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How Startups Can Lead the Charge in Meeting Sustainability Goals

With today’s consuming focus on COVID-19, it’s easy to forget we have other global problems that need our urgent attention. We were already coming up short on meeting the U.N. Sustainable Development Goals that envisioned a better society, environment, economy and governance globally, and the pandemic has definitively set us back even further. In fact, the U.N. believes that this year over 70 million people will be pushed back into extreme poverty because of COVID-19, the first rise of this metric in 20 years. 

Getting back on the good road is not optional, and it’s our responsibility as business leaders to lead the way.

The good news is people are snapping back into action with necessarily ambitious initiatives, notably the Great Reset, in which business and government leaders have come together to put human dignity at the heart of sustainable and resilient progress. Those who haven’t realized it yet will soon see that this mantra is essential to all companies that want to thrive in a future that, frankly, needs our help.

I know what you’re thinking: Fixing these immense problems is the job of governments, right? I would argue the mission has already proven too big for national governments alone, and with today’s pandemic, governments are cooperating less, postponing vital meetings on the environment, and cutting aid to poorer nations. Not to mention the breakdown of the Paris climate agreement and the shaky (to put it lightly) state of international politics.

So who has to step up? 

It’s clear that moving forward will need some serious legwork from corporations. Who says the market forces of capitalism can’t be just as (if not more) effective in creating societal change than a room full of risk-averse politicians? Certainly not the young consumers of Gens Y and Z, who are increasingly using their hard-earned dollars to “vote for” (buy from) companies and products making a positive impact on the causes they hold dear. Startups, as businesses that can move fast, break the rules, and weave sustainability into their fabric from day one, are perhaps in a position to make the most immediate impact. 

 

Traditional Systems Are Not Working

While we have made progress, most of the global business community has been adopting sustainability at a glacial pace. A 2020 U.N. report revealed that only two in five businesses that have committed to the U.N. goals have sufficiently adapted their targets to accomplish them–we’re talking about the companies that are already part of the UN Global Compact sustainability initiative. The bar has been set very, very low. 

Also, the traditional means for major policy changes involved large conference halls full of power players, big declarations and even bigger media coverage. The global lockdown has thrown a wet towel over this. Not being able to physically come together behind a goal, or even negotiate actions face to face, can make a movement feel stagnant and even less urgent.

But startups are born remote ready. After a sobering annual progress update on the Sustainable Development Goals (which was virtual), the U.N. appeared to speak directly to startups, announcing that reaching its 2030 goals would mean “reimagining the way people work, learn, live and consume, and listening to young people.” 

Being a good startup founder means being entitled enough to not buy what others are selling. Any rule is meant to be broken if it means getting to where you’re going. Innovating when everyone said it wasn’t possible: that’s what being a 21st century founder is.

So who’s better placed to create integrated food systems, build more inclusive workplaces, and tap into modern energy and alternatives to finite resources, than the recent graduate with a wacky new idea, the engineer who’s just made a monumental discovery, or the budding entrepreneur with a replicable green business model?

 

We Need To Set Milestones For Long-term Impact

Companies are often prompt to pledge, make policies and publicize their sustainability initiatives, but no one’s benefitting if they’re hollow. You will be called out, and it will be damaging to your brand.

The problem is that “impact” is hard to quantify or prove–even at national level, let alone in individual businesses. Currently, companies are held to account in some ways, for example, Environmental, Social and Governance (ESG) rating agencies are used by investors to monitor companies’ sustainability claims, but these have been linked to conflicts of interest and misleading scores. Tracking progress can also involve independent auditors and public data such as Emissions & Generation Resource Integrated Database (eGRID) data. But social impact indicators are far harder to envision.

What we need to do first and foremost is come together around achievable targets in the spirit of the U.N. Sustainable Development Goals, but remodel them to make sense within business strategies. 

Business leaders should approach sustainability like they would approach any other business initiative: By first defining actionable and measurable Key Performance Indicators through which all strategy and benchmarking around the project will be based. The implementation of KPIs forces you to be focused and accountable. 

The U.N. did an admirable job defining 17 Sustainable Development Goals, each with a number of sub-targets. If a business really wants to create change, then its leaders need to create specific KPIs aligned with those sub-goals. That’s why a collective of companies and organizations led by the Founder Institute has agreed to set a number of “Impact KPIs,” or iKPIs, as core parts of their business models. 

For example, one U.N. target under equal education includes “improving access to technical and vocational skills for employment and entrepreneurship.” Relevant iKPIs for this target could be to make publicly available any reskilling or upskilling resources your company may have created for its employees–it’s likely they’re already digital–and/or conduct a technical training course for at least 100 students in your local community center by the end of 2021.

Be ambitious and specific, but also realistic about what you can achieve over what time scale: Flying too high and failing risks demotivating your team and ultimately backfiring on progress.

