How can data turn the tables on business impact? In the realm of sustainability, it is a game-changer.
In the first article of this 3-part series on Vinnova's impact measurement journey, we laid the groundwork for the challenges funders face when translating impact measurement into actionable results. In the second article, we highlighted the successes of Vinnova-funded startups, Water in Sight and Schoons Maleri, who are pioneering actionable impact intelligence.
Now, let's delve into four key lessons to elevate your organization's sustainability data insights to drive meaningful change.
Lesson #4 - Leverage the Power of Community
Building a sustainable future requires more than just individual efforts; it demands collective action. For early stage startups with limited in-house resources, learning communities are essential to quickly gain actionable knowledge from industry peers.
Vinnova’s Innovative Startups cohorts are members and active contributors to the Proof Sustainability Community. The community brings together investors and enterprises to exchange best practices regarding data collection, metric selection, performance improvement, and leveraging impact data for capital raise. Through the community, Vinnova and the startups it funds engage with other Proof users to attend networking sessions and expert office hours, discuss topical articles, and review accessible training courses on key sustainability topics — all with the goal of continuously improving their ESG+Impact performance.
Lesson #5 - Proactively Navigate Regulatory Compliance
In an ever-evolving regulatory landscape, staying ahead of the curve is essential. Vinnova recognizes the significance of keeping abreast of regulatory requirements, especially in the European Union, where reporting on metrics is increasingly being regulated. To support continuous compliance with frameworks like SFDR (Sustainable Finance Disclosure Regulation) and CSRD (Corporate Sustainability Reporting Directive), having a trusted third party is invaluable. While Vinnova’s startups are not yet required to comply with emerging regulations, many of the companies have elected to align their metrics to SFDR reporting requirements to get ahead of regulatory requirements and to signal their ESG commitment to investors.
Lesson #6 - Embrace Innovation and Growth
Perhaps the most important lesson for early stage startups as they begin their sustainability journey is to maintain an attitude of innovation and continuous improvement.
As startups evolve and grow, so do their ESG+Impact measurement needs. As an agency focused on cutting-edge innovation, Vinnova understands the importance of supporting startups to assess and enhance measurement practices continually.
Vinnova’s Innovative Startups cohorts are embracing innovation through:
- Leadership Commitment and Vision: Start-up leaders play a pivotal role in inspiring their teams to embrace sustainability and setting sustainability goals that align with the organization’s mission.
- Shared Accountability: Successful start-up teams embrace shared accountability and embed sustainability across all business functions - from Finance and Sales to Marketing and HR.
- Regular Reviews: Vinnova’s Innovative Startups cohorts regularly review their metrics and performance, to identify opportunities for improvement. We recommend an annual review to add new metrics based on investor requirements and evolving business priorities. For ongoing performance management, we recommend a quarterly or semi-annual review to investigate metric performance, identify where the company is outperforming or lagging, and establish action plans for improvement.
Lesson #7 - Tie Financing to Impact Outcomes
Ultimately, the greatest opportunity for funders to support startups on their sustainability journey is to provide financial incentives for sustainability performance milestones. At Vinnova, startups are eligible for additional funding if they demonstrate progress in achieving their impact goals through their first funding opportunity with Vinnova.
Proof recommends a carrot-and-stick based approach for investors to tie finance to impact, based on the investor’s level of maturity:
- Stick (Beginner) - Companies avoid a negative consequence from the investor by simply completing a sustainability survey.
- Carrot (Beginner) - Companies get a reward for submitting quantitative data on high priority metrics.
- Carrot (Intermediate) - Companies receive another reward by demonstrating improvement in their performance over time, either by showing quantitative improvement compared to targets or by implementing new policies.
- Carrot (Advanced) - Companies receive bonus incentives if they outperform the benchmark.
Ideas for Financial and Impact incentives include:
- A one-time payment or gift. This can be done for the first X% of data submissions, or drawn randomly for X number of companies
- Extra support with introducing investors for follow-on capital rounds
- Additional networking support, by introducing possible clients or partners
- Access to favorable capital terms based on reporting on impact
- Impact reporting support in the form on a digital performance dashboard, through a data intelligence software like Proof
- The London Institute of Banking and Finance provides further ideas for investing with carrots and sticks
The Future of Data-Based Start-Up Funding
Vinnova is not just a funder - they are a partner on a start-up’s journey towards creating a sustainable and impactful future. Vinnova’s collaboration with Proof has opened doors to new possibilities for startups to improve their sustainability performance in collaboration with a broader community of funders and founders. Together, we are committed to building a world where purpose and profit go hand in hand, and where the startup ecosystem not only thrives but also leaves a positive imprint on society and the environment.
About Vinnova: Vinnova helps to build Sweden’s innovation capacity, contributing to sustainable growth. Vinnova makes it possible for organizations to address challenges together by enabling innovation that makes a difference. Interested to see if Vinnova’s funding might be a good fit for you? Learn more about Vinnova’s funding opportunities here.
About Proof: Proof provides access to the world’s largest consolidated set of reliable, material and high-quality ESG & impact data for private markets. Proof's driving vision is to serve as the largest force multiplier for creating positive, meaningful change through business. Interested in learning more? Sign up for a platform demo here.