Is ESG key to securing the right funding?

Professional investors in the UK are expecting a greater focus on ESG (Environmental, Social and Governance) issues in small and micro-cap companies, new research from investment holding company MBH Corporation shows.

The MBH study, among UK based professional investors managing a collective £83.2bn who specialise in small and micro-cap investments, found 87% believe the focus on ESG issues will increase over the next 12 months with 31% expecting a dramatic increase in the next year.

The numbers expecting a dramatic increase over the next five years increases to 46%, the study found, with none of the investors interviewed believing the focus on ESG will decrease in the next 12 months or the next five years.

MBH Corporation plc, a diversified investment holding company listed in the US and Germany, which acquires successful, well established micro-cap and small sized enterprises across multiple geographies and sectors, says its role in helping small businesses to grow and create jobs in their communities is central to its ESG strategy.

ESG criteria are a set of standards for a company’s operations used by socially-conscious investors to screen potential investments focusing on environmental issues, social issues such as relationships with employees, suppliers and local communities and governance issues relating to a company’s leadership.

The research found 82% of investors believe the focus and investment by small and micro caps in ESG will increase over the next three years with 37% saying it will increase dramatically.

Increased focus and investment on ESG will be accompanied by enhanced reporting and transparency from companies on their ESG policies and strategies with 92% expecting the level to increase including 49% who expect a dramatic increase.

Vikki Sylvester, CEO Acacia Training and Executive Director of MBH commented: “ESG issues sit right at the heart of the corporate and investor agenda and our study demonstrates they will only grow in importance for investors and small and micro-cap companies. ESG is not just something for major companies and our commitment to ESG is integral to our business as we continually look to find new ways to make sure we continue to have a positive impact on our people and the planet.”

Callum Laing, CEO MBH Corporation plc, said: “ESG might be flavour of the day for investors right now, but whether it is called ESG, CSR, or Social Entrepreneurship, most small businesses – certainly the ones we work with – have been doing this in one form or another for decades.  Our clients and most definitely our team members needed to know that their companies stood for something more than just selling widgets.  We welcome the focus from investors and the opportunity to use 3rd party benchmarking to create a common language around the ethos that is already deeply ingrained in many great companies”