My question would be, why do they feel there’s a compromise between those two aspects? Being more responsible isn’t mutually exclusive to financial wellness. Responsibility and reward can and do go hand in hand. And in any case, sustainability is defined by 3 pillars – economic (profit); social (people) and environmental (planet). If one looks after people and the planet, they’ll in turn look after you (profit) so sustainability is a matter of good business sense. “Do the right thing and the bottomline will take care of itself.” It’s baffling to me at this stage for any founder to not appreciate that. But if those founders insist on their stance, then with time they’ll find themselves representing the startling statistic of the 70-80% of startups that fail – that’s what’s sitting in VC portfolios these days.
From a strategic viewpoint, any startup that focuses solely on the money, rather than qualitatively building up an entity, is following a defective path. If you care only about profit, then that’s a governance issue at heart and it means most likely that your decisions about your strategic direction, hiring, team morale, interactions with potential partners, how you qualify investors – the human aspects which are integral to a successful business – won’t be healthy ones, integral to your business’ sustainability. I’ve advised many startups on these issues and there are those that consider them ‘fluffy, nice to have’ – at their own peril.
From an investment point of view, more investors are looking at how companies are incorporating ESG factors into their considerations – ‘future-proofability’ – what problem is your company trying to solve? ESG ultimately concerns risk mitigation and therefore factoring those costs into your business model which have until now been unquantified. And if you’re a B2B SaaS FinTech then you’re also going to be dealing with financial institutions who are highly regulated and also obligated to their shareholders and clients, to deliver both sustainable and enterprise value.
Clients are driving demand and are also looking at the social and environmental credentials of companies.
With regards to talent attraction and retention, I’ve been approached by quite a few professionals, especially this past year, who are looking to embed purpose into their careers and therefore steering themselves towards those companies who are on a journey of sustainability. A lot of conversations I’ve had with current entrepreneurs, but also other professionals, have tended to them being inspired to want to make a difference and are therefore also seeking values-led opportunities.