Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Sifted | Freya Pratty | Mar 31, 2022
Environmental, social and governance factors have gone from being a concern of specialist investors to a key part of mainstream investment strategy but, for all the talk, how are VC firms’ portfolio companies actually doing? Well — much better on the S and the G than the E, new research shows.
The average score for environmental metrics was 1.4 out of 4, compared to 2.6 for social and 2.7 for governance. In particular, startups showed strong progress on diversity and inclusion in the workplace and mental health provision. 57% of companies said they would provide diversity and inclusion training for their teams this year, and 58% said they have a mental health policy in place. Likewise, nearly 40% of businesses are looking to measure the gender pay gap.
The average performance of early-stage startups on environmental metrics is almost 50% lower than social and governance metrics. Just 7% of startups have a policy in place to achieve net zero carbon.
There are some differences between sectors too. The research found that SaaS and fintech companies have struggled to adopt environmentally friendly practices at the rate of other industries. 65% of SaaS companies surveyed scored 1 out of 4 stars on environmental metrics. Ecommerce and manufacturing companies did well — scoring 3 stars on average.
Change has to come from investors as well as startups themselves, McCormick says. “It’s our responsibility as investors to take some of the burden away from startups that are struggling to know how get started,” she says.
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