ESG Integration In Startup Business Models

By Ahila Ganesan, Founder of Future Linq,

Integrating ESG (Environmental, Social, and Governance) principles into a business is akin to constructing a sturdy building. Just as a building requires meticulous planning, quality materials and robust construction to support its intended use and withstand the test of time, businesses incorporate ESG considerations into their core strategies to establish a resilient foundation for their operations. This strong foundation fortified with ESG principles ensures adaptability and sustainability amid challenges while fostering progress and expansion.

Startups, renowned for their flexibility and innovation, possess a distinctive advantage in integrating ESG into their ethos. Unlike established corporations, start-ups often emerge from founders driven by a profound passion for specific causes or issues, instilling a deep-rooted commitment to values from the outset.

Consequently, startups exhibit a heightened willingness to infuse ESG considerations into their business strategies, leveraging their agility to make meaningful societal and environmental impacts.

In recent years, the significance of ESG factors for start-ups has escalated significantly. Companies prioritising ESG not only contribute positively to communities and the environment but also gain a competitive edge.

Embracing ethical practices not only resonates with like-minded customers, but also attracts investors, enhancing funding prospects. Furthermore, ESG safeguards start-ups against reputational risks, legal entanglements, and regulatory penalties, fostering sustainability and credibility.

Startups adopt various approaches to integrate ESG into their operations, encompassing business strategy, operations, and organisational culture. They champion environmental responsibility by adopting eco-friendly practices such as renewable energy usage and waste reduction, thereby reducing their carbon footprint.

Moreover, startups focus on social responsibility through initiatives like employee diversity, community engagement and ethical business practices. Upholding robust governance practices ensures transparency, accountability and adherence to ethical standards, thereby fostering trust among stakeholders.

A Singapore and Malaysia-based HR, artificial intelligence consulting start-up, named Pulsifi has taken steps to integrate ESG practices into its business strategies. The business aims to revolutionise the HR industry by utilising AI technology to help companies make better hiring decisions and improve employee engagement.

Pulsifi focuses on the social factors, emphasising the need to support diversity, equity and inclusion during hiring processes in companies that require their services. The sustainability goal is to ensure companies make more credible decisions that hinder discrimination.

Impossible Foods, founded in 2011 by Patrick O. Brown, is a food technology company that produces plant-based meat substitutes. They aim to reduce the environmental impact of food production by creating plant-based alternatives to meat. Their flagship product, the Impossible Burger, uses 96% less land, 87% less water and produces 89% fewer greenhouse gas emissions compared to conventional beef burgers. By promoting plant-based diets, Impossible Foods contributes to biodiversity conservation and mitigates climate change.

Another example of a startup integrating ESG into their business model is Pure Harvest Smart Farms, headquartered in the United Arab Emirates, where it pioneers technology-enabled agribusiness. The focus is to have a sustainable year-round production of premium-quality fresh fruits and vegetables with a mission of farming flavourful, affordable and fresh produce.

This was achieved by innovating across the entire value chain of controlled-environment agriculture (CEA) including technology design, procurement, construction and farm operations. Thus, Pure Harvest Smart Farms secured over US$334.4 million in capital commitments from a global investor base that spans from California, USA to Seoul, South Korea. Integrating ESG factors into the business strategy shows investors recognise the value of the company’s mission and its unwavering commitment to sustainable agriculture.

Integrating ESG into startups’ core business strategies catalyses transformative success, fostering sustainability, responsibility and resilience. Despite their modest scale, start-ups wield significant influence, capable of driving positive environmental, social and economic change. By embracing ESG considerations, start-ups fortify their own operations with a strong foundation while contributing meaningfully to societal well-being and environmental preservation.,

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