Innovation

Capitalize on the Sustainability Gap

Consumers vote with their wallets. And the Social Venture Connection believes they'll support startups that step up where traditional businesses fall short

Written by Adam Spence

As consumers have become increasingly product-savvy, they’ve also become more discerning about sustainability. Canadians want to know whether their goods and services are ethically sourced and delivered. Is there respect for the people through whose hands these products have passed? Are they able to make a sustainable living?

Companies that work to advance this triple bottom line can attract these consumers. The approach can help you carve out a market niche or empower you to develop an entirely new market altogether. It can also help you retain staff and attract new investment.

Michael Andrew, chairman of KPMG International, has emphasized this point, saying, “The bold, the visionary and the innovative recognize that what is good for people and the planet will also be good for the long term bottom line and shareholder value.”

When MaRS Discovery District, a Toronto Innovation Centre, launched SVX (Social Venture Connexion) at the Toronto Stock Exchange last week, we showcased twelve local ventures that are balancing people, planet and profit to their benefit.

Consumers vote with their wallets—and they’re ready to support new businesses who step up where traditional businesses fall short.

As one reflection of this trend, global organic food sales increased by 10.2% to $29 billion in 2012, compared to 3.7% annual growth for conventional food sales. This trend is also reflected in the growth of B Corporations, an emerging group of companies that use the power of business to tackle social and/or environmental problems. They meet rigorous standards of social and environmental performance, accountability and transparency. From companies like Bullfrog Power and DIIRT in Canada, to Patagonia and Method in the US, there are almost 1,000 B Corps worldwide representing over $3 billion in annual sales.

Read: Is B Corps BS?

And, the sustainability gap extends further: it’s often the missing link in employee satisfaction and retention, which can make or break a businesses’ success €“ especially in the crucial, early stages.

Working for a company that demonstrates fundamental values of respect for people and our planet sets the stage for happy, engaged employees. At startups especially, long hours are often required: the difference is that employees can go home at the end of the day feeling that they contributed something to a cause bigger than themselves, rather than simply adding a few dollars to their employer’s bottom line. There can be an enormous sense of satisfaction and personal achievement in this type of “big picture, people first” work environment. A study, conducted in 2012 at MIT, points to some these advantages.

With SVX, we believe we have opened up a new market for small and medium sized sustainable businesses to attract capital through what’s known as impact investing. Impact investing focuses on achieving social and environmental impact alongside financial return. It’s a concept that’s attracting increased attention from the public and private sectors around the world, as we collectively face down intractable problems from poverty to climate change, compounded by constrained financial resources. There is both a necessity and an opportunity to tackle these problems through entrepreneurial approaches. Our online platform will connect triple bottom line ventures with investors and funds who look beyond profit to businesses that generate social and environmental returns as well.

Impact investing is more than just an interesting idea. It is a real opportunity for enterprises of all sizes. There are already $5.3 billion assets currently invested in Canada. Within the next decade, this market is projected to grow to $30 billion. In this phase, where impact investing is moving from a novel concept to a viable component of our local venture and mature capital markets, Canada truly has the opportunity to become a world leader.

The opportunity for social and environmental change is taking shape now, and the opportunity for entrepreneurs is just as significant. If you’re building or scaling your business, think about stepping into the sustainability gap. The results could better our world and your bottom line.

Adam Spence is associate director of the Centre for Impact Investing at MaRS Discovery District, a Toronto innovation hub that provides education, advisory services and access to capital for Ontario-based small to medium sized businesses. Spence heads up the SVX on behalf of MaRS.

Originally appeared on PROFITguide.com