Part #1 – Financing a Small Business in a Sustainable/Circular Economy

In this post:
The world of banking is listening,
Environmental, Social and Governance (ESG),
Keep an Open Mind,
Incentives offered by your Buyers
….a list at the bottom of other posts in this Financing a Small Business series

Money Available for Small ECO Businesses? – Ideas when setting up Circular Re-thinking projects

A lot of this is just common business sense, but let us put it in a circular production process / sustainability frame of reference.

Although lending to Small Businesses declined in 2016/17, other finance tools became more widely used. This trend improved the operations of Small Businesses, based on a drop in bankruptcies and payment delays.

As you know and deal with on a daily basis, Small Businesses are plagued by difficult time factors: *No time to keep records, *Surprise changes, *Late paying customers, *Government rulings, *Sudden supply chain delays, and many many more….

The world of banking is listening,

……….if slowly.  Old conservative banking is aware of improved Small Business operations and attracted to them.  They have accelerated their efforts to figure out how they can open up and take more risks with Small Businesses. And…..

The world of banking is changing, becoming very aware of ESG ethical Investing………..

ESG also for small business

Environmental, Social and Governance (ESG)

Banks are using ESG now that most companies traded world-wide are subjected to the Dow Jones Sustainability Group index (DJSI) which defines corporate sustainability by risk management of environmental, social (labor, etc.) and governance developments (ESG).  In some cases the banking community is beginning to take drastic steps, such as “World Bank to end financial support for oil and gas extraction”.   On every level, sustainability issues are fast becoming world-wide banking practices.  Look at the Fiduciary (Guardian, Trustee) Responsibility: of environmental, social and governance issues into institutional (funds) investment.   

3:27 min Al Gore is as much interested in Economic Growth as he is in fixing the Climate

So how can a growing Small Business, use this information to increase financing and grow?

1. Keep an Open Mind

Keep this “ESG” stuff in mind when looking for funding and try something new – ask ALL questions that come to mind.  Do not start by thinking that the idea in your head will be rejected – ask anyway !

A question not asked is a door not opened.” – Dr. M. Adams

The day before something is truly a breakthrough, it’s a crazy idea.” – Peter H. Diamandis M.D. , Founder and Executive Chairman of XPrize 

Circular operating systems and sustainability issues are changing the way almost everyone is doing business.

Small Business discussion
Photo by rawpixel on Unsplash


2. Incentives offered by your Buyers

Large companies (now subjected to that DJSI/ESG) offer their Small Business suppliers financial rewards in exchange for compliance to the large buyers’ sustainability requirements and policies. You might be able to document and negotiate:

  • better terms
  • higher purchase prices
  • bigger orders or some kind of increased business incentive
  • contributions to your costs if you are willing to improve your product
  • using an online knowledge platform from the big buyer 
  • big buyer advice, case studies and toolkits on how to make practical changes within your factory or farm

For example:
German footwear and clothing manufacturer Puma launched an arrangement with BNP Paribas bank and the (cloud based) fintech supply chain firm GT Nexus :   If suppliers get a high score on Puma’s social and environmental audit, they get a higher share of the invoice upfront, which can cut suppliers financing fees and improve peace of mind.


2:43 min
Roche Procurement: Sustainability and compliance are non-negotiable


Sustainability Networks support each other

Sustainability certified suppliers need to monitor their entire supply chain to ensure that the materials they work with are also sustainably compliant. That’s a lot of work, but not if you happen to be one of those suppliers.  It is like reverse logistics.  Being one of those suppliers gives you access to customers that otherwise would not have been interested in your products.

The Power of Connection: A Network of Sustainable Retailers

The new currency of today is connection—a feeling of being genuinely connected to one another. … Companies like Patagonia credit their supply chains for their ability to be fully transparent to consumers.

The modern company is not an island, it’s a network.

*This is a 3 part series with suggestions for financing a Small Business project:
Part #1 – Keep an Open Mind & Incentives offered by your Buyers
Part #2 – Documentation & CE and Sustainability Certificates
Part #3 – Private Funding & Government funding
and now an additional post about Waste Commodity tools.

(Remember our disclaimer: any company or website mentioned herein are only examples and should NOT be taken as recommendations or endorsements, unless specifically notated.)

Your eco-business concerns are the motive for my blog. Tell me what’s on your mind, good or bad or what you are looking for!.

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