Sustainability Performance Evaluation for Start-ups: Defining the Characteristics for a Tailored ESG Assessment Tool

Abstract

Environmental, Social, and Governance (ESG) reporting has become a fundamental element of corporate disclosure. An increasing number of stakeholders, including investors, is demanding the disclosure of this typology of non-financial information as basis for their decision-making, thus shaping the regulatory context. However, the research on ESG reporting remains poorly explored among small and medium enterprises (SMEs), and almost inexistent among Start-Ups (SUs). By examining the characteristics of major ESG evaluation tools designed prevalently for large firms and SMEs, this thesis highlights the extent to which the current needs of SUs in the context of ESG performance assessment remain unaddressed. This study reveals that, in evident contrast with SMEs, sustainability disclosure for SUs should focus on the Governance dimension, be cost- and time-efficient as well as consider the intrinsic characteristics of SUs in order to meet their needs. Finally, the characteristics that a ESG evaluation tool tailored to SUs should possess are discussed. The latter should be flexible and able to adapt to highly unstable business models, focused on materiality, cloud- and AI-based so to minimize errors and resources, and framed on both national and international frameworks so to be able to integrate new information as the venture scales up.