Identify Material Risksįounders should start by identifying the key risks to avoid and manage. Purpose helps founders identify the few dimensions the startup chooses to “win” on versus just being a good citizen. On the other hand, ESG without purpose isn’t focused enough on the few crucial topics underpinning the startup’s strategy. It provides an implementation framework to guide business decision-making. Purpose without ESG is neither measurable nor strategic. ESG frameworks suggest how you run your business to deliver your purpose, and strategy, and what exposure you have to certain risks. Marry Purpose with ESGĮSG is different than Purpose. Startups often benefit from a strong sense of purpose given their proximity to a founder’s initial passion to solve a problem in the world.

When employees feel their personal purpose can be lived at work, they are four times more likely to be engaged. It inspires stakeholders, helps the company focus its efforts, and make trade-offs in moments of truth. Purpose crystallizes the unmet need a startup is answering and the unique strengths it brings to do that. Purpose answers: “What would the world lose if the startup disappeared?” Could competitors easily replace it or is there something unique it brings which customers will pay for, which is embedded deeply in its core strengths and value proposition? Purpose is a lot more than branding and PR. Here is a novel approach for founders to launch their ESG journey. And they can do this in a way that accelerates the urgent search for product-market fit versus distracting from it. Startups can build it right from the start, avoiding costly rework later. Quite the contrary: start-ups have an advantage over larger companies whose “installed base” of assets, products and culture often needs to be undone to be consistent with ESG principles. Over the last five years, the corporate world has focused increasingly on implementing stakeholder capitalism through Environmental, Social and Governance principles (ESG). However, is ESG a distraction to cash-strapped talent and time constrained startups? Should founders build their business first and worry about ESG later?

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