KEY CONCEPTS EVERY STARTUP SHOULD KNOW
Sustainability
Sustainability is the concept of balancing economic, ecological, and social goals to ensure that the present generation can fulfill its needs without jeopardizing the capacity of future generations to satisfy their own needs. This approach, as defined by the United Nations, emphasizes living in a manner that does not exploit the well-being of tomorrow’s generations. Sustainability thereby extends beyond environmental conservation and encompasses various criteria for a dignified future, including economic prosperity and social security.
Environmental, Social and Governance (ESG)
ESG have become the three pillars of sustainability for companies and the primary approach in assessing a company’s accountability for its impacts and sustainability claims. These ESG pillars are:
- Environmental focuses on how a company’s activities affect the world, including issues such as waste and resource management, greenhouse gas emissions, energy efficiency, and deforestation.
- Social considers how a company engages with and impacts the community and society at large, including worker rights, safety, diversity, education, labor relations, supply chain standards, community relations, and human rights.
- Governance examines the structure and accountability of a company, including ethical business operations, risk management and the long-term economic sustainability of the organization.
Sustainable Development Goals (SDGs)
SDGs (Sustainable Development Goals) were set by the UN in 2015 are 17 goals aiming to catalyze sustainable development. Investors and customers increasingly value businesses that contribute to sustainable development. Incorporating SDGs into a startup’s mission and operations can enhance its appeal, attracting socially-conscious investors and customers.
Impact Investing
Impact investing refers to investment strategies and practices that aim to achieve not only financial returns but also measurable positive social and environmental impacts.
Impact Investors prioritize the impact or mission of businesses when selecting portfolio companies. These investors go beyond traditional financial metrics, emphasizing the importance of creating meaningful, measurable, and beneficial changes in social and environmental dimensions through their investment decisions.
Carbon Footprint
Carbon footprint refers to the measurement of a company’s climate impacts, primarily assessed through greenhouse gas emissions (GHG). As greenhouse gasses have different global warming power, the carbon footprint is measured by converting to equivalent carbon dioxide (CO2) emissions . Companies report their progress in reducing emissions in categories:
- Scope 1: Emissions directly controlled and managed by a company.
- Scope 2: Indirect Emissions caused by a company’s consumption of purchased energy, such as electricity, heat, or steam.
- Scope 3: Other Indirect Emissions not produced by assets owned or controlled by the company, but produced by those it is indirectly responsible for up and down the value chain, eg.a company processing raw materials, but not involved in the extraction process, would have the relevant emissions from the extraction attributed to Scope 3.
Sustainability ratings
Various organizations assess companies’ sustainability performance, providing a rating or index as metrics to inform investment decisions. With differing criteria and calculations, these can differ across ratings provider. Nevertheless, ratings can provide useful information on what ESG factors are considered, particularly in your industry and can be useful for startups in reviewing ratings for large suppliers and how large customers or competitors are performing.
EU Taxonomy for sustainable activities
The EU Taxonomy is a regulatory classification system introduced by the European Union to help direct investments to the economic activities most needed to meet the European Green Deal objectives. It establishes European standards as a market transparency tool to help companies define which of their 3 Own illustration 5 economic activities are environmentally sustainable and to give investors security.
Since 2023, large listed EU companies must report against the EU Taxonomy’s two climate objectives – climate change mitigation and climate change adaptation. Reporting according to the EU Taxonomy will be mandatory for larger Swiss companies operating in the EU from 2025. While such reporting requirements have limited relevance for startups, understanding the standards and requirements can help startups to associate which sustainability standards apply to some of their stakeholders (e.g. business partners) and where the sustainability trend is heading for large companies.
EU Taxonomy website 4 provides further information, including a calculator on reporting obligations.
Corporate Social Reporting Directive (CSRD)
The CSRD entered into force in January 2023 to strengthen the rules on social and environmental information that companies have to report.
This impacts large EU companies, listed SMEs and non-EU companies if they generate >EUR150m in the EU market. Further and current details can be found on the European Commission’s website here and financial consultants and advisors publish papers, podcasts etc.
WHY SUSTAINABILITY IS IMPORTANT FOR STARTUPS
Integrating ESG principles makes compelling business sense:
CREATING A SUSTAINABLE, RESILIENT AND LONG-TERM VIABLE BUSINESS
Through building sustainable business models, addressing environmental and social challenges and maintaining robust governance practices.
PROMOTING INNOVATION
Through fostering the development of sustainable products, improved operational efficiency, and new market opportunities.
