New research has revealed that, for the first time, the proportion of startups measuring their carbon footprint has fallen, declining from 28% in 2023 to 23% in 2024.
ESG_VC and the BVCA analysed ESG data from 711 startups backed by leading venture capital firms.
According to the data partners, the drop could be explained – in part – by the increasing numbers of startups conducting more effective materiality assessments and determining their footprint is too immaterial to report.
Henry Philipson, director of marketing and communications at Beringea and co-founder of ESG_VC, said: “The data we have compiled indicates that the noisy debate around ESG may be leading to environmental issues being deprioritised by startups.
“To tackle this diverging performance, ESG_VC – following our merger with VentureESG – will be strengthening its focus on materiality as the critical issue in investors’ approach to ESG in startups.”
In contrast, startups have placed a significant focus on initiatives that identify and develop talent. The proportion of companies providing educational support to employees rose to 70% in 2024, up from 57% in 2023 and 40% in 2022.
Over half (56%) of startups analysed offered an apprenticeship, internship or trainee programme, while 73% offered mental health support to employees.
Outperforming global peers
Despite the growing volume of environmental regulation within the EU, startups based in the UK have outperformed peers in Europe, the US and APAC on a broad set of ESG-related issues.
Key highlights from the data presented that 26% of UK startups measure their carbon footprint compared to 23% in Europe and only 8% in the US.
In addition, 16% of UK companies analysed have adopted a net-zero policy or programme versus 13% in Europe, 7% in the US, and 7% in APAC.
Sector breakdown
The research also revealed that fintech startups led the push into responsible use of AI, as 67% of fintech companies monitored offer codes of conduct or training on responsible AI versus 53% of SaaS companies and 27% of deeptech companies.
A higher proportion of fintech companies also measure their carbon footprint (37%) than their peers in SaaS (20%) or healthtech and biotech (19%) the data showed.
Suzi Gillespie, head of research at the BVCA, added: “The ESG_VC framework provides a valuable toolkit for startups and scaleups to identify and track the metrics which are relevant and material to them.
“It is natural that companies do more on sustainability initiatives as they grow, and this research evidences this.
“Through providing benchmarking, guidance and best practice, we hope to help companies grow from sustainable foundations.”
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