Founder Spotlight: Majid Mirza, Founder and CEO of ESGTree

You can't improve what you don't measure.

It’s a simple piece of advice that has had a significant impact on leaders of the world’s most successful businesses. What makes these words from management theory pioneer Peter Drucker so lasting is that they apply to virtually any business metric, from sales to customer success to human resources.

Over the last twenty years, global businesses and organizations have started to track a new set of metrics to improve not only their bottom lines, but also the planet. First introduced at the United Nations Global Compact Leaders Summit in 2004, Environmental, Social, and Governance (ESG) measures a company's environmental impact, its treatment of people and society, and the quality of its leadership and internal controls.

Making an impact on how these goals are tracked is the mission of Majid Mirza, the founder and CEO of ESGTree. The Waterloo-based startup automates ESG tracking for impact investors, private equity and venture capital, and other financial institutions.

Making a choice for change

Originally from Pakistan, Mirza came to Canada in 2003 to pursue his undergraduate degree focused on user experience and design at the University of Waterloo. After graduating, he jumped back into his studies at UWaterloo in the Masters of Business, Entrepreneurship, and Technology (MBET) program.

“I loved doing testing and research and development, and that’s where my career was headed. Then in the MBET, we had one module for social innovation and entrepreneurship which changed my path. I didn’t want to go back to a desk job, I wanted to make an impact,” Mirza says.

After earning his graduate degree, Mirza spent almost ten years traveling around rural areas in 21 countries across Sub Saharan Africa, Latin America, and Asia working in sustainable development. The experience showed him the opportunities to enhance environmental social impact within the context of the corporate world. In 2019, Mirza returned to UWaterloo for a PhD program in Sustainability Management.

“I worked with companies to implement what's called inclusive supply chain practices. How do you integrate economically smaller suppliers into corporate supply chains? It's not check writing or philanthropic work. It's how do you make the actual business operations more inclusive to marginalized communities,” he said.

Inspiration for making a global difference

Mirza was inspired by early social innovation projects like Kiva microloans and Oxfam. He says these programs productized social impact. For example, Oxfam lets individuals purchase goats or other animals for families in developing countries. The family can then sell milk or other dairy products from those animals to provide for their communities.

“That's kind of what got me interested in how we can use technology to create a direct impact on the lives of poor people,” he says.

One of Mirza’s last roles during his work developing social impact projects was with the Mennonite Economic Development Agency as a senior project manager and interim technical director.

“Many of these programs are funded by what are called impact investors. They’re essentially private equity firms that invest in companies that want to do good for the world,” Mirza says.

It was during his PhD research on social impact and ESG that Mirza realized there were no technology platforms that are designed for impact investors to track ESG goals. There is no government regulation to track or report on ESG goals, but stock exchanges can ask listed publicly-traded companies to issue a report.

Instead of focusing on publicly-traded companies, Mirza developed ESGTree to help impact investment firms monitor and report the ESG performance of their private portfolio companies.

“If they wanted to track these sustainability factors, they would normally use Excel. Then they would send out this Excel sheet, either attach it or by the cloud to a whole bunch of departments inside their company. Then there would be all these Excel sheets going around, people entering stuff. You can't really track that properly on Excel, but with ESGTree, all the portfolio companies can easily submit their data and it gets turned into dashboards, analytics, and scorecards,” he says.

Investing in acceleration

ESGTree is one of the companies selected in July for the first cohort of the AC:RevLab program. The new program is part of the Scale-Up Platform delivered by Communitech and is designed to help startups bridge the gap between early traction and scalable revenue.

“RevLab has been amazing. It’s everything that startups in the Waterloo ecosystem need. Most of these founders are coming from technical backgrounds. Very few of them have business backgrounds. They’re engineers, mathematicians…they’re good at building stuff, but they’re not as good at sales, market intelligence, or communication in general,” Mirza says.

Mirza says his own background gives him a different perspective, but the program has still been invaluable.

“RevLab has allowed me to bring my team into the sessions so they don’t have to keep hearing that from me. It’s like a structured way to communicate what I already know as a founder, but find it really challenging to communicate to my team. If I were to hire consultants to do what RevLab is doing, I would pay $30,000,” he says.

What’s next for ESGTree

Mirza says the timing is exciting and challenging for ESGTree’s sector.

“ESG was at the top of the news. It was the most investable industry during COVID. And then the wind changed and ESG is not a popular topic in the U.S.”

While ESGTree serves clients in Europe and New Zealand, Mirza says their North American base means these political headwinds have an impact. He adds that they have built the company to weather the storm.

“We didn’t raise institutional financing. We are bootstrapped. We have an angel investor who’s with us for the long run, and we have to play the patient game in waiting for the ESG industry to take root. So right now, the strategy is to survive and thrive—take care of our current clients, improve the current platform, and continue to build our client base."