On Monday, Indonesia-based venture capital firm AC Ventures, in collaboration with the global consultancy PricewaterhouseCoopers (PwC) Indonesia, released a playbook on corporate governance tailored for tech startups.
According to a press statement, the playbook is anchored in the Indonesian General Guidelines for Corporate Governance. It offers actionable advice on accountability, transparency, sustainability, and ethical behaviour as essential pillars to ensure a company’s enduring resilience and success in an unpredictable business climate.
There are several key points that the playbook offered, but one that stands out for me is this part: There has been a decisive shift in the investment landscape in recent years, with 80 per cent of investors now cautious of “greenwashing” and 70 per cent of consumers showing a preference for sustainable products.
“Today’s investor landscape is rapidly shifting toward a keen focus on environmental, social, and governance (ESG) metrics,” the report wrote.
“Given PwC’s revealing data—one point in 2022 exposing that a staggering 80 per cent of investors are cautious of ‘greenwashing’ and another in 2023 highlighting that 70 per cent of consumers lean toward sustainable products, it has become evident that startups must attune themselves to these changing dynamics if they hope to raise capital and succeed in the market.”
But the thing that is at stake here is not just funding, though we will not deny its importance for startups.
What this means for startups today
The startup ecosystem is entirely different from what it was years ago when I began my career by writing about the Indonesian startup ecosystem.
Back then, there seemed to be plenty of leeway, an almost permissive way of doing things. Cash burning was so common that once, someone I know tweeted a picture of billowing smoke on the horizon with the caption, “Oh, look, some startup is burning cash again.” Growth at all costs was the rule of the games; startups are competing to grow the fastest and soonest.
Ideas such as ESG metrics are merely ideas. It was not something that was realistic to implement. After all, they were all startups.
But as we face back-to-back global crises and are forced to get our things together, as we witness how our indulgences caused us several health problems, we are finally called to run our operations like a “proper” business. Several investors even put ESG impact as a factor in their decision-making process when considering a potential investment.
This means with the need to pay meticulous attention to profitability, we find ourselves playing a different game. We no longer can get away with the notion of “just a startup”. Suddenly, we are forced to consider our place in the world and the impact that we have created.
Like any other business, the activities of production and distribution that we perform as startups have consequences to the environment. We are not exempted from responsibilities, though the scale of that responsibility may vary.
On the grander scale of things, it is all about making an impact and doing things responsibly.
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Image Credit: RunwayML
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