ESG for startups

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How do you get started with ESG for startups, and what is lega's role in supporting the business' ESG goals? Keep reading to find out.
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ESG for startups: where to start?

Environmental, social and governance (ESG) issues are centrally important in 2024, and as such it's never too early to start thinking about them as your company grows. But what is legal's role in supporting and executing ESG initiatives, and where do you get started?

We sat down with Beamery's Chief Legal and Impact Officer, Xavier Langlois, to discuss in depth. Xavier discusses the importance of environmental social governance (ESG) for startups. He shares his experience in implementing ESG initiatives and highlights the need for buy-in from leadership and clear goals. Xavier emphasizes the importance of authenticity and transparency in ESG efforts to avoid greenwashing. He also discusses the challenges of implementing ESG requirements with suppliers and the role of B Corp certification. Xavier concludes by addressing the impact of the current economic climate on ESG initiatives and the value of investing in ESG during challenging times.

ESG for startups: key takeaways

  • Buy-in from leadership is crucial for successful implementation of ESG initiatives in startups.
  • Authenticity and transparency are key to avoiding greenwashing and building trust with stakeholders.
  • Implementing ESG requirements with suppliers involves clear communication and setting expectations.
  • B Corp certification can provide a benchmark and validation for ESG efforts.
  • Investing in ESG initiatives during challenging times can reinforce company values and strengthen relationships with employees and customers.

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Tom Bangay: Hello, everyone. The topic today is environmental social governance (ESG) for startups, and we'll be discussing what you need to do and the legal dwellings supporting those initiatives. This is kind of a fireside style chat, so I've just got the one speaker, and I'll let him introduce himself in a second. But I have lots of questions in advance that you’ve sent through. If you have any in real time, just put them in the chat, and we’ll discuss them live. So just before I ask our speaker to introduce himself, we are going to run a quick poll.

I think it’s going to go live now when I click my fingers or sometime around now. If you can just have a look at those poll questions while our speaker introduces himself. So I will now pass over to you.

Xavier Langlois: It’s weird that you’re talking to me in the third person, Tom. Hi, everyone. I’m Xavier, or as most people call me, X. I’m Chief Legal Impact Officer at Beamery. We’re a B2B, SaaS, HR tech business. The reason why I’ve been asked to come in and have a chat is because of my dual title, and impact at Beamery very much means ESG. So yeah, I’m looking forward to speaking to, well, everyone.

Tom Bangay: Thank you very much, X. So we have a poll, which I think you might have to click to bring up, which is around whether you have an ESG strategy yet at your organization. So if you can have a go at that one, I’m going to answer it as well, and we’ll discuss the results a bit later. Here we go. So not too many people have it yet, but some people do. I think when we were doing discovery for our event planning, we did have some feedback that ESG might have slipped off the radar based on the events of the last six months or so, both in terms of the war in Ukraine and also the economic climate. But I think the interest in the session has not borne that out. So it’s really heartening to know that this is staying on the agenda, especially with COP going on right now, maybe just finishing.

To get started, before we get into these advanced questions, obviously, your role as Chief Legal and Impact Officer. Can you just tell us how that came about? Why did you want to grab a bit of extra workload?

Xavier Langlois: Yeah, 100%. And I did grab more workload. I don’t think I regret it, but I guess, you know, you’ve got to be careful what you wish for. When we talk in a bit more detail, that will come to light as to why I say that. But basically, at the end of last year, I turned around and looked at—we had a number of people at the organization doing a number of things. The one area that no one had oversight of and was holding the company accountable to was all things ESG. There was a, perhaps, sort of, “Hey, this is a compliance thing. So it lives in legal somewhere.”

Is ESG a legal responsibility?

But I didn’t want it to be just that. I really made a case for flipping it on its head and saying, “Hey, let’s not talk about ESG, but let’s talk about—ESG supports sort of the more, the higher impact rationale, which is how can we as a business be impactful, not just to our people, to our customers, to our partners, but also in the communities and in the world that we live in? So how can we make a difference as a company?”

This ties into a number of things, right? It ties into why are our people working for us? Why do they want to work here? Why do they enjoy working here? Why do our customers want to do business with us? Same with our suppliers, our partners, and ultimately down to our investors as well. So it really made us sort of redefine and think about what kind of business we want to be and what kind of business we are today. So that’s really how that came about, and I went to our CEO, our founders, with this proposal and said, “Hey, I think there’s a great opportunity here for us to link and bridge the gap with all of these things and bring it under sort of one umbrella, one roof where we can make a difference on, you know, employees, customers, partners, suppliers, and also our investors.”

