Attracting Investment in Fintech: Is Your ESG Approach a Help or a Hindrance?
Whether you are looking to attract new funding or manage existing investment, having and implementing a credible ESG (Environmental, Social and Governance) plan will influence success.
Why? Because the investment community equates ESG with risk and opportunity. They need confidence in your company’s ability to assess and deliver growth in an ever-changing landscape (e.g. Climate change and shifting societal norms).
Why is ESG commercially important to investors?
Investors view a company's ESG strategy as a proxy for risk management and future resilience. They're not just interested in what your business does today, but how it plans to navigate the challenges of tomorrow. With regulatory pressures mounting and societal expectations evolving, demonstrating a mature ESG strategy is becoming essential.
For fintech companies, this is particularly crucial. The sector's growth-oriented nature means that the stakes are high, and the scrutiny is intense. Investors need to see more than vague commitments; they want evidence of formal governance, materiality assessments, and clear progress against ESG goals.
What are investors looking for?
In today's investment landscape, simply talking about ESG (Environmental, Social, and Governance) isn’t enough. If your company’s website has broad, vague commitments and states that you are ‘passionate about ESG or sustainability’, that’s generally a red flag. (Unless it’s accompanied by a plan, targets and KPIs)
Whether you’re dealing with private equity, venture capital, or public markets, the demand for credible ESG actions is growing and investors at all levels are increasingly scrutinising these factors when making decisions throughout the investment cycle. They need to see a clear plan of where you are focusing your resources, evidence of action backed up by data and a clear narrative about the governance in place to ensure actions taken are effective.
This isn’t about how ‘green’ your company is (or claims to be), it’s about your attitude and management style. Investors want to invest in companies that are progressive and collaborative in their approach to ESG matters.
So, what does a strong ESG approach look like?
It’s one that moves beyond generic statements to implement structured governance, define specific KPIs, and regularly report on progress. On the flip side, a weak ESG approach—characterised by broad, unspecific commitments—can quickly become a barrier to securing investment.
Greenwashing presents a real risk from both a regulatory and reputational perspective to any company, but particularly those regulated by the Financial Conduct Authority. This is easily avoided by communicating your plans, targets and performance using data.
Here are five steps to get started:
Assess Materiality: Identify the ESG issues most relevant to your business and stakeholders.
Develop a Governance Structure: Establish clear roles and responsibilities for ESG oversight.
Set Measurable Goals: Define ESG KPIs that align with your business strategy.
Implement Reporting Mechanisms: Regularly track and report on your ESG progress.
Engage Stakeholders: Communicate your ESG strategy transparently to investors and other key stakeholders.
How can Thrive help?
Thrive has a track record in assisting fintech companies to develop a commercially pragmatic ESG plan that meets investor expectations, builds resilience, and drives long-term value.
We undertake analysis to identify the expectations of your stakeholders (e.g. investors and legislation), work with your management team to identify the company’s plans and ambitions and create a practical roadmap for your ESG agenda, no matter where you are starting. We help you to develop and embed a plan that has measurable and trackable targets that you can report and share with your investors.
Summary
Don’t let your ESG approach hinder your growth—make it your competitive advantage.