Beth Meyer on ESG compliance and strategy

How is the legal landscape evolving around ESG compliance?

The ESG legal landscape has grown significantly in recent years. As of early 2025, there are over 2,500 sustainability-related regulations globally—a significant increase compared to a decade ago. One of the most transformative regulations is the EU's Corporate Sustainability Reporting Directive (CSRD), often described as the "GDPR of sustainability" due to its focus on transparency. CSRD mandates transparent and accountable reporting on sustainability metrics, setting a global precedent. The CSRD, and other similarly broad-sweeping sustainability regulations, have created a sea change in the legal obligations on corporations and asset managers to make climate and social-related disclosures.

This shift represents a legal evolution: it's not about penalizing companies for their emissions or other metrics but about requiring them to measure, verify, and disclose this information. For companies, this means more data-driven insights into their climate impact, risks, and opportunities. It’s a groundbreaking moment where an area that was previously largely untouched by the legal world is now facing an increasingly complex and demanding web of regulations.

At Novata, we stay at the forefront of these changes by continuously updating our platform's metrics and frameworks to align with evolving regulations. Our team tracks global sustainability developments weekly, ensuring clients have the tools and guidance needed to navigate this rapidly changing landscape.

How can integrating sustainable initiatives and policies from the start benefit startups and early-stage companies?

Integrating ESG considerations early on embeds sustainability into the DNA of a company, making it part of how business is done rather than a later adjustment. Frankly, it works better when it is done early. Early-stage companies that prioritize ESG are often on a more secure and resilient growth trajectory. For instance, tracking emissions or incorporating diversity into hiring practices becomes second nature and aligns seamlessly with their operations. When companies develop ESG later on in their growth journey, it can be much more difficult as they have to bolt-on new policies and processes that may go against the grain of how business has been done for a long time. In other words, retrofitting ESG initiatives later in a company’s journey is far more challenging—it can feel disjointed and less authentic.

In addition to the benefit of resilience, starting early also positions startups to adapt quickly to emerging regulations, attract investment, and access new markets. For venture capital-backed companies, demonstrating measurable ESG impacts can open doors to a broader pool of investors. By making ESG an early priority, startups can build a foundation for long-term success.

What is holding startups or early-stage companies back from prioritizing ESG considerations?

The two main barriers are education and capacity.

Startups are often focused on immediate priorities like securing revenue, building products, and managing operational risks. Adding ESG considerations to their plate can feel secondary when foundational business needs are still being addressed. It can feel that there just isn’t the capacity to address ESG concerns when every bit of resource is devoted to getting the company off the ground.

When it comes to education, there’s a misconception that ESG is difficult and only relevant for large corporations, which leads smaller companies to dismiss it as unnecessary or overly complex. People are reluctant to build out an ESG policy and related processes because they may not have in-depth knowledge of carbon accounting or any historical experience in sustainability. Or, they don’t have a team to help them figure it out. You don’t need any of that to start on ESG. Many business processes that companies are already measuring fall under the ESG umbrella – such as understanding how your business relies on and impacts the environment (climate-related risk), how it treats its employees and key stakeholders, and how it governs itself. As you develop along your company’s ESG journey, you can also address any perceived education gaps by calling on advisors that do have more experience in the space. It doesn’t have to be a big, difficult thing.

The misconceptions underestimate the risks of ignoring ESG. Early-stage companies are not exempt from challenges like data breaches or compliance violations, which can be business-ending. Ignoring ESG can also mean missing critical opportunities. Diverse product teams create value that capture more market segments, and embedding sustainability into your supply chain typically translates into reduced operational costs. By understanding what ESG means for their specific context, startups can mitigate risks, secure operations, and create competitive advantages.

What steps should start-ups and growth-stage companies take to develop an effective ESG strategy?

Start-ups and growth-stage companies should begin by defining what ESG means for their specific business. Rather than adopting a generic policy, leaders should assess their company’s unique strengths, weaknesses, and impacts across each E, S, and G dimension. For example, does the business have significant energy use? Are there gaps in diversity? What governance risks might affect operations?

Governance is particularly critical at early stages. While environmental and social considerations may seem more appealing, strong governance practices—such as data protection, relevant internal policies, and board oversight—lay the foundation for long-term resilience.

Once priorities are identified, companies should develop targeted policies and strategies to address weaknesses and leverage strengths. This approach ensures ESG efforts are integrated, relevant, and effective. Importantly, it also prevents ESG from feeling like an added burden. Instead, it becomes a tool to mitigate risks, attract investors, and even enhance marketing or talent acquisition efforts.

By starting with clear goals and focusing on what matters most to their business, start-ups can establish ESG as a strength rather than a challenge.

How does Novata help companies at all stages manage ESG information?

Novata provides tools and expertise to simplify ESG data collection and management for companies at every stage of their journey. Our platform includes built-in education, guiding users through ESG standards, frameworks, and regulations in accessible terms. For those needing more support, we provide additional resources and in-house advisory services.

For early-stage companies, Novata helps break down ESG complexities and provides actionable insights tailored to their needs. Our analytics and benchmarks allow companies to see how they compare to peers and identify opportunities for improvement. For later-stage companies, we offer robust tools to streamline reporting and meet investor and regulatory expectations.

What sets Novata apart is our ability to scale with our clients. Companies can start with advisory support and later transition to managing ESG data independently as they grow. By

combining technology with expert guidance, we empower companies to confidently manage ESG at their own pace.