the continuity of the business in the long run and its ability to repay the loan. The investment often has a positive impact on the company’s reputation and a long term contribution to the cashflow. 

– Bob en Alexander from the Credit team in Amsterdam

 

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