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Hello, Sarah and Connor here!

Welcome back to Sustain, Sifted's newsletter covering the intersection between startups and sustainability. Please drop us any feedback on this issue, and forward on to your friends so they can sign up too!

What're we talking about today?
  • VCs are coming together to talk ESG
  • What makes Europe a sustainability leader?
  • Getting corporates to try out your climate tech.

\Top Five News Stories

🛍️ Second-hand fashion. Paris-based second-hand clothes marketplace Vestiaire Collective is now a unicorn, following a $216m raise raise announced on Tuesday.

☀️ Climate change club. 15 UK tech firms, including Bulb, what3words and Starling Bank, have formed a “Tech Zero taskforce”. Their mission? To “boost access to finance and make the UK the number one destination for green investment in the world”.

😏 The new index on the block. VegTech is tracking the stocks of 21 plant-based companies to literally chart the market's growth (and, hopefully, deliver returns).

✅ Fossil-free steel. One-year-old H2 Green Steel is building a gigascale green hydrogen plant in northern Sweden to produce fossil-free ‘green’ steel. Production will begin by 2024 and by 2030 it plans to produce 5m tonnes of steel.

🔋 Super batteries. University of Cambridge spinout Nyobolt, which has developed tech for batteries to make them more powerful and faster charging, has raised $10m.

\Venture Capital

Europe’s VCs are working together to crack the ESG conundrum

What's that? VCs working together? For the good of the planet and society? Yep, you heard us.

For the past six months, investors across Europe have been quietly meeting to discuss how they can come together as an industry and set the standard for ESG reporting when it comes to their portfolios (we're sure they'll deal with their own business travel habits later). 

What's been going on?

  • GMG Ventures and Houghton Street Ventures — two UK firms backed by The Guardian Media Group's owner The Scott Trust and LSE, respectively — have been consulting with startup founders, legal specialists, academics and more than 60 VCs to figure out what a "best practice" ESG framework that can be applied to startups might look like.
  • In Sweden, Wellstreet partner Jessica Rameau is working with Northzone, EQT Ventures and Industrifonden to adapt a pre-existing ESG framework (originally designed for large corporates) to make sense in the context of VC.
  • Leaders For Climate Action has also got 30 VCs to add a "sustainability clause" to their term sheets, which makes startups commit to improving on ESG metrics.
  • Each of these groups is hoping to set the standard when it comes to getting startups to report on ESG metrics, by creating a framework that can work across industries and different investment stages.
  • The drivers for this action are regulatory (the EU's Sustainable Finance Disclosure Regulation comes into effect next week; the UK is planning similar rules) and reputational (LPs are demanding to see action).
     
We asked partners from Beringea, Houghton Street Ventures, GMG Ventures, Wellstreet and more to fill us in on their plans.

\Opinion

Why Europe — not Silicon Valley — is leading the sustainability revolution

During the software revolution of the 90s, Silicon Valley was where it's at. Today, another great wave of change is happening — but this time it's in Europe, and it’s being driven by our need for sustainability.

From a bedrock of support among consumers to governments and corporates that take climate change seriously, Rob Genieser, managing partner at ETF Ventures, outlines the ingredients of Europe's sustainability leadership success.

Read it here.

\A message from our sponsor Norrsken

2113 applications. From 120 countries. 20 will be chosen.

The Norrsken Impact Accelerator still has one spot open for late arrivals. Participants will receive $100k pre-seed investment, an eight week sprint with mentorship support in Stockholm and access to top investors.

Learn more and apply here.

\The Data Drop

49%


This is how much Europe's plant-based industry has grown by in the past two years, according to a report by the Smart Protein Project. It also says that sales over the past two years have hit €3.6bn.

European startups in the plant-based industry have been seeing strong growth. Despite launching in supermarkets in 2020, UK plant meat maker Moving Mountains is already generating 32% of its revenues from retail. Meanwhile, Oatly is eyeing up a monster $10bn IPO, and has just struck a big deal to supply Starbucks coffee shops.

