This topic frequently leads to confusion within the industry, underlining the need to differentiate between two key terms. Here’s our take on this—described as simply as we can.

<aside> <img src="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/45084749-bfbc-4c8b-af58-f3f9a75f7705/Antler_Sign.jpeg" alt="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/45084749-bfbc-4c8b-af58-f3f9a75f7705/Antler_Sign.jpeg" width="40px" /> Environmental, Social, and Governance (ESG) refers to the critical factors that, while not always visible on a traditional balance sheet, have a direct and significant impact on a company's financial outcomes and long-term success. It encompasses the risks and opportunities tied to a company's practices in managing environmental, social, and governance issues. Forget the jargon and labels—ESG addresses the tangible and intangible elements that build more resilient and robust businesses over time. Every company can and should actively consider it as part of its strategy for sustainable success.

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• The diagram below shows the five business areas to which ESG relates.

• A company that chooses to incorporate ESG into its business model, processes, and policies will prevent or reduce significant effects on important negative outcomes for people and the planet. This can be impactful in itself.
• ESG and impact are not mutually exclusive. For a company to have an impact, strong ESG practices also need to be in place.
• At Antler, the way we define impact portfolio companies is that the companies not only act to avoid harm but also generate one or more significant effect(s) on positive outcomes for society and/or the planet.

<aside> <img src="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/a5ca4a4e-1dfb-4369-add3-018a67298ba5/Antler_Sign.jpeg" alt="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/a5ca4a4e-1dfb-4369-add3-018a67298ba5/Antler_Sign.jpeg" width="40px" /> Impact, on the other hand, focuses on the intentional outcomes of a company's products, services, or practices that intentionally generate positive, measurable social and environmental benefits. Often, impact companies align with the UN Sustainable Development Goals (SDGs), which offer a framework for addressing global challenges. However, it's important to note that the SDGs were primarily designed for governments, not investors or startups.

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• Antler invests in great founders and strong business models. Our investment decisions are not based on whether a company is defined as an impact company or not. We make investment decisions based on whether a portfolio company considers ESG factors. We believe it is important to categorize portfolio companies—if they meet the definition of impact—to make the distinction and offer appropriate support.

Antler integrates ESG and impact considerations into its investment process, outlined below:

<aside> <img src="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/a5ca4a4e-1dfb-4369-add3-018a67298ba5/Antler_Sign.jpeg" alt="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/a5ca4a4e-1dfb-4369-add3-018a67298ba5/Antler_Sign.jpeg" width="40px" /> Sustainability: Sustainability is often misunderstood as purely environmental, but it encompasses much more. At its core, it’s a dynamic system that balances human needs, environmental health, and economic systems. Sustainability evolves over time, shaped by changing priorities, narratives, and innovations. At Antler, we recognize that sustainability cannot be universally defined or applied—it depends on the specific context. For early-stage companies, sustainability involves addressing immediate realities while building toward long-term goals. It reflects the balance between short-term constraints and future ambitions, making it a flexible and evolving concept rather than a fixed target. At Antler, we use sustainability as an all-encompassing term that includes both ESG and impact, recognizing their distinct yet complementary roles.

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