After ESG boom is community investing set to follow?

The way investors make their decisions has changed permanently over the past few years and has no doubt been accelerated by the pandemic. Global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of the projected total assets under management, with Europe accounting for half of the current ESG assets. Research from IW Capital supports this trend with it showing that 45% of investors are looking to back green or sustainable firms in 2022.

Much of what is normally considered impact or ESG investing is associated with combatting climate change and while that is a key aspect the change to the local community that a business makes is now increasing important. This is according to new data from IW Capital – a private equity house specialising in small businesses – which shows that while sustainability is the key concern for investors, community is a close second with 42% investors looking to back firms that benefit their community.

This shows a clear sign of the increased desire to invest in something which investors will hold a personal connection with, being given the chance to visit their investment into their local community and feel valued when they attend. One prime example of this is IW Capital CEO Luke Davis, who as a resident of Hove, has led a multi-million pound investment and renovation project on the seafront, creating a community hub and world-class entertainment venue known as Rockwater Hove (https://rockwater.uk). Part of this raise was a round open solely to residents which raised over £1 million.

Luke Davis, CEO of IW Capital discusses:

“The pandemic has had an impact on the UK in ways that we could never have predicted, it has created a new class of investor, one more concerned with the impact their capital is having and the difference it makes to their local area.

“If my work on Rockwater has taught me anything it would be that, given the chance, investors are more eager than ever before to make their financial decisions with altruism in mind. That is not say they don’t need good returns, but that if they can, doing good with their money is now a priority.

“Investing has never been more emotionally charged after a year where the social, environmental and medicinal good of companies has been in sharp focus. Individuals now want to back companies that can prove they are beneficial to the local area, either through employment, redevelopment, or community outreach. This comes alongside what the firm is doing on climate change and carbon emissions which is, as ever, increasingly important.

“Working with local residents on redeveloping the pub and hospitality venue Rockwater Hove has shown me how much people want, more than ever, a place to come together as a community. IW Capital’s investment in Rockwater was supported by over £1million of investment from members of the community, an indication of the strength of the sentiment shown in our data.”