So it’s, yeah, for me, it was a matter of raising my hand and saying, “I think there’s an opportunity here for us to do something bigger. So let’s go and do it.” The support has been amazing. I know it’s not the support that everyone gets, which is a bit of a shame because I think a lot of people see it as this tick-box compliance piece and don’t see the bigger picture. And I think if you’re able to sell the bigger picture, getting the buy-in is, I think, a lot easier. But yeah, that’s how it came about.

Tom Bangay: Very nice. So that kind of leads into the first question we had, which was, you know, you had to pitch this to the exec team, and lots of us here work at venture-backed scale-ups that are growing really well. Any kind of project that doesn’t really obviously scream revenue growth is kind of hard to get the airtime for. So how did you manage to make it something that people wanted to commit to versus prioritizing some kind of more revenue-adjacent project?

Xavier Langlois: Yeah, that’s a fair question. Maybe we’re a little bit lucky in that way, but a lot of what Beamery sells is helping our customers be better at recruitment from a DNI perspective. So that already is a sort of a big chapter of the S in ESG on the social element. So that did help because we’re able to show how we would in an ideal world bridge the gap between what we sell to our customers and what we do internally and how we can package that as a whole and hopefully end up in a place where we will gain new customers, not only because of what we sell as a company, but also what we stand for as a company.

Getting buy-in for ESG at a startup

To be honest, it has proven so far a little bit successful where we’ve had a couple of new customers talking about what we do internally and talking about everything we do under the impact umbrella, which is a harder one, right? Because it’s not like you can track that and say, “Hey, we’ve done this, well, we’ve signed X amount of revenue.” But I think, again, if we link it to creating a culture, high-performing culture where people care about these things, and then wanting to do good by their customers, and ultimately what you do and generate as a business to sell, there isn’t a huge argument to be able to bridge the gap on those two fronts. So that’s how we managed to sell that internally and up until now stayed true to it.

Tom Bangay: And did you, when you were selling it, did you just go straight to the top in terms of getting buy-in?

Xavier Langlois: Yes. I mean, I think with all of these topics, unless you have buy-in from the leadership team—and in many of our cases, we work for founder-led businesses—unless you get buy-in from them, I think a lot of the time it falls on its head. And also, if you don’t have someone that is also on the leadership team sponsoring it or being the person that is accountable for it, then I think, sadly, again, it does fall a bit flat on its face because people will just see it as a compliance sort of tick box.

So 100%, I don’t think to set this up for success and to make it successful, I think you can only truly do it well if you have that buy-in from your founders and from your leadership team. And if someone on that team, ideally yourself, if you’re the one sort of responsible for it, has a seat at that table and is the one that is accountable for it.

Tom Bangay: Yeah, it makes sense. So, you know, you did that, they said, this sounds great. Let’s go. What was the first thing you did? How did you get started with the planning?

Xavier Langlois: Well, my first thought was, what the hell did I just sign up to? Because I actually didn’t have a real plan. We all talk about ESG, but ESG can mean so many things to every company. ESG will mean something different. So what we spent the next couple of weeks doing is truly going into the detail of what does ESG mean for Beamery and taking things in isolation, you know, the E, the S, and the G. And there’s a number of ways you can do this. There’s a number of tools online like SASB that can help identify some of those areas, depending if you’re a tech company, a SaaS business, if you’re this, if you’re that. But ultimately, it took a lot of research.

We did a couple of focus groups internally as well, especially on the S because the S, I guess, is—I see the S as all things people, right? Because it’s a social part. So it’s mental health and wellbeing. It’s creating a high-performance culture. It’s all the things that relate to people. And in wellbeing, obviously, it’s things like holidays, things that people care about, right? DNI is obviously a huge part of that.

So we did one or two focus groups and, yeah, we spent a lot of time mapping out what are the things that—yeah, what does ESG mean to us? And then where are we today, and where do we want to be in three, six, 12, 18, 24 months, which then led us to publishing and putting together what we called our Impact and Sustainability Manifesto, which I know a lot of companies have done.

ESG for startup investors

And again, that’s where you can really help marry up the external piece with the internal piece. And the biggest validation for us was when our CFO sent our manifesto to a couple of prospective investors, because, again, putting this out there can open you to new investors that are more sort of ESG driven and can open those conversations and open those doors. So for us, that was a huge validation of what we were doing. Sorry, I know I’ve sort of skipped ahead.

To answer the question, but I just wanted to give the whole journey. But yeah, to recap, it was spending the first couple of weeks just really understanding what does ESG mean for us and where do we want to take it? So that’s what we spent the initial couple of weeks doing.

Tom Bangay: Yeah. I think that investor point's really nice because no one’s going to see through a vanity project faster than investors who have this eye of Sauron ability when it comes to diligence.

Xavier Langlois: Correct.

Tom Bangay: Just on that planning process. So did you come out of that with some metrics and some projects that you wanted to focus on?

