Finding the right balance between social impact and returns.
Large investors like ESG-supportive, high-performance exposures. More and more investors are looking for value with values. And at Valloop, our focus is on a specific kind of impact investment that brings a unique perspective on ESG.
Environmental Social Governance (ESG) terminology varies between sustainable investing, impact investing, and responsible investing. All of which are ESG.
Before investing in companies, fund managers look at a wide range of factors that encompass the three key pillars of ESG: environment, society, and governance. They check things like:
- How much waste a company produces
- How much energy it uses
- What it does do to champion gender and race equality
- Whether it gives back to local communities
- What rights it gives its shareholders
- How transparent it is when it’s reporting to the public
Fund managers give an ESG rating to each company based on the company’s activities. The better a company’s ethical standards are, the higher its ESG score.
ESG matters because it gives investors the tools to build plans that reflect their principles. But more importantly, ESG helps push for change. Thanks to ESG, companies are held accountable for their actions and are urged to do better.
Businesses understand that they must actively find ways to increase their positive contribution to the environment and society. If they don’t they will miss out on potential financing opportunities and revenue streams.
In 2018, 48% of consumers said they would “definitely or probably change their consumption habits to reduce their impact on the environment” according to a survey by Nielsen, which also found that the values were reflected in actual spending with $128.5 billion spent on FMCG products that same year.
But it’s often assumed that ethical investing harms performance and returns. Yet research has shown that ethical investments tend to perform as well as other types of investments.
What does ESG mean for Valloop?
For Valloop, ESG has a strong focus on the social aspect. This is because we believe that change starts with people. Environmental change and governance enforcement only happen when people choose to enable them when they’re able to.
As an impact investment, Valloop champions the social impact both within the SMEs we invest in, and in the communities, those SMEs are a part of. We believe that once you give people the means and incentives to do more good in the world, the rest will follow.
Social impact within SMEs
Valloop brings a co-ownership model that respects the people in the business. Our employee co-ownership frameworks and financial tools deliver a fair deal for owners and an exciting opportunity for employees.
We know that within the next 5 years, Gen Z is going to start making waves in our workforce. We also know that this new generation feels responsible for making a difference in the world.
90% of Gen Zers believe companies must drive action on social and environmental issues.
Businesses need to be equipped with the tools to both satisfy their personal need to make a difference and enfranchise them with the means of doing so.
By giving employees a stake in the business to call their own and an asset to act as a foundation for future opportunities, Valloop is working to improve employees’ prospects and personal societal impact.
Wealth managers need socially inclusive SME strategies to offer their clients. As co-owner, we work with the management team to provide support and guidance to help them drive initiatives they care about. From paid charity days and fundraising to greener office solutions, we help co-owned businesses build the world they aspire to live in.
Social impact within communities
By investing in employee co-ownership, you help build a strong society. One with:
- Improved and sustained local employment
- Stronger local supply chains
- Stronger community empowerment and responsibility
Trade sales too often result in consolidation, job reductions or even relocation. That one local business that employs over 100 people in a local community is suddenly swallowed up and sold off. The impact business closures have on our high streets and the people who depend on local employment is huge.
It’s easy to see the societal advantages that flow from a more equitable distribution of profit, improved employee wellbeing, and an increase in jobs and job security within communities.
By putting the business back into the hands of the employees, we help keep value creation and jobs in the places SMEs live. That means local taxes, local opportunities, local relationships. In a time of global challenges, we all benefit from thriving communities and a more inclusive society.
“Creating businesses whose employees have significant ownership and involvement offers a great opportunity to spread business ownership from the few to the many, increasing productivity and innovation and developing the potential of workforces in areas of high deprivation where entrepreneurs are needed.”
Impact investing with Valoop
For Valloop, ESG is all about people, which means we focus on the S in ESG. Because without people, we have no one to make a positive impact on the world. We enable buy-outs, growth finance and conversion to employee co-ownership models.
We co-own businesses with the people involved to release value in partnership with them. Our expertise unlocks new opportunities for business owners, employees and their communities, delivering value with values.