Environmental sustainability is no longer a choice for businesses in the modern world; It is now an expected responsibility. Green businesses with sustainable financing are forging a critical and enduring path towards a greener future.

For many businesses, having adequate financial support is not always as easy as one would hope for in the journey towards sustainability. 

In this article, we’ll introduce you to some of the core concepts needed for understanding financing for sustainable development and for turning your business green. 

Understanding Green Businesses

When we use the term “green business” or even “sustainable business”, we are generally referring to businesses that prioritise and champion environmental and social responsibility in their operations. Green businesses put priority on their ecological footprint and ethical legacy in addition to their commercial aspirations. This can include commitments to using renewable energy, sustainable manufacturing processes or partnerships with other green enterprises.

What is Sustainable Financing?

Sustainable financing is a form of financial funding for businesses to use in investments or for purposes directly correlated with sustainable practices or outcomes. Additionally, those investments or uses of the financing will still need to ensure financial return for the business, its investors and lenders.

Exploring Sustainable Financing

When it comes to sustainable financing, businesses are looking to align themselves and their respective financial structures with the principles of environmental, social and governance (ESG) criteria outlined by umbrella bodies such as the United Nations and other organisations. 

On a practical level, it can be confusing for businesses to understand how they can leverage their business practices in a way that is both genuinely sustainable for both the company and the environment.

1. Obtaining financing for sustainable development

For small and medium enterprises, the desire to invest in sustainable financing can outstrip ability. Leveraging the benefit of invoice finance can assist these SMEs in not just smoothing out their cash flow management issues and re-investing in the success of their own business, but also make strategic and timely investments in sustainable practices.

Invoice finance allows businesses to receive funds against their outstanding invoices. This means that an SME doesn’t have to put up assets as collateral and can gain quick and easier access to the funds they need to meet their business costs and invest in sustainable practices. Without access to working capital, it can be near-impossible for smaller businesses with less liquidity to invest in meaningful sustainable practices. 

2. Investing in green assets

Asset finance is another financial facility with potential for providing SMEs with opportunities for sustainable financing.

Asset finance enables businesses to invest and acquire eco-friendly assets, such as solar panels to power manufacturing or electric vehicles to facilitate environmentally friendly logistics and transport. The flexibility and customisation available with asset finance procured from a company like ScotPac means that a business can meaningfully invest in and embark on sustainable practices without negatively impacting its own commercial viability. 

3. Trading with green businesses

Green businesses with true aspirations for sustainable financing will not just focus on their own practices but those of their partners along the supply chain and even in international trade. To facilitate partnerships in trade with, potentially, new businesses trade finance can be a critical instrument.

Trade finance enhances not just the competitiveness of green businesses on both sides of the trade agreement, but provides financing options to support and facilitate the sustainable sourcing, production, transport and delivery of goods.

International trade can be complex and difficult to begin with and emphasis on sustainable practices and ESG can often serve to only heighten the complexity and difficulty. Trade finance can go a long way for many businesses in financing sustainable development and business practice.

4. Business loans to fuel green practices

More traditional business loans are not just valuable for helping to fuel financial success and ensure a business can continue operating and growing. These loans can also be critical in allowing businesses to have the liquidity and access to working capital needed to meet their environmental aspirations and invest in truly green, sustainable financing. 

Business loans through a lender such as ScotPac, as opposed to more traditional banks with more red tape, can be tailored to suit the specific needs of a green business without reneging on meeting financial requirements and long-term growth strategies. 

Much like some of the previous examples, a business loan with favourable and mutually beneficial terms can facilitate further investment in everything from sustainable assets to trade with other green suppliers and businesses.

ScotPac – your partner for financing

ScotPac is not just the largest non-banking lender across Australia and New Zealand. We’re also a leader in SME advocacy through our SME GRowth Index research and significant thought leadership.

The sheer breadth and depth of our financial facilities and options allows businesses of all sizes, across all industries, to access the working capital they need to invest in their own business, fuel their own success, and ensure truly green business practices. 

We work with our clients as partners, offering comprehensive consultation to understand their needs and priorities, including for sustainable financing. With customisable financial solutions to incorporate even the highest of sustainability standards, a solution with ScotPac is the green fuel your business needs to grow.

Committing to sustainable financing is becoming more and more important in an increasingly environmentally-conscious market and world. Of course, it’s also an increasingly ethical consideration for the benefit of the climate, the world and everyone in it.

To find out more about our products and how one of our lending specialists can help you, make sure to contact us today.