The Importance of ESG for Startups: A Q&A with PitchBook

The importance of environmental, social, and governance (ESG) strategies for startups is on the rise, with investors paying closer attention to the impact of their investments on the world. A report by Amazon found that 70% of early-stage European VC investors surveyed requested details on startups’ sustainability strategies prior to investing. More than half of these investors declined an investment if concerns were present. Balderton Capital, a London-based firm, has created a guide to help startups navigate best practices with ESG. Investment firms and startups are paying more attention to ESG due to global challenges and evolving societal expectations, putting unprecedented pressure on companies to take responsibility for the impact they have on society and the environment. Startups have competing priorities, particularly early on, and can easily find themselves feeling overwhelmed by ESG responsibilities. However, the benefits of ESG policies should not be overlooked, as it helps attract top talent, gains customer trust, and appeases future investors. The blanket ESG requirements for early-stage companies usually center on diversity and governance, which can easily be included in the startup’s early strategies.