ESG is a key phenomenon anyone looking to invest in tech or startup should consider. The concept is about three major factors one should consider before making an investment decision. These three concepts would help against bad investment. This is even more important now that, there are various factors mitigating against businesses generally and not just startups or techs. The invasion of coronavirus has cost businesses lots of bad loss. Many businesses are yet to recover from COVID-19 impacted profit and even capital loss. We must look out for ESG metrics when considering investing in techs or startups generally.
How is ESG important for investing in techs
ESG according to Wikipedia are three core factors for measuring the sustainability, the societal impact of an investment in a company or business. ESG as an acronym refers to Environmental, Social and Corporate Governance. Those three factors could help to measure the potential growth of companies relative to return and risk.
Environmental (ESG) Factor for Techs
Before investing in a particular tech is best to consider certain environmental issues depending on the niche of that tech firm. There certain issues for example one could take into consideration climatic threats. In what way does a solution contribute less to the climate problem. Lots of institutions and NGOs are already putting in efforts for firms to start adopting solar technologies. Companies like Tesla and the rest are working on techs that rely less on normal fuel. This, in turn, has an effect on emissions of bad gases, that could reduce the depletion of O2 in the ozone layer. Therefore any tech or startup that factor in climatic concerns in its solutions would do more on ESG metrics.
Social or Societal Factors
Societal factors and how a particular solution put into consideration its immediate environs is key to investing. There are lots to consider under this ESG factor. For example, does a particular solution fae well on factors that affect its immediate environs. If the right hands are available, a particular startup might farewell. But if there is a lack of the right work-force, the startup might fail. A firm that considered training and re-training for her workforce would also fair well. Corporate social Rights policies are also worth planning for. The solution should also have enough user rights policies. Can a particular age group be exposed to your content or use your app? How do you plan to put this straight, outrightly from the beta stage of the App? As an investor one should factor all these in before investing even in tech.
Corporate Governance Factors
These are shareholder concerns, the board, executives, and even departmental heads. How is the firm structured? From Board to the last bottom of the hierarchy, is investigation a person looking forward to investing in tech considered. Emoluments and compensations are commeasurable to employee inputs. Investors now need to investigate even up to equity investors, what do they get.
These are all ESG factors that could help one invest in a that can safe against bad investment. There are have been lots of startups with good business modeling, and plans, with a catchy proposal. And at the end of the day, most of these businesses would fail to pass a second growth phase. This is why ESG can help with quality investment. Read this post on Amazon Sage.
Here is a link to Primdal ESG consultant homepage.