More Than a Checklist: How to Make Your ESG Strategy Count

Environmental, Social, and Governance (ESG) considerations are becoming increasingly important, especially for any companies working in climate tech. Despite this, many companies still treat ESG like a box that needs to be checked off, a minor task that founders need to take care of before they can get to the “real” work.

This is the wrong approach. Poorly-executed ESG represents a real risk to the company, while ESG done well can set companies on the right track to become best-in-class. Also, taking a close look at your company under an ESG lens can reveal business opportunities that you have otherwise missed, and ways to distinguish yourself from the competition. 

At Extantia, we believe that ESG is important, especially for early-stage companies, and that it is more than just a box-ticking exercise. That’s why we have formalised our approach in an ESG playbook. We want to share it with early stage companies so that they can clearly and systematically integrate ESG into their business operations. 

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In the following piece, we’ll talk about how to set your ESG priorities, and share some tips on how to make ESG work for your company, based on our newly developed ESG Playbook. 

The ESG Prioritisation Tree

In our climate tech portfolio companies, we’ve identified ESG topics that come up often, and have placed these topics in a “prioritisation tree”. The topics are roughly divided into three sections, depending on company attributes, and is intended to make it easier to pick out the relevant topics according to company priorities. 

Every company’s priorities will differ – a concept known as materiality – which refers to the ESG issues most relevant to your operations, stakeholders, and long-term value. Under double materiality, you should assess both how ESG factors affect your business (outside-in) and how your business impacts people and the environment (inside-out). Identifying these priorities is the first step to focusing your ESG efforts where they matter most.

This is the Prioritisation tree:

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It starts with attributes that describe your company: Production of Physical Products, High Usage of Data/AI, and Strong Growth Ambitions. Under each of these attributes is a list of topics that most relate to those overarching attributes. 

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As part of our early conversations with any company, we go over the prioritisation tree together and pick the 3-5 most relevant topics to their business model. If you’d like to do this on your own, we emphasise not just selecting things that you have already worked on, or easy “wins” Remember, you’re not just trying to check off a box, you’re identifying topics that will impact the future of your company. So as you select your priorities, really focus on the ones that are actually important and relevant to you. 

Let’s take a company whose product relies on rare earth elements such as neodymium and dysprosium; common in technologies like EV motors, magnetic refrigeration, or wind turbines. These materials are essential for performance but come with complex environmental and social risks: high-impact extraction processes, limited global suppliers, geopolitical concentration, and weak labor or environmental standards in some mining regions.

Because of this, Raw Materials and Supply Chain management naturally emerge as two of the company’s most material ESG topics. Why? First, the sourcing of these critical materials directly affects the company’s environmental footprint and exposure to social risks. Second, supply chain resilience, transparency, and traceability become business-critical in the face of regulatory scrutiny, stakeholder expectations, and potential disruptions. In short, companies relying on rare earths cannot address ESG meaningfully without a clear strategy around both their raw material inputs and the integrity of their supply chains.

Now imagine a company with a production line that uses heavy machinery, hazardous materials, or operates in high-voltage environments. For them, Employee Health and Safety is clearly a material ESG topic. As the company scales, prioritising a safety-first culture and implementing strong safety protocols becomes essential; not just to protect workers, but to manage operational risk during rapid growth and increased investor scrutiny.

Once you’ve established your priorities, you have the hard job of actually implementing actions addressing them. We’ve tried to make that job easier by breaking each topic down into a bespoke checklist by stages. 

The ESG Checklists

Once you’ve identified your priority topics, the next step is translating them into action. That’s where our ESG checklists come in. We use these checklists to develop bespoke, actionable ESG action plans based on each company’s material topics and checklist items; turning high-level priorities into concrete steps that drive meaningful, measurable progress.

We’ve built custom checklists for each core ESG topic, organised into three stages. These don’t align with funding rounds, they track your company’s maturity. The idea is to help you move from early foundations to market leadership in your ESG performance.

• Stage 1: Establish
  Set a clear foundation. Build basic systems, values, policies and awareness around your priority ESG topic.
  
  
• Stage 2: Integrate
  Embed the topic into your core business strategy, operations, and decision-making.
  
  
• Stage 3: Lead
  Aim for industry best practice. Drive innovation, transparency, and continuous improvement.
  
  

Let’s bring this to life with an example. Think back to the company using rare earth materials. We identified Supply Chain Management as one of their key ESG topics. In the first stage, they should focus on mapping their critical material sources and understanding key supply chain risks. In the second, they could develop responsible sourcing guidelines and start evaluating suppliers based on ESG criteria. And in the third, they should conduct full supply chain audits, publish transparency reports, or participate in collaborative industry standards. All of these steps are outlined in the full checklist below: 

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Now take Energy Usage, a material topic especially relevant for climate tech companies with high energy demand, like a direct air capture (DAC) startup. DAC processes are notoriously energy intensive, whether they rely on chemical sorbents, heat, or large-scale fans. That energy use isn’t just a sustainability issue; it directly affects unit economics ($/tCO₂), incentive eligibility, and the credibility of a company’s net-negative claims.

In Stage 1, the focus is on embedding energy efficiency early. This could include creating energy consumption maps for prototype stages, drafting a prioritised list of energy-intensive processes, and conducting a regulatory landscape analysis of energy efficiency requirements relevant to the product and scale. In Stage 2, the company shifts toward integration—installing energy metering systems across key production lines, testing process control strategies for efficiency gains, applying energy efficiency criteria to procurement, and conducting a gap analysis for readiness against standards like ISO 50001.

By the third stage, as the company scales, the focus turns to leadership. That might mean conducting full lifecycle energy audits - and publishing them -, shifting to renewable energy procurement at commercial scale, or participating in industry alliances to set energy efficiency standards for DAC. At this point, energy performance is part of the company’s operations, market positioning and policy engagement.

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ESG checklists aren’t the end of the journey - they’re living documents that should evolve with your company. As you scale, move to higher TRLs, or undergo major pivots, revisit your priorities and adapt your action plans. Our ESG Playbook helps companies do just that, giving founders a flexible, visual framework to take ownership of their ESG roadmap and focus on meaningful progress over “tick-boxing.” It’s applicable across climate tech, turning ESG from a compliance task into a strategic advantage that drives resilience, unlocks growth, and builds lasting value. Once all topics are identified and action plans are in place, we also encourage founders to share progress with investors using our ESG board slide template, released last year to make reporting simple and impactful. 

If you’d like to learn more or receive a copy of the Playbook, reach out! We’d be happy to share it.

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