ESG: Transforming Into a Powerful Business Imperative

The article discusses the rise of Environmental, Social, and Government (ESG) standards in the tech ecosystem in 2024. The author emphasizes that ESG is no longer just a buzzword, but a business imperative. Companies are expected to have mission-backed, integrated, and executed ESG policies to meet consumer demand and win deals. The article highlights that 88% of publicly traded companies, 79% of venture and private equity-backed companies, and 67% of privately-owned companies have implemented ESG initiatives since 2020. The driving forces behind the demand for ESG include the new Gen Z/Millennial workforce, who prioritize causes such as diversity, inclusion, climate change, and social inequalities. The rise of consumer sustainability demands is also driving businesses to prioritize ESG. The article points out that financially successful companies that integrate ESG into their growth strategies outperform their competitors. However, the increasing bar and regulations on ESG metrics, particularly regarding carbon emissions reduction and diversity, pose challenges for companies. Despite challenges, venture capitalists (VCs) have started considering ESG in their investment process, with 76% of global VCs considering ESG and 64% acknowledging their limited partners’ expectations regarding ESG risk management. The article highlights Pitango Venture Capital as a leader in adopting ESG and impact into its investment strategy since 2020. Pitango has developed the “ESG-SDG continuum” methodology to ensure companies integrate relevant ESG practices and track impact-related outcomes aligned with the UN Sustainable Development Goals. The author concludes by stating that companies that adapt and implement new ESG strategies will outperform, outgrow, and outlast competition.