Xavier Langlois: 100%. And so how we did that, we actually started with the end result. So we knew we wanted to put this manifesto together. And then through that process, we then identified the metrics that we wanted to achieve. So, for example, we use an external tool to help us score our DNI internally. So we have a DNI score. So we looked at what that score is today and then where we want that score to be in two, three, four years, and then mapped out what are the things we want to do or things we should do in order to move the needle on that score.

So we really did that for all of the big buckets. So environmental, I guess, is one. Under the S for ESG, we focus on mental health and wellbeing. We focus on DNI as the two main buckets. And then on governance. Again, governance can mean a lot of things to different people. But we decided, for example, that all things InfoSec, so data compliance, which is a big part of what we sell, would fall under governance. For some people, it falls in S. But we decided it fell under G.

So again, here we looked at all of the things, you know, right through how we, you know, the governance right from the board level to all things InfoSec, as I said, and again, seeing where we are today and where we want to be. What also helped us, I have to say, is we were doing our B Corp accreditation at the same time. And B Corp is, I mean, we could do a whole other session on B Corp, but it is broken down in very similar buckets.

When you do their submissions. So that highly helped us as well think of, okay, well, we know that we have some gaps here, where do we want to be in a year? And we sort of used that as a, I don’t want to say a checkbox because it shouldn’t be a checkbox, but I guess as a way to help us score ourselves and benchmark ourselves against the standard. Because ultimately, B Corp is what ISO 27001 is for information security, right?

B Corp is that standard for all things ESG. So that, you know, when we decided that we wanted that certification, again, we then worked backwards with the manifesto in mind to sort of really benchmark ourselves on where we were and where we wanted to be.

Legal's role in B Corp certification

Tom Bangay: Makes sense. We’ll talk a bit about B Corp later, because that’s another huge amount of work to look on somebody’s plate as well. So just in terms of getting started before we move on to implementation, when you did that exercise of working out, you know, what does this mean for us as a company, and then let's transition into having some planning. Who did you talk to internally? Who are the people that need to be involved there?

Xavier Langlois: Yeah, so I mean, the one thing I must say, because I think I’m very lucky in this regard, but I actually have a team of three people in the impact team. So I didn’t, I’m not doing all of this by myself, which again, I’m super, super lucky and thankful for. But I have someone who, well, these people were already in the business, but we decided to bring them together under the impact team. So there’s someone doing internal comms, someone doing DNI, and someone doing employee experience.

So in terms of then who we reached out to further, obviously we needed the buy-in from the people team. They were a huge, yeah, a huge, I don’t want to use the word player, but yeah, they were someone we needed to get input from. We then worked a lot with our marketing team as well, and also with our CXO teams, what we call our CSMs, to again, get that customer angle, because that was very key to us to make sure that we always stayed true to connecting the dots between what we do internally and externally.

And then last but not least is obviously getting buy-in from our finance team because a lot of this you can do for free. But I guess, again, if you want to start measuring your carbon footprint, if you want to submit for B Corp, if you want to do X, Y and Z, that that that, yeah, there can be some costs involved. So again, we had to get buy-in from the finance team. But luckily, because we had done the selling to the leadership team that was buying there already. But yeah, those were the main sort of groups that we worked with very closely to start on that journey, which ended up with us publishing our manifesto in August this year.

Tom Bangay: Can't get anything done without finance these days. There’s a question in the chat, Tom. Do you want to do questions later or as we go along?

Xavier Langlois: I think the question is actually from Henry in the chat. I think it’s about the B &B product.

Tom Bangay: Yeah, the question was, do you think the nature of your product makes ESG a more natural part of commercial conversations than if your product was something different? I guess that does give you a leg up, right? Because you're in the space a little bit.

Xavier Langlois: Correct. It does give a leg up. But then I do think about this a lot. And the conclusion I’ve come to is every company exists in my mind—and I might be completely wrong because they’re solving for something that hasn’t been solved before. And ultimately, every company exists to try and make a difference in whatever it is, whatever sector it is, right? So I think you can still do a bit of, let’s call it soul searching to try and finesse the messaging that you’re going out to market with, with the impact that you’re making as a company. Because I think in any company in their sector or that they operate in,

again, we exist because we have customers that believe in what we do, because there’s a space for it. And I think there is a way to connect that with all things ESG. And it might not always be, for us, S is the hook because of the DNI piece. But for some companies, E might be the hook because of their measuring carbon footprint, or they are in the environmental supply chain somehow. Or for some companies, it might be the G of ESG. So I think there is a way to find hooks in all of these acronyms.

to then link it back to who your company stands for and what it is that you do and what impact you have in the world and bring those two together. And the moment you do that, not only does it make sense for your employees because then suddenly they're now working for something that's much greater than them. That's something they want to be part of.

This is an excerpt from the full transcript. To watch the webinar in full, click the preview at the top of this page.

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