Measuring What Matters—ESG Transparency for Private Markets
Megan Murday (MBA ’21) shares how her startup, Metric, improves ESG measurement and management for private market investors Tell us more about your background and what inspired you to be an entrepreneur. As my sectionmates have heard over and over again, I am from the Midwest and passionate about economic revitalization between the coasts. My HBS essay culminated in an argument for tech and entrepreneurship-led growth in the region. I thought I would join a Chicago-based startup or VC firm to contribute to the local entrepreneurial ecosystem after HBS. I did not have the idea for Metric at the time of my application and was not actively searching for an idea either. I wanted to have an impact at a systems-level but was not sure how. Prior to enrolling at HBS, I was researching companies creating shared value for multiple stakeholder groups through their business models rather than through corporate philanthropy. This co-linear model of impact is sustainable because as the company scales, impact inherently scales too. The criticisms that I saw repeatedly were: “Where is the data? How can we be sure the company is delivering a positive impact for its community?” This set of questions was similar to questions I regularly answered in consulting: “What should I be measuring? Where do I find the data? What do I do with the dataset?” Unlike other operational datasets though, ESG (environmental, social, and governance) data was not yet perceived as a business-relevant dataset worthy of its own software platform. I saw the gap for ESG enterprise software and knew that the opportunity aligned with my personal desire for impact. Metric is built in service to an economy where business aligns sustainability, equity, and profitability. What is the problem that you are trying to solve? Metric solves the ESG measurement and management challenges facing private market investors. As the inflows to ESG funds continue to soar, the expectations from asset owners and regulators on ESG performance transparency grow as well. Funds have not historically collected this data from portfolio companies, though. The first challenge is determining how to measure ESG—there is an alphabet soup of frameworks, from SASB to TCFD. Once the metrics are chosen, collecting the data from portfolio companies is hard and time-intensive. Several environmental standards, in particular, are difficult to measure—if you ask someone what their Scope 2 Greenhouse Gas Emissions are, you are likely to receive a blank stare. There is often an inefficient back and forth with companies or the wholesale outsourcing of the process to consultants. What is your solution? Metric provides ESG analytics software that simplifies the measurement and management process for private market investors. The investor side of the platform enables the creation of a fund profile, selection of metrics to measure for each portfolio company, and analysis of ESG performance at both the fund and individual company level. Investors invite participating portfolio companies to the Metric platform, and the company operators use a distinct site for their company. The operator completes an initial diagnostic assessment, receives ESG KPI recommendations, and then completes data collection using an approach similar to TurboTax. Metric provides both the investor and the company analysis of the company’s ESG performance, comparison to peers, and financial implications of corporate ESG practices. We also offer improvement strategies, fulfilling the consulting-bred instinct to answer the question, “So what do we do now?” What’s next? We are continuing to pilot our beta product and planning a seed fundraise for this summer. Metric is moving to Chicago after graduation—we are excited to become part of the local tech ecosystem and highlight the meaningful opportunities located between the coasts for founders, joiners, and investors.