Sustainability… How we see it
Sustainability means creating value both now and, in the future
Sustainability means meeting the needs of the present day without jeopardizing the needs of future generations. It is not just about the environment; it is also about meeting social and economic needs as well. Some of the primary goals of sustainability include ending poverty and hunger, improving standards of education and healthcare, increasing water quality and sanitation and creating sustainable economic growth while protecting the health of the land, air, and sea. The U.S. National Environmental Policy Act of 1969 (NEPA) explained that the goal of sustainability is to, “create and maintain conditions, under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.”
Soon companies that focus solely on short-term results for shareholders will not be able to compete successfully. Consumers are becoming more educated and more concerned with the challenges that come with globalization such as climate change. The public is losing confidence in large corporations and many politicians push for more regulations and changes to corporate governance. McKinsey Insights explains, “For today’s value-minded executives, creating value cannot be limited to simply maximizing today’s share price. Rather the evidence points to a better objective: maximizing a company’s value to its shareholders, now and in the future.”
What Sustainability means for Business
Harvard Business Review’s “The Comprehensive Business Case for Sustainability”, illustrates how companies that integrate sustainability into their business model have strong financial performance, customer and employee loyalty and improved risk management. The article explains that social and environmental risk differs from traditional business risk because it is largely outside the organization’s control and can affect the business on many different levels. “Managing risks therefore requires making investment decisions today for longer-term capacity building and developing adaptive strategies.”
One environmental risk that companies are needing to manage is natural disasters. Climate change is causing natural disasters to be stronger and more frequent and these disasters can cause costly supply chain disruptions. Metal 3D printing technologies are growing in popularity because they can provide on-demand production and alleviate supply chain disruptions. Automotive, aerospace, and industrial goods industries have led the acceptance and adoption of this technology. Many other industries are likely to increase their investment in this area because of the increased efficiency and reduced costs that the technology can provide. This adoption will also make a positive impact on the planet by reducing waste from production as well as emissions from transportation.
While focusing on sustainability can improve the operation and resilience of companies, investors should be skeptical of companies that appear to be greenwashing or simply checking boxes. George Serafeim, Harvard Business School Professor, and internationally recognized authority on ESG investing, analyzed 4,000 companies, and found that competitors were focused on similar sustainability activities and therefore not differentiating themselves. He concluded that, “The only way to outperform in this new era will be for companies to make material ESG issues central to their strategy and operations, to go above and beyond their competitors, and then to measure and communicate their superior performance”.
Investment Banking for a Sustainable Planet
Colton Alexander is a family company. We are made up of parents and grandparents who care about the planet that we live in and will leave behind for future generations. Colton Alexander provides Investment Banking services through Weild & Co. Member FINRA/SIPC. Through our work, we are given the opportunity to help connect new and growing companies with the funding and resources that they need to thrive. It is our mission to direct our efforts to raising capital for companies that we believe will make a positive impact on this planet. The companies that we align ourselves with go beyond having good intentions, they are using creativity and innovation to solve complex sustainability issues, and this sets them apart from their competitors. We believe that either through regulation or conscience, investors will increasingly consider sustainability in their investment decisions.
Our primary role at Colton Alexander is to prepare our clients for funding and to help match them with the right investors. Sustainability is a large part of that process. We advise our clients on the best ways to communicate their value, this includes communicating the ways that the company’s sustainability goals will improve their bottom-line over time. We then help to match our clients with investors that have similar goals and values. We believe this process leads to successful and profitable relationships.
Society is not going to make enough progress towards a sustainable future simply by making incremental lifestyle changes, the driving force needs to be innovation. Some of the areas that we believe will be exciting to watch are waste to energy, clean water solutions and green infrastructure solutions.
Let’s continue the conversation. We would love to hear what innovative solutions you are excited about and if you are an investor how sustainability plays a role in your investment criteria. Connect with me at akramarchuk@coltonalexander.com or https://www.linkedin.com/in/akramarchuk/
Alex Kramarchuk is a licensed investment banker and Managing Director of Colton Alexander, LLC. Colton Alexander provides strategic advisory services to public and private sector issuers through private placements of debt and equity, M&A, private markets research and advisory. Alex holds Series 7, 66 and 79 FINRA licenses. He is passionate about contributing to society through the formation of capital and its role as an engine of commerce in today’s market drive system. Colton Alexander, LLC is an affiliate of Weild & Co., broker-dealer.
