ESG for Startups: What Investors Actually Ask For

If you're raising a round and someone mentions ESG, the instinct is to file it under "things big companies worry about." That instinct is wrong. Investors are asking about ESG earlier and more frequently than ever, and what they want is more straightforward than you'd expect.

This isn't about publishing a sustainability report or hiring a Head of Impact. It's about having basic data organized and basic policies written down. The bar is low. Most startups still trip over it.

Why Investors Care About ESG Now

This shift isn't ideological. It's financial.

A recent global survey found that 97% of executives believe sustainability reporting gives SMEs a competitive advantage. Among institutional investors, 96% link sustainability practices to improved financial performance. These numbers drive behavior. LPs are pressuring VCs to incorporate ESG into due diligence, and VCs are passing that pressure down to portfolio companies.

The CSRD in Europe is accelerating this further, driven by the double materiality principle. As large companies face mandatory sustainability reporting across their value chains, the expectation trickles down. Startups that sell to enterprise customers are already being asked for ESG data by their buyers. Investors know this and want to see that portfolio companies can handle those requests.

The core logic is risk management. A startup with no awareness of its environmental impact, no employment policies, and no governance documentation is a startup with unmanaged risk. Investors have learned that these blind spots show up later as regulatory fines, customer churn, or reputational damage.

None of this means you need a perfect ESG score. It means you need to show awareness and a basic system for tracking what matters.

What Investors Ask For at Each Stage

ESG expectations scale with your company. Nobody expects a pre-seed startup to have a carbon footprint calculation. But by Series B, you should have real data.

Pre-Seed and Seed

At the earliest stages, investors are looking for awareness, not sophistication. Expect questions like:

Do you have a basic environmental policy?
Do you have an anti-corruption or ethics policy?
Are you aware of the environmental and social impacts of your product or operations?
How do you think about sustainability as the company grows?

The right answer at this stage is honest and directional. "We don't have formal emissions tracking yet, but we've identified energy consumption as our main environmental impact and plan to start tracking it when we hire our first operations lead." That's fine. What isn't fine is a blank stare.

Have at least two written policies: an environmental policy and a code of conduct covering anti-corruption and business ethics. These don't need to be long. One to two pages each, signed by a founder, dated. That alone puts you ahead of most seed-stage companies.

Series A

By Series A, investors expect you to have some data, not just intentions. Common requests include:

Annual energy consumption (electricity, heating, fuel)
Basic workforce metrics: headcount, gender breakdown, contract types
Health and safety incident records
Governance documentation: who makes decisions, how conflicts of interest are managed
Evidence that policies exist and are communicated to employees

This is the stage where "we'll get to it" stops being an acceptable answer. Investors want to see that you've started tracking operational data and that your governance isn't entirely informal.

If you're a software company with 25 employees in a co-working space, this is straightforward. Your energy data comes from your office provider or a simple estimate. Your workforce data comes from your HRIS or a spreadsheet. Your governance documentation is a one-page description of decision-making structures.

Series B and Beyond

At Series B, expectations approach what enterprise customers ask of their suppliers. Investors may request:

A carbon footprint covering at least Scope 1 and Scope 2 emissions
VSME-aligned reporting (the EU's simplified sustainability standard for SMEs — see our guide to the 11 VSME disclosures)
Gender pay gap data
Employee training hours and development programs
Supply chain due diligence documentation
Formal risk assessments covering environmental and social factors

This doesn't mean you need a sustainability team. It means you need a system. Companies at this stage typically have someone in operations or finance who owns ESG data collection, supported by tools that make tracking manageable rather than heroic.

The 5 Data Points Every Startup Should Track from Day One

You don't need to wait until investors ask. Start tracking these five things now, even if you're two founders in a garage. They take minimal effort to maintain and cover the majority of what investors and customers will eventually request.

1. Energy Consumption

Pull your electricity bills monthly. If you're in a shared office, ask your provider for your allocated consumption or estimate based on your share of the space. Record kilowatt-hours, not just cost. If you have company vehicles, track fuel in litres.

This is the foundation of any carbon footprint calculation. When investors or customers ask about emissions, energy data is where you start. You can use the carbon calculator to turn your energy data into an emissions estimate in minutes.

2. Employee Headcount by Gender and Contract Type

Maintain a simple log: total employees, breakdown by gender, and breakdown by contract type (full-time, part-time, contractor). Update it when someone joins or leaves.

This feeds into diversity reporting, social metrics, and workforce disclosures. It takes five minutes a month and answers questions that appear in nearly every ESG questionnaire.

3. Health and Safety Incidents

Record any workplace injuries, near-misses, or safety-related events. Even if you're a remote-first software company with zero incidents, having a log that shows zero is better than having no log at all. It demonstrates that you're paying attention.

4. Training Hours

Track hours spent on employee training and development per person per year. Include onboarding, skills training, safety training, and professional development. This metric shows up in VSME disclosures, EcoVadis assessments, and investor questionnaires.

5. Anti-Corruption Compliance

Document your anti-corruption and ethics practices. At minimum, this means a written policy and evidence that employees have been made aware of it. A signed acknowledgment during onboarding is sufficient. If you operate in sectors with higher corruption risk, note any additional controls.

These five data points take less than an hour per month to maintain once the habit is established. They answer the majority of early-stage ESG questions and give you a foundation to build on.

How to Set Up Tracking in 20 Minutes

You don't need expensive software or a consultant to get started. (For a detailed walkthrough, see our step-by-step tracking setup guide.) Here's a practical approach:

Option 1: Spreadsheet. Create a simple workbook with tabs for energy, workforce, safety, training, and compliance. Update monthly. This works for very early-stage companies and costs nothing.

Option 2: ESG Passport. The ESG Passport is designed for exactly this situation. It gives you a structured place to track ESG data year-round, so when investors or customers ask, you're not scrambling through email and filing cabinets. It's built for companies without a sustainability team.

Either way, start now. The hardest part of ESG reporting isn't collecting data. It's not having historical data when someone asks for it. A year of monthly energy records is worth far more than a perfect policy document written the week before due diligence.

Before you start tracking, take 10 minutes to run the VSME readiness assessment. It shows you where you currently stand against the EU's SME reporting standard and highlights the specific gaps you should prioritize.

The VSME Standard as Your Framework

If you want a framework to organize your ESG data, the EU's Voluntary SME Standard (VSME) is the most practical choice for startups. It was designed specifically for small and mid-sized companies and covers 11 core disclosures (B1 through B11) spanning environmental, social, and governance topics.

The VSME gives you a globally recognized structure without the complexity of full ESRS or GRI reporting. When an investor asks "what framework do you use?" you have a credible answer. When a customer sends an ESG questionnaire, VSME-organized data maps cleanly to most common formats.

More importantly, VSME is becoming the default expectation for SME suppliers in European value chains. If your startup sells to enterprise customers in Europe, VSME readiness is increasingly a commercial requirement, not just an investor nice-to-have. You can learn more about how this applies to startups at the startup ESG page.

The Bottom Line

ESG for startups isn't about being perfect. It's about being prepared. Investors want to see that you understand the risks, you're tracking the basics, and you have a plan to scale your reporting as the company grows.

Start with the five data points. Write two policies. Run a readiness assessment. Set up a tracking system. That's 80% of the work, and it takes a weekend, not a quarter.

The startups that struggle with ESG aren't the ones with bad data. They're the ones with no data. By the time an investor asks, it's too late to start collecting. The companies that raise smoothly are the ones that built the habit early, tracked consistently, and can pull numbers when asked without breaking a sweat.

That's all investors are looking for. Not perfection. Preparation.