Ian Wilding is the CEO of Hangar 75, a Global Venture Accelerator committed to sustainable impact.
In today’s world, start-ups need to think about ESG (Environmental, Social, and Governance) from day one. This is not just about ticking boxes or making a good impression. ESG can enable innovation, reinforce competitiveness, and, believe it or not, bring solid financial returns. However, you’ve got to set clear, measurable ESG goals from the get-go and make them a priority.
In the world of start-ups, we’re used to the concept of Return on Investment (ROI). You put in X amount of money, and you expect Y in return. With ESG, we need to think bigger and introduce a new term: Impact Return on Investment (IROI). IROI goes beyond monetary returns; it’s about the measurable impact your business has on the environment, society and corporate governance.
Here are some tips for building a successful initiative—the secret sauce for integrating ESG into your start-up and making your impact measurable, real and successful:
1. Define Quantifiable Outcomes
Your ESG initiative needs to start with specific, measurable, achievable goals. Don’t be vague. We’re not talking about “improving the community” or “reducing environmental impact.” We’re talking about concrete goals, such as “getting 1,000 homeless people off the streets” or “helping 1,000 high school leavers start their own businesses.” Make your goals real and make them count.
2. Don’t Back Just One Horse
Once you’ve set your goals, experiment with several ways to achieve that same goal. Try out different strategies to achieve your goals. It’s all about experimentation—some things will work, others won’t. Don’t be afraid to pull the plug on experiments that aren’t yielding results and make sure you double down on those that are.
3. Amplify Impact Through Learning And Optimization
Constantly aim for improvement. Sure, achieving your goals is great, but can you do it better? Can you do it more efficiently? A few percentage points of improvement can significantly amplify your impact. Keep learning, keep optimizing and keep striving for more.
In the hustle and bustle of the 21st-century market, ESG is a big deal. It’s a game-changer for business outcomes and investment returns. Defining clear, measurable ESG outcomes from the start and tracking their IROI can help your start-up navigate the market, drive innovation and deliver value beyond just financial returns.
4. Integrate IROI And Traditional ROI
Lastly, don’t forget about the financial health of your venture. A truly sustainable business needs to perform well and grow. If your company maintains a steady growth trajectory and a solid impact strategy, the future impact becomes amplified. It’s like a snowball effect—the bigger your business gets, the larger your potential for positive impact becomes.
In short, investing in clear ESG goals is the same as investing in a profitable and sustainable future. It’s about looking beyond ROI and embracing IROI—the impact your business has on the world. By following these tips, you can ensure your ESG initiatives are realistic, achievable and measurable. And that’s how we create a world where businesses succeed while making a positive, meaningful impact on society and the environment.
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