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) embodies the risks and opportunities associated with a company's operational practices related to environmental, social, and governance factors. Essentially, these are the non-financial (or intangible) factors that can impact a company's performance. Awareness and improvements across these dimensions have proven to lead to more robust and more resilient businesses over the long term. ESG is something that every company can and should be thinking about.

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• A company that chooses to incorporate ESG into its business model, processes, and policies will be preventing or reducing significant effects on important negative outcomes for people and the planet. This can be impactful in itself.
• The below diagram shows the five business areas that ESG relates to.

• 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 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 serves as an overarching term that encompasses both ESG and impact. ****

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