\Got a burning opinion on sustainability in tech?


Perhaps you have a controversial view on impact investing, or you want to vent some frustrations about the way your industry is tackling (or, um, says it’s tackling) its environmental issues.

Maybe you read something in this newsletter that you'd like to share your two cents on?

If so, see our handy op-ed guide and send us over a pitch.

\Reads and Resources

📝 Google’s carbon-free energy plan. How’s Google getting on with its target to operate on 100% carbon-free energy by 2030? This paper documents its progress so far.

🎙️ Techstars’ climate tech podcast. The first 30-minute episode of this podcast series gets into the nitty gritty about climate change and how tech and startups can solve it.

🌲 Stay-at-home forest bathing. Ecosia's got a radio station consisting of therapeutic forest sounds from around the world (this newsletter was written to the sound of Yasuni National Park in Ecuador).
New to Sustain? Don't forget to sign up!
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\How to...

Strike a big corporate deal as a climate tech company

At the end of January, computing giant Microsoft announced which companies it had decided to work with to achieve its goal of becoming carbon negative by 2030. One of the lucky companies was Puro.earth, a three-year-old carbon removal marketplace from Finland. How did they make the cut? We asked CEO Antti Vihavainen to share some tips.

Invest in your product first. “Sales involves knocking on various doors, and eventually one opens and you have to have a good pitch,” Vihavainen says. “But before that, you have to have a product that is solid enough. So the work to sell to Microsoft is actually something that started out with us rigorously developing the product itself.” Puro.earth was up against 189 other companies when it pitched Microsoft — and Vihavainen says a solid product is what cinched it.

Target corporates making sustainability claims. “When a company makes a bold claim about carbon neutrality or net zero goals, that’s when we typically approach them,” Vihavainen says. “This is what happened with Microsoft. They announced their carbon neutral goals at the end of January, and we were pretty quickly able to open a dialogue with them.”

Be patient. Vihavainen says a year passed between Puro.earth's first conversation with Microsoft to the news it had been selected as a partner, including a six month Request for Proposals (RFP) process where Puro.earth was judged against competitors on how much carbon its solutions could remove. “The RFP process is inefficient and time consuming — but Microsoft did share the knowledge that it had learned [from it].” 

Understand the strategic benefits. While it has taken a long time to get Microsoft on board, Vihavainen says it’s important for young startups to understand the other benefits that come with securing flagship contracts. “It’s important to have high profile customers, and the amount of time invested in getting those few important customers is time well spent. It’s a stepping stone for a startup to gain reputation and widespread acceptability,” he says.

...And dont forget to brag. Vihavainen says it’s not just about signing the contract — it’s important to let other potential customers know you’ve got a big deal customer on board, too. “Remember to utilise it,” he says. “We are talking about the fact we were chosen by Microsoft after going through their rigorous process.”

—Sarah

\The Green Glossary

ESG


What does it stand for? Environment, social and governance.

That... doesn't help that much. In the context of companies, ESG refers to the metrics used to judge a company's performance on factors such as how they manage waste, the energy sources they use, their diversity and inclusion policies, and their labour standards. These are all things that might impact its financial returns, today or in the future.

Sounds corporate. Yep. Pension and other asset-management funds often decide which listed companies to invest in (or avoid) based on their ESG scores. But as we now know, VCs want to set their own ESG standards too.

So they'll all become impact investors? No. Impact and ESG are different. Impact investors focus on specific themes, industries or companies that create tangible, positive outcomes, but ESG metrics can be used to screen any company, whatever its business is.

Where can I read more? 500 Startups has created a portal that explains the different criteria, plus the ways they can be measured.

Seen a sustainability term that's totally confused you — or want to have a go at explaining some often-misused jargon yourself? Let Sarah know.
Sarah Drumm
Sustainability Reporter

Get in touch with her at sarah@sifted.eu
She tweets at @sarah_drumm
Connor Bilboe
Editorial Assistant

Get in touch with him at connor@sifted.eu
He tweets from @connorbilboe
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