The Europe-wide ESG regulations are “probably one of the biggest changes to our economic system in 200 years,” says Vladimir Nikoluk. His startup could benefit enormously from this.
“There are tens of thousands of companies directly affected by ESG. But there are hundreds of thousands who are indirectly affected,” says Vladimir Nikoluk. He founded his startup Atlas Metrics in 2021 to support smaller companies with ESG reporting. Atlas Metrics
ESG could fundamentally change the EU economy in the coming years. ESG – this stands for Environmental, Social and Governance and is the name for a comprehensive set of rules with which the European Union (EU) wants to evaluate the sustainable and ethical practices of companies. To this end, the EU has passed various major legislative proposals, some of which have already come into force or will come into force in the coming years: Companies in particular will have to disclose a wide range of data, including information on annual carbon emissions and energy consumption, water consumption, waste generation and environmental pollution. But, for example, statistics on the diversity of the workforce or company information on corruption will also become mandatory. So it’s a huge amount of effort that companies have to deal with.
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“I think this is probably one of the biggest changes to our economic system in 200 years,” says Vladimir Nikoluk. The startup founder has been working on ESG for years. He realized how relevant the topic was during his master’s degree in “Public Policy” at the Harvard Kennedy School in Cambridge. And Nikoluk still doubts that companies are ready for ESG. “It’s a difficult task even for corporations,” he says. “But when it comes to medium-sized companies or startups: it’s hardly possible for them.” That’s why he founded Atlas Metrics in 2021.
High penalties for violations
The Berlin startup is a kind of mixture of fintech and climatetech: Atlas Metrics develops software that supports companies in entering, evaluating and providing data from all ESG areas. For example, if a company wants to determine its own water consumption, it must also include the consumption of suppliers in the evaluation. Many companies therefore send extensive questionnaires to their suppliers. Instead, Atlas enables them to provide the required data with significantly less effort.
Like a puzzle, the software helps to put together the mass of data, particle by particle. That’s why, says the founder, it is explicitly aimed at smaller companies. Atlas wants to take its customers by the hand and guide them through the process step by step. The ESG regulations not only involve a lot of research; Companies also must adhere to complicated compliance laws and procedures. Atlas wants to support here too: “We guarantee that the regulations are constantly updated,” says founder Nikoluk. Anyone who violates the complicated rules must expect severe penalties. In the worst case scenario, this would amount to up to five percent of sales. “This is very scary for companies because if your margin is only four or five percent, it completely eats up the basis for survival,” says Nikoluk.
Europe-wide market as a major strength
Atlas Metrics is not the first nor the only ESG software on the market. When Nikoluk founded his startup, he feared that he would be too late. But then he realized that there were hardly any providers that, on the one hand, covered all ESG guidelines – many instead focused on partial aspects such as Sustainability Finance Disclosure Regulation (SFDR), which financial institutions in particular have to contend with. Accordingly, there are hardly any offers for SMEs to date. As suppliers, however, if in doubt they have to stay on the edge of all ESG aspects. Nikoluk says: “There are tens of thousands of companies directly affected by ESG. But there are hundreds of thousands who are indirectly affected.” And this is exactly where the founder sees the market for his startup.
In fact, things are going well for the almost two-year-old startup so far: According to Nikoluk, around 2,000 companies are already working with the software. The company aims to break even over the course of the year. Atlas has also raised capital from investors twice: one million euros in a pre-seed round – that was in 2021. And most recently another 5.2 million euros in spring 2023. Investors include B2Venture and Cherry Ventures.
What is particularly noteworthy, however, is that Atlas is already represented in several European countries. While the European market is proving difficult for many young companies – partly because it is extremely heterogeneous – things are different in the ESG area. Because the rules apply across Europe and do not differ between countries. “There aren’t many areas where being a European company is a huge advantage – but here it is,” says Nikoluk. When it comes to sustainability reporting and management, the founder believes that “the most exciting companies” are currently being built in Europe. “Because this is where the pressure is highest,” he says. He therefore sees extremely great potential for the market. Nikoluk says: “I believe whoever wins Europe will also win globally.”
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“Every Späti should have their Atlas microsite”
And if Nikoluk has his way, Atlas Metrics will be at the forefront in the future. The founder has a more far-reaching vision for his startup. Accordingly, Atlas Metrics should be more than just business software. Rather, Nikoluk wants to turn it into a network in which private individuals can also participate. “The idea is that Atlas will eventually be so intuitive that everything can be tracked and shown on it. Every Späti should have their Atlas microsite,” says Nikoluk. Consumers could then always find out what sustainability track record a product or company from which they are about to buy has.
Nikoluk believes that ESG has the potential to change everything – not just for companies, but also for consumers. If he has his way, sustainability reporting could have a decisive influence on why something is bought in the future. “For example, if you compare Pepsi and Coca-Cola, you can see that Coca-Cola wastes significantly more water in its production than Pepsi. I could imagine that a consumer would be more likely to choose Pepsi if they knew that,” says Nikoluk. So far there has been little transparency about how social or sustainable a company is, he says. “But that will change now.” And Atlas Metrics wants to be right in the middle of it all.
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