- il y a 6 heures
The Sustainable Edge: Why Doing Good is Good for Business
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00:01Hello everyone, thank you for joining us here today.
00:05Would you all like to start by briefly introducing yourself and giving us one ESG metric
00:10you think every startup should track from day one?
00:16Hi, it's great to be here, my name is Maren Costa.
00:19I was in big tech for 25 years and recently was in the Netflix documentary
00:27Buy Now, The Shopping Conspiracy, I highly recommend it, not just because I was in it.
00:34And ESG metric, from day one, you just, it's very hard to make big ESG changes late in the game,
00:46so just get started making sure you're on track to measure anything.
00:51I would say this is like, if you're a startup, it'll be much harder to do this later,
00:56so pick a good metric and go for it.
01:01Emily?
01:02Thank you, I'm Emily Witko, I work for an AI open source technology company called Hugging Face.
01:09I am head of culture there and I think specifically because I work for an AI company,
01:16this is a little bit of a pie in the sky reach,
01:20but I'd love for companies to very strongly track their carbon emissions.
01:27And Salome?
01:28Hi, I'm Salome, I'm part of the investment team at Frevaria, a graphically fund in Europe,
01:35and we basically invest in startups from Series B stage all over Europe.
01:41we have 600 million euros under management, and I'm leading our climate tech efforts
01:46and sustainability topics from an investment perspective.
01:50I think I would choose gender diversity, first because it's cheap,
01:54you don't have to spend a lot of money on it, and then if you don't do it right away,
02:00you're gonna pay that back later, because it's really hard then to attract women
02:05if they're not really well represented in the companies first.
02:09Why is that cheap?
02:11Because you just need to track how many women, if we talk about gender diversity,
02:17you have in the team, and if you're a company that has 100 people
02:21and there are only five women in the team, well, the ratio is not good.
02:25I couldn't agree more.
02:27I mean, startups often start thinking about ESG when they're beginning to scale.
02:30Why is that wrong? What are the risks of starting too late?
02:39Yeah, we have enough data now to say that being sustainable and equitable is no longer a choice,
02:49it's a necessity, and customers are telling us that, employees are telling us that,
02:54insurance companies are telling us that, and it's only gonna get more that way,
02:59Gen Z, Gen Alpha, you know, it's just gonna get more and more that way,
03:05and to not put these things in place right away, number one, you won't be attracting the best talent,
03:11you will maybe have your employees rise up against you, as Jeff Bezos experienced with me and my cohort,
03:19and you will, it will cost money at the end of the day, because when in a sustainable and equitable
03:28world,
03:29if we, like we're on track right now to hit two degrees Celsius within 17 years,
03:33with a two degrees Celsius increase, we will have a 38 trillion dollar market collapse,
03:43which is the equivalent of the US, India and Japan economies combined.
03:50Many businesses will be out of business, so if you want to be one of the businesses that isn't out
03:58of business,
03:58you need to be showing that you have sustainability, a sustainable supply chain,
04:03look to set it up from the beginning, because it'll be very hard to put it in place afterwards.
04:06You want to be a leader, not a follower, and customers will remember the leaders, not the followers.
04:12It's hard to argue that you just won't exist if you don't do it now.
04:16What about Emily Salome?
04:17Yeah, I think I agree, obviously, with everything Maren said, but there's also just this simple concept of inertia, right?
04:25If you don't set these policies in place right from the beginning, and let's say five, ten years down the
04:31line,
04:31your company's actually doing pretty well, and maybe you don't have no incentive to make any changes,
04:37but you don't actually know how much better, ten times, hundred times better your company could be doing,
04:43had you actually put some thought into this in the beginning.
04:48Yeah, and maybe to add to that, I think it kind of relates to the concept of ESG debt.
04:54So basically, when you build a company, you might be focusing on product market fit,
04:59because it's going to grow your business, right?
05:02But then you can be tempted to put sustainability aside for the moment.
05:08But then you're going to grow debt that it's going to be super hard to get back from.
05:16And something related to diversity that I said is exactly that.
05:20So if you're a small company, you put in place gender diversity related practices from day one,
05:26it's great, of course.
05:28And then you're going to grow as a diverse team, and you're going to have better financial performance in the
05:35end,
05:35because it's proved that you're going to have better financial performance.
