One sector which is gaining more importance than the recession is climate tech. Following the November COP27 talks in Egypt, numerous reports have triggered new partnerships, investments, startups, and jobs across the low-carbon economy, from climate tech to climate finance and sustainable natural infrastructures and digital infrastructure.
As per the UK reports, the entrepreneur network Tech Nation and the number of new tech companies attacking climate change four times between 2010 and 2022. PwC reported that in twelve months between 2021 and 2022, climate tech investments depicted more than a quarter of every venture dollar invested.
Considerably, these companies experience a nimbus effect. Urgent action is needed, and climate-focused businesses are cultivating the low-carbon world. But on the other hand, the urgency to create a low-carbon economy doesn’t mean these companies can overlook environmental, social, and governance (ESG) strategies. Leaders of new climate action-focused companies need to incorporate ESG from the beginning.
Why does ESG matter even for climate-friendly companies?
ESG is a boon to companies who desire to last long. Investors expect their companies to manage their social and environmental hazards, thereby capturing opportunities and transparently and credibly on their progress. Investors also focus on ESG policies, practices, programs, and governance structures. Incorporating ESG into corporate methods is critical for companies to show investors how ESG problems affect their future.
Apart from meeting the demands of investors, an ESG method can also help companies build trust with other stakeholders, including consumers, customers, business partners, government regulators, and others. Using strategically, ESG can help companies in speeding up sustainable growth. On the other hand, companies that pay only casual attention to ESG meet charges of greenwashing.
For companies dedicated to climate action, ESG serves even more importance. Investors, clients, customers, and the public will care more about these companies’ social and environmental impacts because of the mission implanted in their business plans. Integrating ESG from the beginning is an excellent way for climate startups to ensure their company is sustainable in every manner that matters to the stakeholders.
Three essentials for climate startups to integrate ESG
The three essentials which can integrate into ESG are as follows
1. Know your why
ESG is a vibrant field with evolving expectations, new regulations, and new issues that only increase the requirements for a sustainable company. Therefore, it is essential to understand why ESG is critical to your company and which social and environmental hazards impact your business.
2. Employ an ESG leader early
Once you know your ESG purpose, it’s a perfect time to employ a leader who can build out, grow and guide your ESG plan. Most startup creators are worried about headcount and want their operations to bend. Still, the head of the ESG has a critical role, which indicates that even if that person is wearing more than one hat to start, it’s essential to have a head of ESG responsible for managing the increasing demands and opportunities of the ESG as the company grows. In short, there should be a person who can lead the ship, keep the company aware of the relevant ESG issues and regulations, and serve as the primary contact for your company’s ESG stakeholders.
3. Look for a leader who is comfortable with the change :
Many technical skills and knowledge differ depending on your company’s focus. Hence climate startups should look for ESG leaders with standard capabilities like influencing diverse stakeholders, translating complex issues, adopting risk and a new invention, and indicating humility. It is indeed a fact that the world, if started, is finding a leader who is comfortable with the rapid and frequent shifting of preferences and focus as the company develops and rotates.
Conclusion
The growth of the companies is dedicated to climate action with the right leader who can guide ESG related issues in the companies and help pave the way to build the new low- carbon world.
