The missing piece

15th October 2019  

by Raffaella Bianchi

«There is no planet B» is the slogan that in these days runs the streets of the world. In recent months, the issue of sustainability has appeared more and more frequently than usual in the various news. Not only because of the resounding debate between US President Donald Trump and the young Swedish activist Greta Thunberg, but also because of some important events in the economic world. For example, during the Business Roundtable, it was agreed to make some changes to the “Statement on Corporate Governance” in which the CEOs of the most important American multinationals have admitted that they no longer feel fully aligned with what was laid down in 1997: «The fundamental duty of management and directors is towards the shareholders of the company».

Since it is a topic of interest to me, after the last Friday For Future I had an interesting conversation with a friend who, having also an economic background, agreed that as analysts we usually look at and carefully analyze economic data (turnover, costs, margins, annual and future growth, etc.). However, there was a simple (or maybe not so much) question for which our opinions diverged completely and which gave me inspiration for this first editorial of mine. If the continuous growth of wealth has led, after many years, to an environmental alarm, is it possible to change course and pursue on one side the interests of shareholders and on the other the interests of our planet? In other words, can economic growth and environmental sustainability go together?

Sustainable strategic planning, risk protection, model scalability, future exit, profitability. These are all questions for which we look for answers when it comes to investment, especially if the growth of any ecosystem - small or large - positively correlates with a greater energy need. However, even considering economic growth as an increase in aggregate production, hopefully translated with greater wealth, the responsible investment component is not excluded. On the contrary, the increase in resources needed to sustain this growth, highlights the need to develop new technologies and new means of production.

And if innovation is synonymous - at an economic level - of Venture Capital, it is not surprising that in recent years an increasing number of start-ups have put the emphasis on this issue, falling into the connotation of CleanTech, thus start-ups that aim at the renowned title of unicorns pursuing profitability and productivity at the same time minimizing the negative effects on the environment. From the creation of alternative food products to the use of special fibres and fabrics, this innovative wave is also having a positive impact on the funds. In fact, in response to this urgent need, also vertical funds have moved on CleanTech, perhaps because of the fact that, from a research published by The Business Commission, this sector should be worth 4.3 trillion dollars in 2030. Some concrete examples of this are represented by start-ups as Impossible Food (valuation: 2 billion), Lime (2.4 billion), Bulb (400 million) and funds such as the ArcTern Fund II announced in September and to date the largest vertical fund in this sector (165 million).

Although change is often a slow and fragmented process, the way to go is becoming ever more apparent and is demonstrating that it is possible to pursue the interests of everyone without these impacts negatively on the environment, and vice versa. Investing, but above all planning responsibly, can become the missing piece of a puzzle that, completing the scheme, would allow to take inspiration from past mistakes, correct them, and focus on all the essential components, identifying new opportunities to gain competitive advantages and gain industry leadership.