It is time to embrace the opportunities that come with the technology industry’s shortcomings, according to Bettina Denis, head of sustainability at Revaia

The technology industry during the past decade has been a key factor in reshaping both the society and economy of Europe. The sector has created nine million tech jobs and generated $800bn (€740bn), revolutionising sectors such as education and healthcare. 

Projections suggest demand for an additional 11 million tech specialists by 2030. The industry is rapidly innovating and has the potential to lead the charge towards sustainability. By embracing sustainable principles, it can demonstrate the intertwined nature of sustainability and financial performance. 

Despite these expectations, there are issues that need addressing. Notably, the diversity of the technology industry requires attention and, on the environmental front, its carbon emissions could triple by 2050 without intervention.

Facing challenges 

In the tech world, carbon footprint assessment is the most prioritised sustainable initiative, with 59% of seed to series-D and beyond having completed a carbon footprint analysis – a positive step. Equally positive is that the further down the maturity scale we look, where the larger companies with higher carbon emissions sit, the higher this%age rises, reaching 87% in series-D+ companies.

However, all is not rosy, as tech companies seem to overlook significant Scope 3 emissions, one of the highest contributors to carbon footprint. Scope 3 emissions account for all indirect emissions in a company’s value chain, including both upstream and downstream activities, and notably procurement. Currently, just over a third (36%) of companies have implemented a responsible procurement charter. 

Diversity is an area of concern – especially female representation. As it stands, just 26% of the tech workforce is female. As companies mature, there is also a risk of losing focus on ESG actions from previous financing rounds. Between seed and series-D, female representation at the board level has been shown to decrease from 37%
to 27%. 

Diversity charters often sit below environmental desires, but it is vitally important that we consider both to the same significance. 

Turning the dial 

However, there are reasons for optimism. Tech companies are beginning to understand their ESG responsibilities, and investors are beginning to take sustainability seriously. In 2021, $18.2bn was invested in European startups pursuing environmentally aligned business models. 

VC firms are beginning to see that sustainability has to be ingrained in everything they do, and all investments must adhere to ESG rules, or they quickly see investors putting money elsewhere. In a challenging fundraising environment, this is the last thing that GPs need. 

We are seeing an increasing trend of VCs, in the due diligence phase of investment, ensuring that companies have defined measurable social and environmental indicators, which can be followed in the long term. These KPIs can relate to business practices such as transparency, employee retention and work policies, as well as the company’s business model such as education, partnerships and employment.

This, alongside the appointment of an ESG leader, which has proven to help increase diversity from 38% to 46% according to our latest ESG Benchmark Survey, means that companies can have a clear roadmap and in-house toolbox, improving sustainability performance and ensuring that the tech industry becomes the driving force towards a more sustainable future.

Note: All data referenced is from Revaia’s 2023 Tech ESG Benchmark Survey