Envirotalks: An Interview with ESG Flo

As part of Beaumont Bailey’s mission to connect founders, innovators and the key players that make up the fabric of our industry, our Technology Spotlight series highlights the successes of our incredible BETA members and our wider network. In this instalment we speak with Chiara Meacci, Co-Founder of ESG Flo, where we discuss sustainable services, solutions and technology within the realms of real estate and the built environment.

Tell me a about ESG Flo, its origin story and your role within that…

Our organisation began its journey as a start-up backed by the venture incubator of Bain and Company (a renowned management consulting firm) called Founder’s Studio. I had been with Bain for about a year when Patrick Obeid, our current CEO, joined as an entrepreneur in residence to explore ideas in the ESG (Environmental, Social, and Governance) and sustainability domain.

Given my keen interest in sustainability, backed by my previous work on climate change topics during my thesis, I eagerly joined Patrick to delve into understanding the landscape: identifying key players, pinpointing prevalent issues faced by companies, and uncovering unresolved challenges. We embarked on a journey to define our focus and devise solutions.

In the startup’s nascent stages, my role was multifaceted, as is typical in such environments. I conducted market research, collaborated with engineers in product development and engaged in various other tasks. As we progressed, about a year ago, we officially spun out of Bain.

My trajectory within the venture evolved. Initially, I concentrated on the product aspect, later transitioning to roles in sales and strategy. Presently, I’m deeply involved in marketing, contributing to our mission of advancing sustainability and ESG practices in the corporate world.

Delving into the technology in a little more detail, what problem does ESG Flo solve?

In the current landscape, sustainability considerations are becoming increasingly similar to financial considerations. Companies are now expected not only to report their financial performance but also their sustainability impact. This includes how their activities affect the environment and the social community, such as employees and local communities surrounding facilities.

One of the biggest challenges facing these industries is the difficulty in measuring their impact. Many companies are unfamiliar with such measurements as they have never been asked to quantify metrics like carbon emissions generated during production or commuting. Consequently, they struggle to establish baselines, measure performance, and set improvement targets.

ESG Flo addresses this challenge by providing businesses with a robust data infrastructure. Our technology enables companies to focus on setting targets and improving performance rather than grappling with measuring their impact. We achieve this through artificial intelligence, which allows companies to extract sustainability information from various documents such as PDFs, spreadsheets and even images.

With our platform, companies can effortlessly upload documents containing sustainability information, and our AI extracts the relevant data. This streamlines the process, leaving companies to verify accuracy and easily disclose the information to stakeholders such as investors, customers and regulators.

What advice would you give other women in the space in terms of adversity?

My experience as a female founder has been consistently positive, particularly within the inclusive culture of Bain and Company, where the startup began its journey. Bain fosters an environment where gender differences are not emphasised, ensuring everyone feels valued and on an equal footing. This culture of inclusivity has been instrumental in shaping my experience and I have never encountered discrimination.

How have you seen this industry change over the years and where do you predict it is heading?

In the sustainability industry, we’ve observed a notable disparity between the European and US markets. Europe has been at the forefront, integrating sustainability considerations into business practices and implementing regulations like the CSRD (Corporate Sustainability Reporting Directive). This directive mandates companies with significant revenue and employee size to disclose their sustainability impact, with penalties ranging from fines to potential imprisonment for non-compliance.

While the US is lagging behind, progress is evident. Initiatives such as the California’s climate disclosure rules and the SEC’s upcoming climate disclosure regulations indicate a shift towards greater accountability. Despite the absence of comprehensive regulations, US companies are proactively investing in infrastructure to facilitate reporting.

However, recent scandals highlight the urgency for accountability. For instance, a major company was exposed for falsely claiming green practices while engaging in environmentally harmful activities. Such instances underscore the need for robust monitoring and verification mechanisms.

Technological solutions like ours play a crucial role in enhancing transparency and accountability. By providing reliable ESG reporting tools, we empower companies to accurately assess and communicate their sustainability efforts. This aligns with the growing investor interest in climate-based solutions, as evidenced by our recent successful fundraising round.

The fundraising climate for climate-based solutions is promising, with investors increasingly receptive to initiatives addressing environmental concerns. Our experience in securing seed capital reflects this trend, highlighting investor confidence in our mission to drive sustainability through innovative technology.

What is the current climate for fundraising like in the space?

From my observations, the VC landscape has become more discerning post-pandemic, with investors becoming more selective about where they allocate capital. In 2023, many startups faced challenges in fundraising due to economic conditions, but fortunately, we didn’t encounter such difficulties.

Despite the tightening investment environment, there’s still significant interest in climate-focused startups. However, there’s also a growing backlash, particularly in the US, against terms like ESG. This negative perception has prompted us to consider rebranding from ESG Flo to something more impact oriented.

Nevertheless, regardless of labels, investments in sustainability-related ventures are expected to rise, driven partly by new regulations mandating corporate action in this area.

What do you find the most challenging about the talent market right now specific to your industry?

Hiring poses a significant challenge for startups at our stage. In the current market, talent is often drawn to Series A, B, or C startups over seed-stage ventures due to the perceived level of potential success and certainty. As a result, attracting the right talent who is willing to take on the inherent risks of a seed-stage startup and embrace the sense of ownership can be challenging.

At this stage of our venture, where flexibility and agility are crucial, we need individuals who can adapt to evolving needs and contribute across various areas of the business. Ensuring that our team members feel this sense of ownership and are aligned with our vision is essential. Addressing this challenge may require seeking external support and innovative approaches to talent acquisition.

If you would like to discuss any of the topics raised in this piece or if you need support with your leadership resourcing strategy, please get in touch with Emma Callahan on emma.callahan@beaumontbailey.com.