ESG in Early-Stage Company Boards

Sooner or later, startups will inevitably face ESG-related challenges — whether it’s scaling manufacturing, meeting regulatory requirements, or qualifying for government funding. Tackling these topics early not only mitigates future risks but also sets the stage for sustainable growth and strategic advantage.

Case in point: Reports suggest that Northvolt’s downfall was closely tied to insufficient ESG integration. Challenges ranged from workplace safety issues — including multiple accidents and a worker’s death currently under investigation for gross negligence — to chaotic management that overlooked employee warnings. This highlights a vital lesson for startups: ignoring ESG issues in the early stages can lead to significant operational and reputational risks when scaling up

Despite its growing importance and increasing regulatory demands, such as the SEC’s climate-related disclosure rules and the European CSRD, ESG integration in boardrooms is declining; a recent PwC survey shows that the percentage of boards regularly addressing ESG issues dropped from 55% in 2022 to 47% in 2024.

This decline, fueled by anti-ESG sentiment and a lack of clarity around ESG’s relevance, underscores the urgent need for founders to take the lead in integrating these discussions into their boardrooms.

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Who is responsible for bringing up ESG on the board?

Everyone. From founders to investors and external board members, it is our shared responsibility to ensure that ESG is regularly addressed during meetings. First, it’s part of our duty as board members to uphold good governance and oversight. Second, change doesn’t happen overnight. If we want to advance agendas like employee safety or gender diversity, these topics must be consistently discussed, monitored, and prioritised by all executives.

At present, however, ESG is often absent from early-stage company board templates (e.g., Sequoia, Creandum), and “how to set up” guides (with the exception of the excellent “On Board with Balderton”). Generally, these templates fail to include ESG, rather focussing on business KPIs and strategy discussions. Therefore, we thought it was time to help founders integrate ESG discussions into their regular board updates.

Introducing the ESG Board Template

To help companies integrate ESG into their board conversations, we’ve created an ESG board template designed to guide founders through the process. The template is structured around both quantitative and qualitative sections, ensuring that ESG discussions are both data-driven and aligned with company values. The issues presented in the slide should be carefully and deliberately chosen by the board and the management team, to reflect the material ESG issues that the company is facing at the time.

Let's dive into some of the key features of the template:

ESG Spotlight. This allows the management team to qualitatively describe any issues that are not captured by the KPIs, or propose any discussion topics to the board. It could be used to explain any obstacles or successes for context and tracking.

KPIs. The issues and KPIs that the company decides to showcase should be decided on by the management team and the board, according to what is material to its operations and goals. This requires some initial work to define strategically important ESG topics, as well as the right indicators, which could be further discussed with the Board. This process should involve a “double materiality mapping” exercise* or at the very least, a simple prioritisation exercise by assessing what ESG issues affect your company’s operations and its impact on the world. What environmental impacts do you have? How do you handle governance and diversity? This should be informed by your industry, business model and development stage. However, some ESG issues should always be included in your board updates — for example for hardware startups: any health & safety incidents.

These KPIs should be tracked and reported on a quarterly basis, enabling a consistent approach to monitoring progress, as well as holding the company accountable to reporting on progress. This could also be used as an opportunity to discuss any ESG obstacles or strategic challenges the company faces, where the boards’ input would be helpful. This could include topics like supply chain risks, and how to go about integrating sustainability criteria into supplier decisions.

Progress tracker / Trend line. It allows for quarterly (or yearly, if more fitting) tracking of actions and improvements when it comes to ESG and Impact (if desired). This showcases ESG achievements and successes to the board, and also areas needing improvement or special attention. A company improving gender diversity through successful DEI initiatives can highlight increased female team members in its ESG update to the board. The company will be able to clearly showcase its successes through a positive trend line.

In essence, this template ensures that ESG is more than just a box to check — it becomes a central part of an ongoing company narrative. By embracing and proactively integrating ESG into the board discussion, companies can unlock new opportunities, mitigate risks, and position themselves for long-term growth and resilience.

The template in reality: Feedback from our portfolio companies

Early feedback from our portfolio companies indicates that having a structured approach to ESG reporting has made board discussions more actionable. A few founders have reported feeling more confident in bringing up ESG topics. Lastly, management teams have benefitted from the prioritisation exercise of which ESG issues to focus on, and having clear, trackable indicators that can showcase progress.

If founders continue to track and report on their ESG topics, it will also be a strong signal to future investors that they prioritise responsible business practices. Especially when trying to raise capital from impact or institutional investors, this will be seen as a green flag. They are also building resilience and preparing for growth funding rounds, potential M&A or IPOs.

Last but not least, this slide is our first attempt to distill the complex and broad topic of ESG into a concise format for board meetings. We invite your feedback and would love to hear about your hands-on experiences using it, along with suggestions for improvement.

* Double materiality assessments are a whole topic on their own and there is a lot of material available to guide you in this exercise, such as SASB Materiality Finder. Important to note: the double materiality assessment is a core aspect of the new Corporate Sustainability Reporting Directive (CSRD) — a regulation which applies to companies once they hit 250 employees.

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