05:38But then as investors, we have actually seen a lot of companies that are in Series B stage,
05:46in Series D or even after, that have only 20% of women in their teams.
05:52And as I mentioned, they kind of struggle to attract women.
05:55So I think ESG debt is something that every founder out there needs to have in mind.
06:01And that's why you need to tackle as many things as you can.
06:06Maureen.
06:07Can I add on to that?
06:08Yeah, you can ask her.
06:09You know, ESG is a huge part of culture.
06:14And we all know we need to set the culture of the company from the beginning.
06:18Amazon did a great job of that.
06:20I started in 2002 with the leadership principles.
06:23They were great.
06:24They actually shaped the culture.
06:27ESG was not really a thing back in 2002 as much.
06:30Now this is the thing.
06:32And culture is so hard to move and create and build.
06:36You have to start from the beginning.
06:38And I mean, in your role as a climate activist, you've worked with policymakers,
06:42tech giants, as you mentioned.
06:45Is ESG all talk?
06:46Are they actually put in, you know, do investors actually care?
06:49Absolutely.
06:50Do investors actually care about ESG or are they all talk?
06:54More and more, they really are.
06:57So even in 2020, we filed a shareholder resolution against Amazon to ask Amazon to be more sustainable and equitable.
07:10And surprisingly, a couple of the largest shareholder advisor firms, and this is in the US, of course, actually voted
07:18to say that shareholders should adopt the resolution.
07:27That was in 2020.
07:29Is this moving even faster now?
07:32I mean, Salome, we have an investor on the panel.
07:34Do you agree?
07:36Have you passed up on any startups because they weren't prioritizing ESG?
07:39Yeah, so maybe two things.
07:42So, of course, we've passed on startups because they were red flags.
07:46But first, so at Revaya, we are quite advanced in terms of ESG.
07:51And basically, we have an exclusion list and a concerns list for sectors that are not a fit with our
07:59ESG approach.
07:59So typically, anything related to fast fashion, for example, or businesses that contribute to any more fossil fuels emissions.
08:10So this is one thing.
08:12And the second thing is that there are red flags, but we're trying to deal with them as early as
08:19possible in our deal flow reviews.
08:21So we don't wait until it's term sheet day and it's time to invest in the companies.
08:27It's something that we're trying to do as early as possible.
08:32And maybe as a counter example, I think you can actually have an ESG bonus.
08:38And to give you something concrete, one of our latest investment is in a company called Ampeco.
08:45They're in the EV charging management software business.
08:49So business model is positive.
08:51That's great.
08:52They had great metrics.
08:54also great statistics metrics, all the things that we're looking for that was great.
08:59But what was even greater is that they were very well advanced in terms of ESG practices.
09:05And that excited us even more.
09:07And that pushed us to be even more motivated to invest in a company.
09:12So of course, there are red flags.
09:14We're going to pass on them.
09:15But if you do well in terms of ESG, you can excite us even more.
09:21Let's see about valuation.
09:23But at least in terms of motivation for sure.
09:26Can you share like three red flags that startups should avoid?
09:35Lying when you're talking to us.
09:37So maybe it kind of relates to saying you're doing a lot of things relating to ESG practices.
09:43But because we're focusing on series B stage companies, we usually have three to five years data to look at.
09:51And we typically do ESG due diligence.
09:55And if we look in the due diligence and we are seeing that, okay, you're saying you do a lot
10:02of work on diversity.
10:03It's been three years that your diversity rate is super low and it's not progressing.
10:08It's going to give us a hint that something is wrong.
10:11So that can be a red flag.
10:14And Emily, you've described yourself as a feminist killjoy in the back stage rooms.
10:19What's the most, I think, meaningless, performative, sustainability issue have you seen dressed up as innovation?
10:27The most is a really interesting question.
10:32I'm sure many of us in the room have had the experience of being a feminist killjoy and just haven't
10:39had maybe the words to describe it.
10:41I am reclaiming this.
10:43The author Sarah Ahmed has actually coined this phrase.
10:48The personal example that I have is that parental leave is a big topic of discussion in the United States.
10:54There is no parental leave in the United States that's required by law.
