VITAL Insights from Bryan Breckenridge + Corey Marshall, Co-founders VITAL

Introduction

At the end of the 1970’s, my dad taught me to swing a golf club. I was four. I didn’t need the swing or a well-honed game until I started playing tournaments in my teens. Because of my early start, my muscle memory had a huge advantage over my later adopting peers. It set me up for success in my high school golf career and gave me a half decent corporate golf swing that has persisted through all these decades.

This golf swing metaphor constantly applies in our work as we support fast growth, scale-up companies. Our firm, VITAL helps middle and late stage funded (and some recently public) companies integrate impact strategy and ESG readiness into their culture, planning, operations (yes… even their products), go to market, and measurement approach - often before it’s mandatory. 

These strategies can help companies build these muscles as they grow, versus bolting on programs later in their journey. As industry peers Bruce Simpson and Cait Brumme share in their recent HBR piece, “Companies which outperform on ESG tap into five sources of value: lower risk, cost of capital, and regulatory intervention, and higher growth, talent attraction and retention. Startups develop a competitive advantage from building Purpose and ESG into their DNA from the start.” Building these into your business from the start, they say, can help to accelerate the urgent search for product-market fit versus distracting from it.

To win now and long-term…

There are infinite things to learn and know when scaling a company. Building impact and ESG fluency and integrations may not be on the top of the list, but their proven benefits suggest they should move up the list quickly. Here are 5 things that every growth stage leader should be thinking about and investing in: 

1. Integration of social impact into core offerings and value proposition 

While your product or offerings may not have impact at their core, finding ways to weave it in strategically can open new markets, humanize your brand, drive more revenue and inspire affinity or even admiration from your key stakeholders. Some of the critical considerations for any company include how and where and when to best integrate. As with any other business critical initiative, intentional integration can make all the difference. Our friend Meg Garlinghouse, VP of Social Impact at Linkedin puts it best: “This is why we – and all companies – need to start focusing even more upriver, where the real impact, positive and negative, begins and becomes cemented in company operations, metrics and culture.” 

One of our first clients is a neobank that offers charitable giving tools as part of their day-to-day consumer banking products. Compelling client data and strategic feedback from CFOs in our network has helped them recalibrate and reposition their offerings to serve financial institutions directly as an embedded service. Enabling consumers to pursue positive social impact within their core customer offerings had client acquisition and engagement levels soaring at a much lower cost of acquisition than they thought possible; their growth trajectory as an embedded service will help them grow faster and drive greater positive social impact.   

Is there something you can offer your current business customers to strengthen their ESG roadmap? Companies like Flexport.org help Flexport’s corporate customers with more environmentally friendly logistics. 1/1/1 pioneers at Salesforce have developed tools that make ESG reporting easier for their corporate clients. Your employees likely already have some amazing ideas about how your core products and services can help to drive both revenue growth AND social and environmental impact. Just ask them!

2. Alignment of sales and marketing strategy with nonprofit sector

There are over 8 million nonprofits around the world. Every one of them aspires to drive their mission forward, and needs to be financially healthy to pursue or scale their work. These organizations mirror the rest of the economy, spending billions of dollars each year on staff, technology and services to deliver and measure their work, generate income and keep the trains running on time; there is literally a nonprofit mission niche for every single product or service offered by scale-ups.

What’s more, these mission-driven organizations are working in service of some of the most compelling community and humanitarian causes on the planet. With the right pricing and support, the nonprofit sector can be a great source of revenue, inspiring marketing subject matter, culture and brand-enhancing partnerships and ESG-aligned outcomes worthy of reporting and communications campaigns. When companies and nonprofits team up in strategic and scalable ways, everyone wins - especially when the core offerings and competencies of the companies involved are brought to bear.

3. Pursuit of basic ESG fluency and materiality (even at a shallow depth) 

For all of the politicization, ESG is meant to be one measure of how companies conduct themselves in pursuit of their business goals. ESG is a measure not exclusively of business outcomes, but of how their work impacts their communities and their people, and how that intersection might impact the risk calculations of their shareholders and stakeholders. Corporate purpose and philanthropy are traditional examples of this expression, but how you recruit and compensate employees, how you manage and secure and govern your operations, and how you and your vendors live your values are even more direct, business aligned ways for investors to evaluate risk to your brand reputation, operations, and ultimately the sustainability of your business. The sooner executives acknowledge this dynamic, the sooner they can build these capabilities into their business and reap the rewards from investors and customers. Light materiality scans or deeper assessments to better understand how your business could be impacted and ultimately better positioned for sustainable success are no longer optional. Getting good grades is easier when you understand the grading criteria and study the right things in priority order. Investors and regulators are asking these questions, founders and executive leaders need to build ESG fluency and pursue materiality assessments to aid focus weighting and prioritization.

4. Environmental sustainability baby steps (even if SaaS)

Not just companies building physical goods in factories need to have their environmental footprint in mind. SaaS companies with growing vendor lists, travel budgets and data centers to scale their app’s reach to customers should also increase their environmental fluency and consider taking action. The SEC will soon require carbon accounting disclosure for publicly traded entities in the US. Pre-IPO companies need to take baby steps in this area to make their future life easier. A large community of service providers is now available to maturing start-ups to get their carbon footprint baselines and help them develop reduction intentions or initial plans. A basic Scope 1 and 2 (and a little bit of scope 3) carbon accounting project (and even the off-sets you may purchase quietly to achieve carbon neutrality) will not be a large budget line item or staff expense in your early years. In fact, it may be very small. However, doing it early will make ongoing carbon neutrality or net zero status much easier and cheaper over time as you scale. Learn this cost effective golf swing early! 

5. Impact & ESG integration 1.0 across all departments

Impact and ESG strategy pursued well in an embedded way is a growth engine, not a cost center! Sustainable business value and risk reduction - and the social and environmental value that can come with it - are realized when boards, exec teams and employees work together as stakeholders in a company’s impact and ESG agenda. It can’t be an afterthought, a bolt-on or a stand-alone program, and should be infused into the core strategy, purpose, values, culture and operating models that make a company what it is. As a result, this should live in every employee’s annual or quarterly metrics and operating plans, alongside their other business imperatives. In their book Net Positive, Paul Polman and Andrew Winston note that this kind of integration as part of “a long-term, multistakeholder model create[s] value in many ways. Not every step is automatically win-win, but over time the leaders save money, reduce risk, innovate more, build valuable corporate reputations and brands, attract and retain talent, and have higher employee engagement.”

Impact + ESG is stuff for the gears, not just the vanity features. "Drive for show, putt for dough!" (final golf reference 😂).

Conclusion 

Building in impact and ESG as you grow can be game-changing, sail filling and give you and your company the focus you need to build a long-term legacy. We’ve seen it first-hand during our journeys building these programs at Salesforce, Splunk, Linkedin, Box, Zillow, Snyk and the inspiring clients we serve. None of the strategies referenced above are cost-centers. It can all help to grow revenue, boost your brand, differentiate your culture, AND improve this world that we share. 

Ready to start a VITAL conversation about your ESG journey? Schedule time with VITAL!