Written in collaboration with Zei, a tool for evaluating, managing, and communicating CSR (Corporate Social Responsibility).
What is at stake?
Why is it important?
Unlike large corporations, startups are not yet subject to stringent regulations regarding their CSR commitments.
However, integrating ESG criteria into their business model from the outset, without waiting for future regulations, sends a strong message to stakeholders and constitutes a lever for performance, allowing them to:
➡️ Stand out among investors, which is favorable for fundraising;
➡️ Differentiate themselves from the competition and attract customers who are increasingly concerned about the impact of products/services they choose;
➡️ Attract and retain the best talent;
➡️ Reduce costs by limiting unnecessary expenses (energy consumption, paper waste, etc.);
➡️ Improve their brand image (both for customers and potential talents to recruit) through social and environmental commitments.
59% of startups surveyed have implemented ESG initiatives, and 95% of startups that have implemented ESG initiatives report real benefits.
Study "Startups and Responsible Entrepreneurship in 2022", EDHEC Entrepreneurs
Companies committed to CSR are on average 13% more performant. CSR Guide 2023, Zei
3 actions to implement right now
1️⃣ Identify priority ESG areas
ESG covers a broad spectrum of topics; however, not all of them are equally important and critical depending on the industry, products, business model, or geography. Therefore, it is important to prioritize them.
Filling out the B Impact Assessment is one of the simplest ways to start. It is free and very comprehensive.
When we talk about ESG, we immediately think of risks. It is true: the most obvious step is to start by identifying risks specific to your activity (industry, team size, value proposition).
For example, in the biotech industry, data security is obviously crucial. Moreover, if the founding team consists solely of men, then diversity within the team and board is an issue that should be taken very seriously.
However, ESG is not limited to risk management, far from it. Once we move away from a compliance and risk reduction logic, ESG can be considered a true lever for performance.
The company's purpose will help the startup identify the specific areas in which it can seek to excel or innovate (rather than just being a "good citizen").
For instance, the scale-up ContentSquare committed to digital accessibility and sought innovation in this area by developing an open-source plug-in that enables people with dyslexia and others to read text more easily on Chrome or Microsoft Word.
The "materiality" study is a great way to identify ESG issues specific to the startup's activities, including both risks and opportunities.
Simply put, the "materiality" study establishes a hierarchy of ESG issues based on their importance to stakeholders and their impact on the business.
To conduct this study, the SASB Materiality "Finder" tool is readily accessible.
2️⃣ Building the ESG Roadmap and Measuring Progress
- Appointing an ESG Sponsor
- Establishing an action plan based on identified priority areas
- Determining impact indicators
- Integrating commitments into job descriptions and objectives for each employee
In the early stages, it is important for the founders to champion the ESG subject to align the vision, drive the topic, and ensure its significance. Later on, a sponsor can be found among the employees who can create a working group.
3️⃣ Ensuring Formal Monitoring of the ESG Roadmap and Communicating It
- Choosing suitable tools to track the progress of initiatives (e.g., Zei, Goodsteps, Sami, etc.)
- Reporting to the executive body and the non-executive body and presenting results to employees
- Creating an ESG policy document and/or an impact report, aligning it with the company's mission and values
→ This document can be used internally as a roadmap, shared with stakeholders, or displayed on the company's internal website in a public version (e.g., Explora Project).
The startup can entrust the responsibility of the ESG subject to a board member from its inception, who will be in charge of regularly presenting key performance indicators (KPIs) related to ESG to the board (e.g., annually). It is not necessary to establish specific quantitative targets at this stage (more relevant from Series A onwards), but rather adopt the habit of measuring KPIs from the start, which will be crucial for the future.
Bettina Denis, Head of Sustainability & ESG at Revaia, leading European sustainable growth investor.
📚 Further Reading
🔍 Focus on Different Types of RSE Ecosystem Players
Several types of RSE (Corporate Social Responsibility) tools and players have emerged in recent years. We can categorize them into three main categories: labels, consulting firms, and digital platforms.
- RSE Labels
- Consulting Firms
- Digital Platforms
RSE labels do not directly accompany companies in formalizing an RSE approach, but they award a certification to companies that meet specific criteria regarding social, environmental, and ethical practices at a given time. These criteria can vary depending on the specific label and the standards to which it refers. There are many international and national RSE labels, such as B Corp, ISO 26000, Fair Trade, LEED (Leadership in Energy and Environmental Design), and Global Reporting Initiative (GRI), each with its own criteria and evaluation process.
Several consulting firms specialize in RSE, providing expertise in sustainability and helping companies adopt responsible practices, manage RSE-related risks and opportunities, and improve their reputation and overall performance.
Various platforms, such as Zei (for RSE evaluation, management, and communication) or Vendredi (for engaging companies and employees in social and environmental challenges), support startups and companies in their RSE initiatives and impact strategy. As platforms, they enable companies to structure their approach, engage employees, and make RSE a real driver of performance.
📖 RSE Guide (2023, Zei)
Guide provided by Zei, a tool for RSE evaluation, management, and communication.
📝 B Impact Assessment (B Lab)
Tool developed by B Lab (B Corp Label) to measure and assess the overall performance of a company.
📝 RSE Toolbox (Vendredi)
Toolbox offered by Vendredi, a platform for engaging companies and employees in social and environmental challenges.
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✍️ Contributors to this document:
Zei is an evaluation and management solution for RSE initiatives designed for reporting and communication to clients and employees.
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