10:58And one of the companies I worked for a few years back was so excited to unveil their parental leave
11:04policy.
11:05It was updated. It was modern. It was fresh and new.
11:09And it was also four weeks.
11:12And the company was excited.
11:15Even my colleagues were excited.
11:17And then I had this moment of being like, excuse me.
11:22I know everyone's excited, but this is not good enough.
11:25We can do better.
11:27And that probably falls more under the social aspect of ESG.
11:33But I think about environmental things all the time too.
11:36Lots of green practices that companies attempt to do.
11:40Even sometimes reusable water bottles.
11:42Giving them out to the team without providing a water fountain.
11:46So then people aren't going to use them.
11:48Oriana and I were talking beforehand about tote bags.
11:51We probably all have 20, 30, 40 tote bags that started with good intentions, right?
11:58We'll get rid of our plastic bags.
12:00But now every company is just printing tote bags.
12:03And so now they're the problem.
12:05So there's quite a few ways I feel like companies can actually save some money.
12:11By not handing out green solutions to their employees.
12:15I mean, Maren, do you agree?
12:16Are there any in your work?
12:18Is there any policies you've seen that are like just a waste of money?
12:25A lot of times in the bigger companies, some of the ESG practices are sort of meant to greenwash and
12:37pacify.
12:38Like getting paper cups in the micro kitchens is not going to make a real difference.
12:43And you'll probably actually sort of dampen the desire for your employees and for everyone to sort of speak up
12:52and act more boldly on sustainability.
12:56Because they'll be like, okay, we got paper cups in the micro kitchens.
12:59We're good.
13:00Yeah.
13:01I mean, Salome, speaking of greenwashing, are there any kind of policies that straight away you're like, that's the check
13:06box?
13:10Maybe to, so there are definitely companies saying, oh, I just did my cardboard for this year.
13:20It's great.
13:21Look at it.
13:23But what I often advise to portfolio companies is basically to start with something quite material.
13:31And maybe to go back to a key concept in CSRD is double materiality.
13:38Just for the sake of everyone, it's about pushing companies to assess from financial materiality.
13:48So having ESG factors affecting your company's financial performance or valuation and from an impact materiality.
13:59So how your company's activities are actually affecting your environment and society.
14:06And usually there's kind of a triggering event.
14:09So for one of our portfolio company called Coralogix, it was about RFP.
14:16One of their prospects asked if they had set up any climate related goals.
14:22They said no, but they said that they were going to kick up the project right away.
14:26So what we often advise to companies is basically to start with something material and RFPs are often material and
14:35then to start doing the rest.
14:38And usually maybe calculating your carbon footprint is the first thing to do because it set out the basis, but
14:46you need to do it for a purpose and not just to say, okay, I calculated my carbon footprint.
14:52I mean, so many startups probably argue to that, you know, they're too small or too scrappy to prioritize, you
14:57know, things like sustainability.
14:59What do you say to that?
15:03So, of course, you need to prioritize, but it's not something expensive.
15:07That's why I want to say first.
15:09So calculating your carbon footprint is not expensive.
15:12There are a lot of solutions providing expertise and tools that are super easy and it's not going to cost
15:21you 100K to do that.
15:24But then, yeah, and what I just mentioned about the double materiality, it actually allows you to prioritize because you
15:32see what has an impact on your business, on your finances, and losing business and losing a customer, you want
15:39to avoid that.
15:40So, yeah.
15:41Nara and Emily, do you agree?
15:44Yes.
15:45Absolutely.
15:47I mean, what you don't measure, you won't, you won't fix, you won't be able to fix because you don't
15:54know where the problem is.
15:55I mean, startups are often strapped for cash.
15:57What's something they could do like right now that will put ESG at the forefront that costs very little?
16:07I mean, Salome already mentioned tracking, right? You just mentioned it too. It's very easy, or I should say not
16:13easy, I should say cheap, to just collect data and figure out what your gender diversity is.
16:20There's even ways you can track a little bit of your carbon emissions.
16:23Salome, when I were chatting before the session today about like, this is maybe a very specific example, but if
16:31you're planning events for your team, especially if like Hugging Face, you're a remote first company, think about how many
16:37people need to fly, how many people can use a train, right?
