Investing in sustainable consumption in conversation with SVB and Eka Ventures

Panel

James Downing, Silicon Valley Bank (Moderator)

Timo Boldt, Founder & CEO Gousto

Jon Coker, Managing Partner Eka Ventures

Lucy Shea, Global CEO Futerra

Sandrine Ricard, Head of Sustainability, Chivas Brothers

Summary

The concept of sustainability has been around as long as human civilisation itself. However, within the commercial domain the need for sustainable development has not always been easy to reconcile against the push for sustained shareholder/investor returns.

Silicon Valley Bank Director James Downing explained to an audience of entrepreneurs and investors during a breakfast panel session on, ‘Investing in Sustainable Consumption’, two thirds of investors now claim they want to make the world a better place.

So how can we help investors to understand that it’s no longer a trade off between sustainability and commercial success?

Joining Downing to make the business case and explain the critical role of technology in enabling sustainability success, were some of the industry’s leading thinkers: Timo Boldt of meal kit retailer Gousto, Lucy Shea of creative agency Futerra, global spirits brand Chivas Brothers’ Sandrine Ricard, and Jon Coker of sustainability-focused VC firm Eka Ventures.

Demand is growing

Downing kicked off the debate with a UN statistic that 71% of consumers will consciously avoid buying products from companies with perceived environmental and social governance practices.

Shea said that while most consumers want to adopt a sustainable lifestyle, 41% believe brands make it harder — a “serious marketing failure,” but also a great opportunity to start setting this right.

The main consumer barrier may be convenience. As Ricard put it, “Consumers want to do good but they don’t want to be inconvenienced. They want companies to solve the problems for them.” Boldt agreed, noting that while food wastage is the single biggest problem in his industry, “There’s a real win-win opportunity by building supply chains to eliminate the wastage.”

Creating a more efficient supply chain is a standard way of increasing margin and, as Coker pointed out, one that is wholly aligned with the sustainability agenda. But he also stressed the need for a more emotive argument as, “Customers care who they buy from and people care who they work for.” This was echoed by Shea, who claimed that consumers and staff alike won’t engage with sustainability just to maintain the status quo: “You have to have a bigger vision to motivate people.”

Attracting talent

One aspect of the discussion with particular resonance for the tech sector is the importance of a sustainability focus in attracting talent. As Boldt explained, “Young data scientists can command the salaries they want wherever they want to go, our sustainability focus is incredibly important to attract and motivate them.”

However, to drive a sustainability vision internally, firms must make sure it runs through the entire organisation. One of the ways companies are doing this is creating and appointing a “Department of Tiny Affairs,” in Shea’s words, to ensure the vision is being met consistently. Conversely, as Ricard pointed out, “Sustainability is about walking the walk, and so if the top managers don’t believe in it then it’s never going to fly across the broader business.”

Impact versus profitability?

Coker’s firm Eka Ventures specialises in investing in companies who are building with sustainability from the ground up and he was quick to note that many companies don’t see sustainability as an agenda — they’re just building it seamlessly into their businesses. “We’re not an impact VC; we’re mainstream, but with sustainability baked in. This is not just about doing good, it’s about delivering shareholder value… Our successful investments are because they incorporate sustainability rather than in addition to it.”

Ricard expanded on this point, highlighting that, “The numbers show that when businesses act responsibly they perform better. But you have to be in it for the long term.”

Boldt agreed, going on to explain that even when sustainability might at first appear more expensive, customer retention could sway the argument in the other direction. “If you look at Net Promoter Scores these days you’ll find growing examples of unhappiness due to issues such as plastic use. If you act on this data to make customers happier, for example by investing in reducing plastic use retention will jump which translates directly into the bottom line. Businesses need to look harder at the data, rather than just glancing at the top line costs.”

Measurement

The panel agreed that measurement is possible and is important. Shea mentioned “Efficiency is absolutely measurable. It’s maybe harder to measure the tangible positive impact on the world. A twist I’d put on this is transparency and what consumers understand. What impact are you having versus what consumers see? “

James picked up on the point that sustainability encompasses diversity and inequality, highlighting that on the Forbes Global-100 sustainability index they have on average three times as many female executives as other companies.

Jon highlighted that this pattern was reflected at the early stages as well with Eka’s current dealflow pipeline having 50%+ female founded companies, far higher than the industry estimates of 10% of funded companies having a female founder.

The macro outlook is surprisingly positive

The debate concluded with a look at the macro economic perspective, and whether current conditions are sufficiently favourable to allow sustainability investment to achieve its potential.

Boldt explained that we are moving into the age of abundance and that, “If you step away from the noise and look at the data, most things are getting better. There may be short term issues on the political horizon but the long term outlook is positive.”

The panel agreed that much of this positivity stemmed from companies’ ability to step up and take the lead on sustainability.. Shea commented that with climate change comes a greater opportunity to pursue sustainability, leading to greater equality. “The lens through which we look at things is finally changing.”

And, when it comes to achieving their sustainability-powered potential, the odds may favour the startups. For as Coker concluded, “Many firms have to retrofit sustainability. What’s great for startups is that you can begin with a blank sheet of paper and built from the ground up.”

If you are a company building a full stack brand on market network, please do get in touch (Camilla@ekavc.com, jon@ekavc.com or Andrew@ekavc.com)