Investors favour startups with strong environmental sustainability credentials

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If you’re looking for investment and haven’t got your environmental sustainability credentials in order you might be in for a disappointment. Investors are looking at how green your business is and it’s not just because they care about the environment, they know that your potential customers do and if no one wants to buy your products they don’t want to invest in a potential dud!

Investors want environmental sustainability credentials

A massive seventy percent of early-stage investors are requesting more detail on the environmental sustainability credentials of startups before they decide to invest, according to new independent research from Amazon. Eighty-three percent of the investors surveyed said they want to invest in more environmentally sustainable startups, and those companies with a strong sustainability profile will often command a 16% valuation premium, underlining the opportunity for entrepreneurs who are building more sustainable products and businesses.

An overwhelming majority (85%) believe startups perform better in the long-term if they have sustainability and purpose built into their business models from the outset. Those investors say the biggest challenge facing startups in the next year will be ‘accessing and securing finance’ (38%), followed closely by ‘mitigating or lessening their environmental impact’ (36%). More than half (59%) of early-stage investors surveyed in Europe said they have declined an investment opportunity in the last year due to sustainability concerns.

The research comes as Amazon and EIT Climate-KIC, the European Union’s climate innovation initiative, announce the 12 early-stage startups joining the first ever Amazon Launchpad Sustainability Accelerator to help them scale their businesses, following more than 1,200 applications from across the UK and Europe. Each Accelerator startup is committed to reducing the environmental impact of their products, an increasingly important factor in securing funds from investors.

Amazon Launchpad Sustainability Accelerator

The Amazon Launchpad Sustainability Accelerator will provide startups with a support package worth more than £30,000 through an equity-free grant, AWS Activate Credits and Amazon Advertising credits, together with expert mentorship and a tailored curriculum through the Accelerator. Startups will join the dedicated Accelerator space at Amazon’s London headquarters for the duration of the programme, and receive free access to Amazon Launchpad for a year which includes strategic account support and marketing benefits.

All Accelerator participants will complete a Climate Impact Assessment by Impact Forecast to help ensure their products are quantifiably more sustainable than what is currently available. This will also help them consider new ingredients, raw and recycled materials, and other innovations to develop and offer more sustainable products.

The first Amazon Launchpad Sustainability Accelerator startups are:

  • adrop (Germany) – a refillable hand sanitiser startup made from 100% natural ingredients, using recycled materials in their packaging
  • baybies (Germany) – vegan, gender-neutral baby care products on a mission to save the planet for kids
  • Cleannest (UK) – a digitally-native nappy company using high performance sustainable materials with a long-term vision to create a 100% biodegradable diapers
  • ETHOSA (UK) – waterless, powder-to-gel shower products designed with simplicity and sustainability in mind
  • Grub Club Pets (UK) – naturally hypoallergenic, vet-approved, insect-based pet food that delivers the nutritional goodness of regular meat, without the carbon footprint and meat-related allergies
  • Home Things (UK) – refillable and sustainable home cleaning products to help people minimise single-use plastics
  • KLIR (UK) – a research-based supplements brand to boost brain function, building sustainability into each step of their supply chain, from sourcing to packaging
  • Laundry Leaves (UK) – waterless laundry detergent sheets that replace plastic bottles and can be shipped more sustainably than heavy traditional detergent
  • OMNI (UK) – vet formulated and nutritionally complete plant-based pet food which uses less land, water and creates fewer greenhouse gases compared to meat-based equivalents
  • Skingredients (Ireland) – a natural skincare brand with a refillable, recyclable packaging system
  • SURI (UK) – electric toothbrushes which are reusable and repairable, with replaceable heads made from plant-based materials
  • YOKUU (Belgium) – waterless, probiotic-based cleaning products

Entrepreneurs are finding ways to turn the challenge of climate change into a growth opportunity, and investors are backing those startups with sustainability in mind from the outset, moving away from businesses where those credentials are missing. This is where the Amazon Launchpad Sustainability Accelerator comes in – we have designed a programme to help founders start and scale more sustainable product-based businesses with expert-led virtual workshops, specialised mentorship, a tailored curriculum, and access to a network of like-minded founders. We are excited to welcome our first Accelerator group. Impact can only happen at scale, and scale will only happen if businesses large and small are choosing to lead at pace.

– Aditi Singh, General Manager, Amazon Launchpad, Europe

Investors perceive climate-positive businesses as more likely to deliver on financial performance, and more frequently, they are being pressured away from companies that don’t demonstrate sufficient impact potential. We have selected a stellar cohort of startups for our first Amazon Launchpad Sustainability Accelerator, and we are looking forward to helping them navigate these complexities and ensure they are sustainable from the start by accessing the support, grants and visibility they need to scale.

– Aimee Apel Accelerator Lead, EIT Climate-KIC

One Response

  1. The WEF have a large report on ‘Global Risks Report 2022’, and a section on ‘Disorderly Climate Transition’ as these changes towards rewarding companies is a reaction to the goal of ESG (Environmental, Social, and Governance) reporting.

    Although any startup or company favouring environmental issues is positive, what concerns me is the chaos that most likely will pursue in the meanwhile in order to achieve this.

    To quote from the report:

    “The goal of 1.5°C is so fundamental that societies need to be prepared to assume negative consequences of policies taken by governments today to avoid the worst consequences tomorrow. This includes job losses, increased costs, and geopolitical insecurity associated with a disorderly transition. Only a socially just transition will make the consequences bearable for large parts of societies with governments needing to create policies and social-protection systems that help reduce the impacts for those affected.”

    I foresee a lot of heartache for a lot of business and individuals in the coming years. I’m not sure if ‘social-protection systems’ is a nod towards UBI.

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