16:40So just sort of have this like very, this sounds like a lot of pressure. I don't mean it to
16:46sound like a lot of pressure, just like constant thought in the back of your mind about how can I
16:52be a little bit more thoughtful in small ways about the decisions I make every day.
16:57Marina, are there any high impact you think policies they can launch tomorrow even?
17:02I would just say like you want to have a plan. You don't have to do everything at once. You
17:07can start small, but you want to think 10 steps ahead, 10 years ahead and see a path of how
17:16you're going to get there.
17:18It's good. That's going to be crucial for your business to still be in business as well as to attract
17:24investors.
17:25I mean, I'm going to address the elephant in the room, which is why should they be bothering if government
17:30billionaires don't seem to be?
17:38Governments move too slow. It's going to be up to business, really. You all have such a huge role to
17:45play, whether you're a startup or a mid cap or a big corporation.
17:52We would love to see the Amazons and the Microsofts and the Apples really leading. They are falling away. And
18:02I think there's going to be a backlash, especially if everyone else comes together to do this together.
18:10And if you have any way to form alliances across similar companies or even across industries or with your supply
18:21chain or whatever that is, to say, let's all take this step together.
18:25And I think it could really be a push that would shine the light on how some of the bigger
18:34corporations are stepping away from their sustainability goals right now because they're building AI.
18:40And then, you know, we have to ask AI for who? Growth for who? And you guys can do better.
18:47You all can do better.
18:48And you think they're at risk of getting backlash that they don't kind of put? Yeah, I mean, that's but
18:54like you say, the business is hard when these massive power holders are shaping culture, especially in the US.
19:01I'm sorry, I'm feeling it right now. What I spoken with so many French people today and yesterday and it's
19:07just I love the bubble a little bit because it's so bad in the US.
19:18And and I but I don't think it's going to benefit them in the end. I think they will suffer
19:23and you don't want to be suffering with them.
19:27I think you want to show just because we know customer this is what customers want. We know this is
19:33what employees want.
19:34We know this is what insurance companies want, et cetera, et cetera.
19:38Yeah, my my follow up to that, as you know, I am also from the States. And as Maren said,
19:42it's awful.
19:44But I'm not ready to stop fighting. Right. And I'm I took a you know, like everyone else, I took
19:52a few months to mourn and recover.
19:54And now I'm I'm I'm ready to do stuff said eloquently. I'm ready to do stuff.
20:01But I actually like want to plug hugging face a little bit in this moment.
20:07First of all, because I think we do a lot of these topics pretty well.
20:12We've been open source from the very beginning. We have a very global team.
20:16We have very transparent policies.
20:19But aside from all of that, what hugging face has taught me is that your impact can be a lot
20:25bigger than your team or your money.
20:29We folks that I talk to think hugging face has a thousand ten thousand employees based on the impact that
20:35we've had on the world of AI and how many people know about us.
20:39We are 200 employees and folks are shocked to find this fact out.
20:43And that just illustrates the fact that you can have a pretty far reach and have a large impact, even
20:50if you're not one of the billionaires at the moment.
20:54That's true. It can help you stand out. It can be the differentiator.
20:59Yeah. And I think as investors, we don't expect that at the time of the investment companies are already best
21:07in class in terms of ESG practices.
21:10That's a good point.
21:10We just expect a strong willingness to progress. And actually, at Frevaya, we also have as a value proposition to
21:20support them in their ESG journey.
21:22We have one person fully dedicated to ESG in our team that is also there to step up and to
21:30improve the companies from an ESG perspective.
21:33I love that. You don't have to be best in class. You just have to show you're willing. Do you
21:37have any advice for founders on how to pitch ESG as a growth driver and not a cost to the
21:41business?
21:43Yeah, so I think it kind of relates to engaging with your stakeholders. And I strongly believe that by executing
21:54well on your ESG strategy, basically, you'll be able to comment with your stakeholders and to unlock new revenue sources.
22:02And maybe to illustrate that, so we have one great portfolio companies that is called Hublot.
22:08and they basically develop a natural suite for clinics and hospitals. And what they have concretely demonstrated is that they
22:19were improving the well-being of the clinical staff.
22:22And by doing that, basically, they became the preferred choice of the customers. And because they became the preferred choice
22:29of the customers, they had great retention metrics and it grew their business.