ENHANCING THE BRAND AND REPUTATION
As companies committed to social and environmental responsibility are favored by consumers, employees and partners.
ATTRACTING INVESTMENT
By accessing a broader range of funding opportunities, including Impact Investors and funds dedicated to sustainable and responsible investments.
ATTRACTING AND RETAINING TALENT
By creating a positive workplace culture, with satisfied employees who want to stay, who feel they are making the world a better place.
Incorporating ESG principles into a startup’s operations is essential from a risk mitigation standpoint:
COMPLYING WITH REGULATION
As regulatory attention on ESG considerations increases, startups incorporating these principles early on can comply with current and emerging regulations and standards.
IDENTIFYING ESG RISKS
By considering environmental impacts, social responsibility, and governance practices, startups can identify and mitigate risks associated with reputation, compliance, and operational issues.
MINIMIZING DAMAGES
Establishing appropriate controls and processes helps reduce damage to the business’s financials and reputation. Being proactive can prevent costly fines, revenue loss, and reputational damage
HOW CAN STARTUPS INCORPORATE SUSTAINABILITY?
Determine which environmental, social, and governance issues matter most to your startup, your industry, and your stakeholders.
Define measurable, time-bound objectives such as reducing emissions, improving diversity, or enhancing product responsibility.
Even basic reporting helps attract partners and investors and builds internal alignment. Include KPIs, goals, and progress updates.
Include sustainability principles in your Articles of Association, mission, and company values to guide decision-making.
Move beyond activities and outcomes. Track long-term effects on society and environment, using data, surveys, or benchmarks.
FUNDING FOR SUSTAINABILITY ORIENTED STARTUPS
VENTURE CAPITAL FUNDS
Apprecia Capital: invests in purpose-driven founders with bold ambitions to lead a virtuous cycle for the planet’s and human health. Their fund supports early-stage teams with their entrepreneurial mindset, expertise, and network to deliver momentous innovations and solve the systemic challenges.
Alpana Ventures: a Swiss VC focusing on digital transformation, investing to embed innovative business models into start-ups and back them to become global market leaders. Applying ESG criteria, their portfolio companies help create a more sustainable future.
Blue Horizon: invests in transition to a Sustainable Food System, with an end-to-end approach that extends beyond alternative proteins, starting with better crop practices right through to sustainable packaging and smarter distribution. They generate impactful investments with a philosophy they call Double Positive: positive, above-market returns for investors and positive measurable impact for the planet, humans and animals.
Collateral Good: a climate-first Zurich-based venture capital platform, that aims to transform polluting industry systems to more sustainable ones. They invest from Seed to Series A, opportunistically can go to Series B&C.
DART Ventures: believe the world’s biggest challenges can be tackled by combining breakthrough technologies and global collaboration. The fund invests in the health of people and the planet with the goal of generating sustainable value and leaving a better world for future generations. DART is woven into the U.S, and Swiss ecosystems and connects the best of both.
ECBF: a venture capital fund dedicated to growth-stage investments within the European Circular Bio-economy with the European Investment Bank as cornerstone investor. Their mission is to provide access to finance for innovative solutions that enable the transition from a linear economy to a more sustainable circular one. Their targeted investment sectors include new technologies and business models in Agtech, blue economy, and bio-based chemicals, specialities and materials, nutrition, packaging, personal care, construction, and textiles. Investment opportunities in circularity (i.e., conversion of biological resources and waste streams into value-added products) have a high priority.
Emerald Technology Ventures: brings open innovation and venture capital together, with 20+ years of experience investing in the sustainable industrial transformation. They empower corporates to successfully innovate and collaborate with start-ups, and to transition their businesses to a more sustainable future. They have over 50 large corporations as investors and partners in open innovation. Their sectors: energy, water & wastewater, food & agriculture, mobility & urbanization, materials & packaging, industrial, IT.
Sand Born: a team of innovators and change drivers that love hatching ideas and businesses to change our world for the better.
UNA Terra Circular Economy Transition Fund: a VC fund, complemented by a venture studio, providing capital, network and support to accelerate growth and impact of emerging ESG enterprises.
Übermorgen Ventures: an early stage venture capital investment company backing entrepreneurs, who understand that climate change mitigation is not only the responsibility of our generation but also the potentially biggest business opportunity of our time
INCUBATORS / ACCELERATORS
Clim Accelerator: A global programme for start-ups to innovate, catalyze and scale the potential of their climate solutions. The accelerator wants to turn cleantech start-ups into successful businesses and harness the power of human ingenuity to drive rapid impact and unlock a net-zero, resilient future for all. The accelerator offers:
- An open-sourced Operating System that provides startups with management tools, content, coaching and mentoring networks.
