Antler believes that each startup should start with the right intentions to incorporate best practices and policies for non-financial considerations. Sustainability should be considered by every company.
Some of the numbers shown below demonstrate the general sentiment across different groups that highlights why sustainability considerations are important.
1 Edelman Trust Barometer 2022. 2 World Economic Forum survey: ESG Pulse Check: Getting the Basics Right for Start-ups and Venture Capital Firms, September 2022. 3 McKinsey Quarterly November 2019: Five ways that ESG creates value. 4 ILPA and Bain & Company ESG Report 2022. 5 PwC Beyond compliance: Consumers and employees want business to do more on ESG. 6 Just Capital, 2022 Americans’ views on business survey: Americans want less talk, more action.
Investor priorities: A growing number of investors weigh sustainability factors heavily in their investment decisions. Non-compliance can lead to reputational risks, legal issues, or missed funding opportunities.
<aside> 💡 Key insight: Sustainable investments have gained momentum, accounting for more than a third of all assets globally according to the Global Sustainable Investments Alliance (GSIA), and are expected to reach US$40 trillion by 2030.
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Regulatory Landscape: With regulations evolving, startups are increasingly required to disclose sustainability-related information. Adapting early positions startups favorably as they scale.
The chart below highlights the increasing number of sustainable finance policies happening around the world.
Disclosures regulations means that VCs need to explain:
As companies grow there will be certain data requests coming from investors around how a company is lead, managed and how it operates.
Examples of these regulations include Sustainability Financial Disclosures Regulation (SFDR) for EU domiciled funds (and any fund that intends to market to EU/EAA LPs). In the UK the FCA will launch the Sustainability Disclosure Requirements (SDR). Australia and the US have all proposed investors to disclose similar information. Corporate Sustainability Reporting Directive (CSRD) in Europe includes detailed reporting requirements to bring the level of sustainability reporting in line with financial reporting. Growth companies are not currently in the scope of the regulation, however, will likely face increasing requests for information from stakeholders who are directly impacted by the regulation.
These are just a few examples, and the regulatory landscape is evolving rapidly as more and more countries recognize the importance of investor sustainability disclosures.
Startups are increasingly becoming the destination of choice for the millennial and GenZ generations. Culture, development, and impact can all play a crucial part in attracting and retaining the best talent. Millennials and Gen Z prioritize employers who share their values on sustainability and social responsibility. Companies that embody these values attract and retain top talent.