UK start-ups are embracing ESG
For the fourth consecutive year the BVCA has partnered with ESG_VC, now the portfolio arm of VentureESG, to produce the annual research into the ESG performance of venture-backed businesses.
Over the years the number of portfolio companies participating in the research have more than tripled - from around 225 companies in 2022 to over 700 start-ups and scale-ups across multiple countries and regions in 2025.
UK-based start-ups have consistently formed a strong core of the respondent base. In this article we take a closer look at how domestic early-stage companies are performing - not only in comparison to other regions but also in terms of their year-on-year ESG progress.
UK start-ups outperform international counterparts on environmental metrics
While on average the proportion of startups measuring their carbon footprint has dropped from 28% in 2023 to 23% in 2024, likely driven by an increased focus on materiality, UK start-up ecosystem offers a more upbeat picture. Defying the downward shift seen in other territories, the proportion of UK early-stage companies tracking their carbon emissions increased from 24% in 2023 to 26% in 2024 outperforming other regions.
Building on this, 16% of UK startups have adopted a net zero policy or programme - up from 11% in 2023, while a further 11% plan to set a net zero target in 2025. By contrast only 13% of startups in Europe, and just 7% in both APAC and North America, have a policy or program in place to achieve Net Zero.
Increased focus on talent development and some progress on diversity
This year’s report also highlighted that start-ups are prioritizing initiatives that identify and develop talent. Our research finds that proportion of UK companies that provide educational support to employees rose to 71% in 2024, up from 66% in 2023. 53% of UK startups analysed offer an internship, apprenticeship or trainee programme, an uplift of 3% from 2023. While UK start-ups have placed more emphasis on both of these metrics year-on-year, they still trail behind APAC and Europe. UK companies, however, lead in providing mental health support to employees (76%).
UK start-ups are responding proactively to rapid development of artificial intelligence (AI) and cybersecurity threats. 41% of companies now provide codes of conduct and training for the responsible development and use of AI, up from 30% last year and on par with European peers, who have led on this front. Meanwhile nearly 4 in 5 companies have a cybersecurity programme in place.
Diversity in leadership remains a challenge and requires a greater focus among UK companies despite some progress over time. Out of all companies that track this metric, 38% of UK start-ups have no female representative on their board (versus 40% in 2023), while 18% of companies have no women within senior leadership team, an improvement from 21% the year before.
Sector benchmarking: Fintech outperforming on AI but boardrooms lack diversity
From the sector perspective nearly 76% of UK Healthtech and Biotech start-ups have at least one woman on their board, and this drops as low as 45% for Fintech companies. At the same time more than one quarter (26%) of SaaS companies have no women in their senior management.
However, Fintech start-ups outperform local peers on responsible AI and together with retail and consumer companies also lead in measuring carbon footprint. 40% of companies in both sectors track their carbon emissions, as opposed to 18% of SaaS companies.
ESG_VC provides venture-backed businesses with the tools to measure and improve their ESG performance and help them to get strong and sustainable foundations in place. More information can be found here.
Authored by Ewa Skornas, Research Manager, BVCA
