Outlook for Investment Decisions for Entrepreneurs and Investors

The pressure on companies is mounting. After all, the EU must achieve climate neutrality by 2050. At the same time, the landscape of opportunities and risks has rarely changed as rapidly as it is now. While consumption and usage patterns for many products are changing rapidly, raw material and energy insecurity, disruptive technological advances, inflation, and a shortage of skilled workers—as well as geopolitical upheavals—are shaping the business climate in which companies develop their strategies for the future. 

Legislators, consumers, investors, and the general public are pressing companies to transform their status quo into environmentally and socially sustainable business models. Small and medium-sized enterprises, too, will in the future be required to outline strategic pathways—subject to reporting requirements—toward greenhouse gas neutrality in their manufacturing processes and products, as well as toward a circular economy and raw material management. This entails additional costs and requires significant investments. Not to mention new, real costs that are already emerging, such as the pricing of CO2 emissions.

This raises the question of how a sustainable transformation can be achieved, particularly with regard to future forms of financing. Can sustainability and economic success be combined within a company? Can financial investments in a sustainable business sector also offer demonstrable returns for investors? Investors have recognized how important sustainable business models have become and are increasingly getting involved as capital providers. 

A key factor is the strategic engagement with the development of transformative technologies—such as hydrogen, battery, or other energy storage technologies—and their integration into operational processes. The more developed a location is in terms of the availability of renewable energy sources, the easier it is to transition to sustainable business models. Success will also depend on network partners with whom recycling and raw material flows can be established in line with a circular economy. There are also changing consumer trends and usage habits, leading to disruption of business models. This requires companies to demonstrate even greater willingness to think holistically and take risks in the face of technologies that are not yet fully mature. Collaborations with green tech companies will also play a key role as drivers of innovation. 

Starting in 2026, many small and medium-sized enterprises will be required to report annually on their sustainability activities. This has spurred the collection and processing of the data required for this reporting and has made the benefits of a standardized ESG rating clear to many business owners. This is because the granting of “green” financing and government subsidy practices will increasingly rely on the comparability of ESG ratings. Capital allocation based on these ratings will become the standard, for example in the form of “green” debt financing solutions. The various capital providers—banks, asset managers, private equity firms, and investment funds—need transparency regarding where individual companies stand in the transformation of their business models, both in terms of their respective risk profiles and their business performance and new opportunities for returns. They are thus becoming the key driver of transformation for the corporate sector, rendering conventional financing obsolete. 

A common theme that emerged from the expert survey was that, above all, entrepreneurs must look even further ahead than they have in the past. Potential future trends regarding energy sources, raw material use, and consumer trends must be systematically sorted and analyzed today so that investment decisions can be made to support sustainably viable business models—and the risk of emerging as a loser in the transformation is minimized.