Environment, social, and governance (“ESG”) factors provide a framework for assessing the efforts of an organization, its value to investors, and how its values align with those of customers. For public companies, ESG is increasingly one of the most important investment criteria as investors require corporations to be fully aware of how they impact all their stakeholders. ESG investing is growing rapidly as ESG focused mutual funds captured four times the capital in 2019 compared to 2018 funds.[1]
Establishing clear, measurable ESG metrics is also vital for start-ups that are seeking investment. For instance, investors want to know what your business is doing to better the world around you. Some possible environmental, social, and governance metrics that start ups can consider might include:
Calgary’s business ecosystem has demonstrated strong ESG values. Multiple start-ups within the city have been able to secure investment due to ESG strategies that support their business model.
- Arolytics: With proprietary software and analytics, Arolytics optimizes oil and gas emissions management for reductions and cost savings. With its focus on making the energy industry more sustainable, Arolytics secured a $150,000 investment after winning the Startup TNT Summit.
- HelpSeeker: Founded in 2018 by husband-and-wife duo Travis and Alina Turner, HelpSeeker offers a searchable database of social supports based on current location and includes everything from parenting classes to shelters. With its strong social outlook, HelpSeeker received funding of $2.5 million over three years from the federal ministry of families, children, and social development. With the funding, HelpSeeker will work with the government to address homelessness.
- EnviCore: Founded during the University of Calgary’s GreenSTEM fellowship, EnviCore extracts tailings from mining and oil and gas industries and uses them in other sectors, such as strengthening concrete for construction. With waste diversion at the core of its business, EnviCore raised over $1.2 million for research and development and awarded the Sustainable Development Technology Canada seed fund.
Creating a clear ESG strategy is a competitive advantage and attracts customers whose beliefs align with your ESG policies. For start ups, focusing on ESG can also improve your reputation with consumers and attract and retain valuable employees. Being proactive on ESG standards for your company de-risks your company and encourages investor confidence.
As a Calgary-based venture builder, Tailwind assists entrepreneurs in articulating their business models and strategies - including ESG. Reach out to us to learn how we can help you in developing an effective ESG strategy for investors.
Sources: [1] Gagon. (2021 May 31) The rise of ESG investing | EY Canada