ESG is Good Business: Three Reasons Why Techstars Signed on to the UN PRI

Aug 24, 2021
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By Stacy Carter, Techstars Chief Legal Officer and SVP of Business Affairs

We are proud to announce that Techstars is now a signatory of the United Nations Principles for Responsible Investment (UN PRI). As one of the largest investors in early-stage companies, measured by number of investments, we believe it is not only the right thing to do from a moral perspective but also from a long-term sustainable business-model perspective as well.

The UN PRI is a network of investors working together to implement six principles, created by and for investors, that offers actions for incorporating ESG (Environmental, Social and Governance) issues into investment practices. By signing onto the UN PRI, we are declaring that all of our investments will be responsible investments, we will be held accountable for meeting high standards of ESG across our investments, and we will use our broad influence to promote ESG values in our portfolio companies. 

We believe that by embedding ESG into our business practices, as well as by encouraging our entrepreneurs to do the same, we will help all involved increase their value propositions. In fact, as we look to empower all groups of entrepreneurs, especially the underrepresented with limited access to opportunity and capital, we will uncover a greater number of financially successful business ventures that can create generational wealth for decades to come.

Why? We broke down the three main reasons why we signed onto the UN PRI — and why it matters. 

01. As a business focused on investing, ESG is at the heart of our company

Here’s one of the big takeaways from the recent IPCC (Intergovernmental Panel on Climate Change) report: In the next 30 years we will experience massive change in our global climate. In addition, we are in a moment of great social change and upheaval around the world, and these changes will only accelerate, driven at least in part by climate change and by new technologies. 

Simply put, market conditions have changed and will continue to change substantially. Businesses must respond to these new conditions or they will not succeed. More than 2,000 academic studies have examined the relationship between ESG and financial performance, and 70% of them have found a positive relationship between ESG scores and financial returns. 

Sustainable businesses — ones that build on ESG — lower the risk of such factors as climate change, social change, cyber-security threats, and governance disruptions. These businesses are a better investment. In addition, by investing so widely in hundreds of startups every year, we reduce volatility and risk while yielding higher returns. 

02. ESG is a great investment for our portfolio companies, too

Techstars is much more than just an investor. In addition to capital, we provide business fundamentals and a lifelong network that Gives First. So for us, the UN PRI isn’t just guidelines for our investment strategy but it is a way we can hold ourselves and our stakeholders accountable. This framework will help us be more successful in a more globally conscious way. 

In our accelerator programs we will be teaching early stage companies how to do this from the very beginning. Embedding ESG in a thoughtful and responsible way isn’t easy — especially as very early stage companies are battling for investment visibility and survival — but this is one more benefit we provide to startups in our accelerator programs. 

Techstas is already a B corp, because from the start, we have been dedicated to living our values. And we have seen many of our portfolio companies build ESG into their businesses already, because they know that it’s good business as well as the right thing to do. We have literally hundreds of examples, but here are just a few:

The founders of these companies see huge environmental and social problems as opportunities for them to grow a business and make the world a better place — with the two goals inextricably entwined. 

03. ESG helps us serve even more entrepreneurs across the globe  

Techstars is a global company with accelerator programs, partners, and investments in every part of the world. We continue to expand, helping more entrepreneurs every year by adding cities and further developing our mostly virtual program, Techstars Anywhere. As we do, we see entrepreneurs who are building sustainable businesses, with different ideas and approaches, and who take on deeply entrenched challenges as an incredibly promising investment opportunity.

We recognize that embedding ESG into our business practices, as well as encouraging entrepreneurs to do the same, increases our organization’s overall value proposition. If we look to support all groups of people, with a focused lens on those who are underrepresented and who have limited access to opportunity and capital, we uncover a greater number of financially successful business ventures that can create generational wealth for decades to come.    

We know that great ideas — and transformative investments — can come from anywhere, and that in order to solve the many enormous environmental, social, and economic problems that humanity faces today, we need to foster all of that creativity. 

Our goal is to surface and support entrepreneurs everywhere who clearly see the problems in their communities and countries, by giving them access to mentorship, a network who can open doors and answer questions, and the necessary capital they need to grow. 

We have always believed that entrepreneurs can change the world. We are thrilled to be part of this global movement, to join so many other investors in saying loudly that ESG is how business should be guided from a moral perspective but also to create a long-term sustainable business model.

About the Author
Author
Stacy Carter

Stacy Carter is Chief Legal Officer and Senior Vice President of Business Affairs at Techstars. She oversees the company's ESG matters and worldwide legal affairs, including securities and capital investments, contracting, employee relations, general corporate matters, governance and compliance. Prior to joining Techstars, Stacy served as General Counsel and Head of People at Sphero, a robotics and education company, and as Associate General Counsel with Rally Software. Stacy began her legal career at Cooley LLP, and prior to law school, she worked at KPMG as a tax accountant.