ESG in the DNA | Fieldfisher
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ESG in the DNA


United Kingdom

The adoption of ESG principles in venture capital is still in its early stages. However, there are some key reasons why it will accelerate. Low investment in 2022 and a significant amount of uninvested capital, coupled with institutional investors' preference for ESG-compliant businesses presents real opportunities for early-stage, high-growth businesses.

When compared to established, mature businesses and sectors that are looking to pivot away from the less-sustainable, deleterious practices of old, companies seeking VC investment are more likely to have ESG factors embedded in their businesses from the start.

It is true that KPI-based ESG-alignment can mean cheaper debt, but even in a rising interest rate environment, making basis point savings is about incentivising relatively small changes for established businesses or mitigating any ESG-related risk. In our view the bigger movement therefore - and the greatest potential return - comes from the emerging "value drivers" in supporting next-gen companies that have ESG awareness woven into the fabric of their businesses.

Investors and lenders need to focus on companies where ESG principles are deeply integrated (and ingrained), from early stages. By doing so, the venture capital industry can lead the way in promoting real change and innovation.

Fieldfisher's Venture Debt and Growth Finance practice advises both lenders and borrowers on all types of venture debt and growth finance facilities. We have a long track record of advising banks, non-regulated lenders and borrowers in the UK and across Europe with the structuring and negotiating of these facilities.

To read more about our and our clients' thinking on how the venture and growth industry is uniquely poised at the start of the ESG journey and how we can help you capitalise, download the full article.