The sustainability conversation is taking place across all industries. Consider the dichotomy that’s seized the fashion industry over the last few years. On one hand, fast fashion has proliferated. Highly profitable and equally exploitative, fast fashion companies profit by selling clothing that is popular, inexpensive, and expedited.
As this strategy gained market traction, thrifting also resurfaced and cemented as an industry trend. Equally inexpensive and much more environmentally friendly, thrifting requires consumers to spend more time, but reduces waste, overproduction, and unfair labor practices.
Should we write off the simultaneous growth of these two shopping modes as one of many 21st-century paradoxes? Or does it make sense that the downsides of fast fashion, despite its ridiculous convenience, have gotten consumers thinking about how sustainability is best in the long term?
Across all sectors, sustainable businesses are popping up as important answers to improper practices. Founders are building start-ups that are designed to answer environmental, social, and governmental (ESG) pain points. The qualities a shopper values in a thrifted item-durable, green, money-saving-are the same qualities investors are valuing in start-ups. Despite their best aims, investors follow the yield; luckily, the yield in the post-COVID market is for the sustainable-founder’s taking.
A Pandemic-Imparted Silver Lining
A survey by Aviva revealed the pandemic made ESG factors more important to the investment decisions of 55% of investors. Start-up founders are experiencing something similar: a 500 Startups survey found that 90% of founders believe ESG practices have become more important since COVID-19. Whether these observations are because unemployment and childcare loss disrupted corporate diversity, equity and inclusion (DEI) movements, because remote work was exponentially better for the environment, or because of another factor altogether, the takeaway is the same: the pandemic accelerated ESG’s value to investors and founders.
Starting To Share the Start-Up Story
Sustainability standards are now important to founders and investors alike. ESG standards are proving even more important than corporate social responsibility (CSR) programs. Thought leaders in the space note that while CSR programs refer to a company’s social accountability, ESG initiatives make corporate goals measurable in a way that demonstrates the bottom-line impact of solutions put in place. Communicating ESG goals to investors means a founding team is directed toward concrete and achievable goals; it’s important that companies consider how and when to share their sustainability story.
Like any good author, a start-up needs to consider its audience. What relationship do individual investors and VCs have with the company’s ESG progress? For example, one stakeholder might care for the environmental, the social, or the governmental solutions more than the others. A start-up needs to tailor its communication. Storytelling goes both ways: not only is the company spotlighting investors’ ESG interest, but it is reminding investors of the role they play; founders can leverage their communications to tell their investors the important impact they’re having in making ESG more visible, urgent, and actionable.
Authors need feedback to make sure their work is engaging. So, before launching an ESG message, a start-up needs to test with customers, employees, and investors to make sure it’s resonant. Even after launching, it’s a good idea to open a channel where investors provide feedback and ideas. When it comes to communications campaigns, testing is better than guesting; founders can ask for feedback, A/B testing, and messaging impressions from a test-audience, and scale their spend and focus on the strategies that work best.
The Art of Consistency
In the writing process, consistency is key. A start-up may have an amazing ESG message, but if it’s only communicated once, it runs the risk of being overlooked among the post-COVID cacophony of sustainability claims. Investors and venture capitalists are looking for benchmarks, data, and key performance indicators that confirm their investment will be lucrative. Start-ups need to report not only their progress toward their ESG goals, but also how consumers are rewarding those ESG achievements in the market-and they need to do both on a regular basis.
Post-COVID investors aren’t looking for the path of least resistance. All market data shows that investor funding is finding the founders who are putting in the time and resources to make sustainability a part of their core operations. They’re doing so not only to create a better normal, but to respond to the incredible consumer demand that’s making sustainable practices the only real way to do business.
Bypassing ESG aims, and cutting straight to profit, was once a convenient startup strategy. But it’s officially an outdated way to do business, and it’s the fastest way to fail in securing post-COVID funding.
Sustainability standards are increasing a start-up’s longevity in the eyes of investors. Having an ESG story, sharing it effectively and consistently, and inviting the collaboration of investors and VC’s makes it easier to identify the start-up as fit for the post-COVID future. And with this collective effort, that future will be one in which people and resources are protected.
About Tara Milburn
Tara Milburn is the Founder and CEO of Ethical Swag, a sustainable branding company that makes it easy for brands to offer personalized promotional products that they can stand behind. A certified B-Corporation, Ethical Swag has been audited to the highest global standard for sustainability.
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