There are frameworks in place that complement business’ individual strategies, such as joining the UN Global Compact and following the Global Reporting Initiative, but as important as these are in motivating companies, you need to weave the concepts into your internal structure through iKPIs.

 

Be Transparent And Measure Progress

When it comes to true impact, it’s not about the journey, it’s the result that counts. There’s a real issue with data gaps and the ability to gather stats on achieving the U.N.’s Sustainable Development Goals. 

Startups are at the forefront of technological–and data gathering and processing–advancement. Together, we can come up with solutions to data gaps. There needs to be more communication between companies and stakeholders like investors, who care a great deal about impact goals, to create more objective tracking systems that can be trusted by all.

Chances are your startup has its own metrics, methods and tools: If these can be applied to iKPIs across companies, share it with the world. For example, blockchain is already being used and advocated for as a more tamper-proof option for tracking progress across companies. Initiatives such as ROOY are also sharing their own method of measuring impact, in ROOY’s case by tracking organizations’ outputs, lead indicators and outcomes.

If your company’s technology can be of use, create events around it, share it in presentations. Don’t be jealous–it will also raise your profile and brand by offering the solutions everyone needs, and that governments are calling for.

Transparency is essential to making this work and bringing more people into the fold. Let the world know how you’re progressing, including your shortcomings. Again, this is not about ego boosts, it’s a collaborative project we’re all a part of. By admitting difficulties, you may receive advice on how to do things better. And sharing positive results not only recharges your team and everyone involved, it inspires others to replicate your model in their own business. Make sure those results reach the eyes of your industry peers, as well as institutional actors, where it can have serious reach.

So in your business impact plan, integrate a consistent measurement system so you know how you’re progressing. Adapt and iterate, just as you would with other business KPIs. 

 

Balance Purpose With Profits

The idea that sustainability and profits don’t go hand in hand is a dangerous myth. Profitability has a proven link to ESG impact indicators, and today’s impact investing market is already worth $715 billion, according to the Global Impact Investing Network.

Sure, adopting sustainability targets does not lend itself to irresponsible growth, but you shouldn’t be aiming for that anyway. Sustainability is synonymous to what all companies strive for: long-term growth and resilience.

Investors knew this before the pandemic, with a quarter of all U.S. investment going to companies with ESG initiatives. These sustainable companies also performed better during COVID-19, and some analysts say this had nothing to do with the rating itself, but was thanks to the companies’ inherent durability against adversity and good credit ratings.

Balancing the needs of our planet with our need to generate profits is complex. But being in that position gives you one of the best tools to strike that balance. Sell your purpose to investors, showing them exactly how your sustainable approach will drive long-term performance, support employee well-being, attract conscious consumers, and streamline your operations–recycling materials to reduce waste, etc. Hire a team that is purpose-driven, and you’ll likely also stumble across better talent (90 percent of people are willing to take pay cuts in exchange for greater meaning at work).

Together, we can also strengthen alternative funding that is more in line with sustainability goals. That includes only reaching out to investors who prioritize impact companies, working with ESG funds or using “green” crowdfunding sites like Oneplanetcrowd. Impact companies have raised hundreds of thousands of dollars online.

As we build these networks, we can also apply more pressure to governments to redirect part of their budgets–such as trillion-dollar fossil fuel subsidies–into funding sustainable entrepreneurial initiatives.

 

Be The Change You Want To See

Responsibility as a business leader not only applies to your products and services, it also means taking a long hard look at who you partner with. You may be on track with iKPIs, but are your providers? Your contractors? Who’s paying for the events you’re being invited to speak at? Only about one in three companies surveyed by the U.N. are looking at their value chain’s negative impact on SDGs, and ignoring this critical component slows down our collective rate of change. 

Also make sure your company is diverse and inclusive. Step out of your personal bubble and intentionally expand your network to connect with underrepresented founders and members of the industry. Partner with people outside of your traditional connections. Hire outsiders. Hold focus groups to get feedback on how inclusive you really are, listen and realize what you’re not seeing.

Finally, spread the word. This can’t stop at your company. Even if your product itself is not impact-oriented, you can multiply your brand’s impact by encouraging the public to follow planet- and people-friendly behavior. You might do this by adding to your message with subtle calls to action, such as “Pass it on,” or “Think long.”

The key to fully embracing the above is recognizing that having impact can and does create business value. The better you do, the more likely you’ll be to hang on to clients as habits change. In 2018, half of all consumers were considering changing their consumption behavior to help the environment. You’ll attract better, more dedicated talent. And you’ll expand your reach in the communities you’re helping to strengthen.

Let’s create a world where everyone wins. 


Jonathan Greechan is co-founder at Founder Institute, the world’s largest pre-seed accelerator. Founder Institute recently released A Joint Pledge for Responsible Innovation, a call for organizations around the globe to commit to responsible innovation to solve humanity’s most pressing issues.