22:36So I think it's about, yeah, unlocking new sources of revenues. And by doing good, you just do that.
22:45I mean, Maren, you've had similar experience of having to convince your boss to invest in ESG.
22:50Do you have a similar advice for people? Maybe they're not founders, but they're in a management position on convincing
22:55their boss like this makes business sense.
22:59We just have so much data. There's, what is it, 90% of millennials want their brands to be more
23:09sustainable and Gen Z will be even more.
23:1580 some percent of customers want to even co-create solutions.
23:23They see businesses as the solution provider to these problems that we're facing as a planet and they want to
23:31co-create.
23:32So how can it be a relationship generator with customers?
23:38There's just, there's so much data to show that this is the direction we are moving and you just don't
23:43want to be left behind.
23:45And you mentioned obviously Gen Z, millennial consumers, their expectations.
23:50What's the bare minimum you think that companies need to be doing in 2025 to be taken seriously by consumers?
24:00Tracking, measuring, starting with that.
24:02And then picking at least one or two things that you're going to go after.
24:06That's the thing. You don't have to do everything now.
24:09And you're, everyone's going to have a different, you know, metric that is going to be more meaningful for their
24:16business.
24:17You know, if it's carbon emissions, you know, Amazon wants to shy away from that one because they have such
24:22a huge logistics, you know, section of their business.
24:29You know, so what is most important for your business?
24:32What can you tackle most effectively first to show real results?
24:40Emily?
24:41I think it may be clear that I'm a people person here and not so heavily.
24:47Maren can cover the environmental side.
24:50But I think a lot about, because we are an open source website, about sort of developing equity across the
24:58website for our employees, but also for our users.
25:02Folks may realize that the internet is like not generally a very friendly place.
25:09And we've worked really, really hard to come up with like content moderation and different tools to make sure that
25:17we encourage all users to the platform.
25:22I'm getting to the point, I swear, but GitHub did a survey a few years back about the gender of
25:29open source contributors.
25:31And it was only something around eight to 10% of their contributors identified as women.
25:37And part of the reason is because it's not a nice environment.
25:41And so I just would encourage folks, especially if you have a company where your customers are interacting with each
25:49other or you are allowing conversations to happen, just make sure that it actually, like, is a friendly place.
25:59Because then you'll actually attract more customers that way.
26:02I mean, Salome, you said that people just need to be willing to try.
26:05What is that bare minimum from an investment point of view that they need to be actually demonstrating they're doing?
26:11Yes.
26:11So I think you need to, and kind of relates to the ESG debt concept that we talked about earlier.
26:19It's basically not waiting 10 years after your skill to tackle these subjects and having these ESG practices built on
26:28as early as possible.
26:29And if we were to go even one step further, I would say it would be to have your product
26:37or your service be eco-designed.
26:41And by eco-designed, I mean making sure that your impact is as good as possible on your environment and
26:51limiting the negative effects.
26:52And it's work for B2B businesses as well as B2C, right?
26:57I mean, you said that they shouldn't wait 10 years.
27:01How early should they be baking into their business?
27:06From day one?
27:07I really, well, you have the funding team.
27:10You need to recruit your first people, salespeople.
27:14You need to grow your company.
27:15You're going to quickly grow to 20, 30, 100.
27:20As we talked about gender diversity, having that in mind when you recruit people, if you don't do it in
27:27the first days,
27:27it's going to be hard.
27:28So yeah, big one.
27:29And do we think shareholders are truly valuing ESG or is it still all about returns in 2025?
27:38No.
27:40I would encourage folks.
27:42I know that the money making piece of this conversation is very important, especially when you're trying to convince your
27:48board,
27:49you're trying to convince your leadership to tackle ESG things.
27:53But I also just want to encourage folks to realize that they should be thinking about the environment.
27:58They should be thinking about their people.
28:00They should be thinking about equity.
28:02Just because we're humans and we want to do good.
28:09And just think about sort of reframing this conversation a bit just so that it's all not fully couched in
28:17capitalism.
28:18Maren?
28:21I think there is, we are just at, you know, this is going to be the biggest market shift that
28:26anyone probably ever since the beginning of humanity has experienced.