- Impact Data that helps startups to measure, forecast, and monitor a wide range of environmental and social impact metrics to build a comprehensive view of their long-term impact.
- Access to exclusive funding and investment opportunities and many ClimAccelerators are eligible for grant funding from external sponsors.
- A community of 400+ organizations across the globe working to drive a net-zero carbon transition.
Masschallenge Switzerland: Since 2016, MassChallenge Switzerland has been a leader in helping startups across Europe grow their businesses by accelerating 720 startups across multiple industries that have raised more than $1.2Bn in funding. Their flagship program is the early-stage startup accelerator, which accepts startups from any industry, and in 2024 will be comprised of the agnostic program and 3 industry-specific tracks: Sustainable Food, Sustainable Industry & Climate Solutions, and HealthTech. They only accept startups whose solution will add value to society, and all startups in the accelerator will be advised about how to make their business climate responsible and must intend to offset their emissions or actively reduce GHG to be considered. Participants gain access to:
- Access to 15+ global corporate partners
- Mentoring from 400+ experts
- Comprehensive curriculum of lectures and workshops, featuring 50+ leading entrepreneurs, VCs, and experts
- The opportunity to compete for up to CHF 1M in non-dilutive cash prizes
- For Food and Climate focused startups, an additional cash prize of CHF 100k for the Louis Dreyfus Company Climate Resilience Prize
- Switzerland-specific advice on regulations and tax, easy access to the EU market, and strong trade links
LOAN GUARANTEES
Technology Fund: The Technology Fund offers loan guarantees to Swiss companies whose novel products contribute to a sustainable reduction in greenhouse gas emissions. The guarantees bridge any possible gaps between equity financing during the start-up phase and regular corporate loans for more established businesses. Guaranteed loans are a form of non-dilutive funding and do not affect the current ownership structure. The guarantee may amount to a maximum of CHF 3 million. The maximum duration of the guarantee is 10 years.
AWARDS / COMPETITIONS
W.A. De Vigier Award: awards five young leaders per year, each endowed with CHF 100’000. One important assessment area of the W.A. de Vigier Award is the overall relevance for the society of the startup. In the last years sustainable startups excel at the W.A. de Vigier Award.
Swiss Sustainability Challenge: The Swiss Sustainability Challenge (SSC) organized by the University of Applied Sciences Northwestern Switzerland and Pax, is an innovation competition that supports projects that contribute to environmental and social sustainability. The winner receives CHF 10,000 including CHF 6,000 in cash and CHF 2,000 in the form of a professionally produced video and CHF 2,000 in the form of an additional 10 coaching hours.
Renewable Material Award: The Renewable Materials Conference presents each year the “Renewable Material of the Year” innovation award, organized by the nova-Institute and sponsored by Covestro. Producers and inventors of innovative technologies and applications based on biomass, CO₂ or advanced recycling are invited to submit their innovations.
CERTIFICATES AND LABELS FOR STARTUPS
Obtaining a sustainability label can help startups stand out, attract eco-conscious customers, and strengthen credibility with investors and partners.
Yet many labels are challenging for startups: certification fees are high, requirements demand major operational changes, and extensive documentation can overwhelm small teams. Many schemes are built for larger companies, making them hard to scale down, and some labels lack strong market recognition – limiting their value for early-stage businesses. Before applying for a sustainability label, startups should consider the following aspects:
- Stakeholder Audience: Who are the target stakeholders that are expected to recognize and value the label?
- Material areas: Which material issues and risks does the label address?
- Scope: What is the scope of the label (product level, process level, company level)?
- Sector and regional recognition: In which sector and region is the label recognized?
- Costs: How high are the costs of getting the label and maintaining it?
- Resources: What practices and documentations are required to obtain the label?
Here are some labels that could be of interest to startups and scaleups:
This label for enterprises that prioritize social and environmental impact. It applies to social enterprises, fair-trade and cooperative models, nonprofits, and other mission-driven organizations. Verification focuses on five core standards to keep costs low, reduce legal and language barriers, and make global recognition accessible.
An international certification assessing a company’s total social, environmental, and economic impact. It emphasizes transparency and legal accountability rather than individual products. Startups can pursue Pending B Corp status, which signals commitment to impact management and prepares them for the full certification process.
A certification that helps companies advance sustainability step by step. It covers environmental, social, and economic dimensions and encourages building an integrated sustainability management system. The audit effort scales with company size and locations, supporting ongoing improvement across the organization.
