By Ethan Li
B.S. Economics & Statistics - University of California, San Diego
How are companies in the Engineering, Construction, & Building Material industry focusing on raising capital via private equity?
There are many ways Engineering, Construction, & Building Material companies raise capital through private equity, depending on their company’s size, net worth, and projects. For instance, if the company is to work on a toll road project, private placements raise funds by offering equity or debt to a select group of private investors. The company will be able to raise capital more efficiently and faster than public offerings. Private placements also have fewer regulatory obligations. However, the downside is that there may be a risk of loss of control when the private placements result in a gain of control by the investors, transferring the power from the founders to the investors. The investors might demand higher interest rates in the process too, hindering the company’s healthy growth. Conversely, if a company happens to be a start-up and is to work on smaller projects such as eco-friendly products, crowdfunding and strategic investors are the most favorable candidates. Crowdfunding allows a community of stakeholders to promote the success of the project, democratizing access to capital. Strategic investors foster growth by exchanging equity stakes in return of access to technology, supply chains, etc. They also form joint ventures for projects, which results in a win-win relationship.
Are Engineering, Construction, and Building Material companies adapting to Environmental Social Governance (ESG)
ECB companies adhere to investment policy mandates pertaining to Environmental Social
Governance(ESG) through many ways. Specifically for construction, sustainable building
practices have been gaining popularity, attracting investors as well as abiding by the ESG
investing policy mandates. Sustainable building practices in construction emphasize on
energy-efficient structures, reduced water usage, and so on, resulting in a lower carbon footprint. In addition, responsible materials sourcing play a crucial role in adherence to ESG investment policy mandates. Recent trends indicate that the ECB industry is pushing companies to use eco-friendly materials such as hempcrete and mycelium in order to reduce anthropogenic
changes on the environment. Moreover, the ECB industry is suggesting companies to be more engaging with its employees and labor force. An ESG-focused approach, in this scenario, will mean that the company will have the responsibility to address its employees’ concerns or questions. Concerns can include anything from fair wages, safe working conditions, or insurance. Addressing these common concerns from the employees can lead to good employer-employee relations and foster a healthier and more transparent relationship between the two sides, bolstering productivity as well as a friendlier workplace environment.
What are some ECB Environmental Social Governance (ESG) investment opportunities?
tor, do not list the name of the company but only the type) within your assigned industry? I:e Solar, wave power, sustainable farming technology. In the ECB sector, there are many ESG investment opportunities. To give you an idea, air compressors are widely used in the ECB sector, mostly involving industries utilizing oil, gas, and processing. Air compressors are typically energy consuming, causing big carbon footprints on the environment as well as a high life cycle cost, leading to the machines being more expensive to maintain. Currently, some companies have already implemented cutting-edge technologies into new air compressor models to allow the machines to run efficiently on energy and have a low life cycle cost. The conservation of energy in the newer air compressors will not only reduce carbon footprint towards building a sustainable future, but it will also be less demanding on high input of energy, making the newer air compressor models desirable for most jobs. In addition to energy-saving technologies, photovoltaic systems, more commonly known as solar panels, are widely implemented in the ECB sector too. When it comes to sustainable buildings, it typically comes to the notion that sustainable buildings have a net energy of zero. Solar panels actually generate more energy than the building draws externally, essentially creating a “plus energy building”, reducing human-induced energy consumption by a large margin.
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