28:32And you don't have to believe in the crisis to benefit from the opportunity.
28:37And I am starting to see, I think, positive signs.
28:41You know, products that are marketed as sustainable are already two point, they grow 2.7 times faster than products
28:51that aren't.
28:52And, you know, investors will respond to that.
28:56We see employees or companies that, you know, have good policies attract employees.
29:05Like Gen Z and they all, they want, it's another high, whatever, 80, 90 percentage, want to work for an
29:13employer that is, you know, sustainable and equitable.
29:18And we all know, you know, your employees are your biggest asset and they're going to be the biggest differentiator
29:26of how well you perform.
29:27So, attracting top talent is probably the most important thing you can do to make your business successful.
29:36Yeah, and maybe to add on that, so as investors, returns are important, right, because we're financiers.
29:44And actually, for us, we're deeply convinced that implementing sustainability and ESG practices actually leads to better financial performance.
29:55So, even though you're not a person super well convinced about implementing ESG practices, you're going to have better financial
30:04performance.
30:05And you're going to, and as investors, we're going to have better regions.
30:09So, all you know, yeah.
30:12I mean, you're saying you believe that, is that what you're actually seeing in the data that companies that prioritize
30:17ESG do do better financially?
30:19Yes.
30:21I mean, the biggest cost, I guess, setback would be backlash, right?
30:25You get loads of people, you see, you mentioned the US right now, calling companies woke.
30:30You also get the other side of, if you're not jumping on these ESG, prioritizing ESG, you also get backlash
30:37for that.
30:38How can companies balance not being too woke, being woke enough?
30:43Be as woke as possible.
30:45Now, there are certain things that you can bake directly into your business model.
30:50Again, Hugging Face, open source platform, and we operate on a freemium model, right?
30:57So, if you are a user, you don't need a ton of compute, you're just using it to graduate from
31:04your PhD, or you're building an app, or, I mean, any number of things is possible on Hugging Face.
31:09Your work is actually being subsidized by the larger corporations, possibly those billionaires, that are actually paying to use space
31:18on Hugging Face.
31:20And so, we actually have kept our platform free for as many users as possible, and we're using some of
31:26the cash that people are paying for it to make sure that we have this more equitable platform.
31:33Do you have any advice, Maren, on balancing find that sweet spot?
31:39It is, you know, it's going to be one of the bigger challenges any business faces right now as we're
31:45at this turning point.
31:46And so, you know, that's why I encourage if there's any way for people to build coalitions of like companies,
31:59even organizations, you might be a B2B, and you have a B2C, or whatever alliances you can form, and do
32:08it together.
32:08It will make you stronger, it will make a bigger splash, and you will attract more attention for doing the
32:18right thing.
32:19It is the right thing, but of course business can't be expected to do.
32:23You know, like I would love to say like we do, we're going to do things because it's the right
32:28thing to do.
32:29And it is obviously the right thing to do.
32:32But it is also business viable.
32:35And so, if you can find a way to do it together, it will be easier and more impactful.
32:43Salome, have you got any advice on businesses on how to not get labeled woke, but not get alienated by
32:47customers for not jumping on ESG?
32:51Do you have any advice for businesses on not getting labeled wrongly, perhaps, as woke?
32:59Be transparent. I would say is my biggest advice. Be transparent on what you do, on what you track.
33:07Don't hesitate to put it on your website, what you're doing. So yeah, be transparent.
33:13I love that. And we've only got a few seconds left. So finally, what's your top tip on an ESG
33:20metric that actually matters and one that's just noise?
33:28I'm going to steal Salome's. We can both use gender diversity, very heavily focused on that right now. Super important.
33:35And just noisy one? Maybe the number of green items you're buying for your company.
33:42Mm-hmm. Nine more tight bags.
33:44And transparency. I think that is huge. If you can measure and then be transparent about it, that's a good
33:51start.
33:53Maybe something controversial. Maybe anything related to carbon credits. So it's a big topic. It's good. But I think there's
34:03so much to do before just buying carbon credits.
34:07Interesting. What should they do first?
34:10Yeah. Start with gender diversity or calculating your carbon footprint before just buying carbon credits.
34:17Thank you so much, everyone. Thank you for joining us.
34:20Thank you, folks.
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