Insight to Impact: A Roadmap for ESG in Start-ups

Henry Philipson, Co-Founder, ESG_VC

Last week, ESG_VC and the BVCA published their annual research into the ESG performance of venture-backed businesses. This year’s analysis delved into data collected from 587 start-ups and scale-ups backed by the likes of Atomico, Beringea, Molten Ventures, and Cambridge Innovation Capital.

In this article, we examine the trends and issues highlighted in this report, from where progress is being made to where challenges are persisting and how the venture capital ecosystem is collaborating to enable start-ups to embed ESG effectively.

Key findings: Significant progress on Net Zero balanced by challenges in leadership diversity

This year’s research shows a near doubling in the proportion of start-ups measuring their carbon footprint (2022 to 2023) increasing from 16% to 28%. Building on this, 8% of start-ups now have a Net Zero policy in place - an uplift from 5% in 2022 - while a further 17% of those surveyed expect to set a Net Zero target in 2024.

Diversity in leadership is still an area that needs greater focus, as 41% of the start-up participants do not have a woman on their board, while the proportion of companies with no women in senior management roles has increased to 20% from 15% in 2022.

Sector benchmarking: SaaS struggles with boardroom diversity matched by strengths in AI

Diversity within specific tech sectors revealed that healthtech and biotech start-ups lead the way, with only 26% of businesses having no women on their board, compared to 45% of SaaS start-ups failing to appoint a woman to their board of directors.

However, 37% of SaaS companies offer training or codes of conduct on responsible AI ahead of healthtech and biotech (21%) and other sectors (31%).

Towards a roadmap for ESG in start-ups

The analysis captured by this year’s report has enabled the development of a detailed roadmap for ESG in start-ups. This roadmap advises companies on the specific initiatives that they may consider implementing as they scale, with guidance on policies and processes to adopt across Pre-Seed and Seed through to Series C and beyond.

ESG_VC also offers resources and training to portfolio companies throughout the year. These are designed to provide entrepreneurs with off-the-shelf solutions to ESG, enabling them to make pragmatic progress on objectives set with their investors and stakeholders.

Authored by Henry Philipson
Co-Founder, ESG_VC, and Director of Marketing & Communications, Beringea