By Prabhav Khandelwal
Sustainability is increasingly becoming part of how businesses think about growth. For startups, however, sustainability can still appear to be a distant objective. ESG (environmental, social and governance) frameworks, reporting requirements and environmental targets may seem easier to associate with large companies that already have dedicated teams, established processes and substantial resources.
But sustainability does not always begin with a report. It can begin with a smaller question: What can we improve today?
This is where Kaizen can offer a useful perspective.
Kaizen is commonly associated with continuous, incremental improvement. Rather than waiting for a major transformation, it encourages organisations to identify problems, reduce waste, improve processes and involve the people closest to the work.
For an ESG-focused startup, that approach can provide a practical connection between sustainability ambitions and everyday operations. Kaizen cannot replace an ESG strategy. But it can help turn sustainability from an abstract objective into an ongoing process of improvement.
India’s startup ecosystem illustrates why this question is increasingly relevant to younger businesses. Startup India describes an ecosystem encompassing startups alongside supporting, funding, research and knowledge hubs. At the same time, ESG considerations are becoming increasingly structured within India’s corporate and investment environment. The Securities and Exchange Board of India (SEBI) has introduced Business Responsibility and Sustainability Reporting requirements for listed entities and a regulatory framework for ESG-oriented mutual fund schemes.
From Continuous Improvement to Sustainability
Kaizen is closely associated with Japanese management practices and was popularised internationally by consultant Masaaki Imai, particularly through his influential 1986 book Kaizen: The Key to Japan’s Competitive Success. The concept is also strongly associated with Toyota.
Toyota’s Production System describes an approach focused on eliminating waste while encouraging employees to make continual improvements. Its significance for sustainability lies in this repeated attention to everyday activity.
A startup may have a sustainability objective such as reducing resource consumption. Kaizen asks a more operational question: Where is the resource being wasted?
The answer might be found in unnecessary material use, excessive energy consumption, inefficient movement of goods, repeated defects, avoidable rework or processes that consume more time and resources than necessary.
These improvements may appear small individually, but their importance comes from repetition. A process that wastes a small amount of material every day can create a much larger environmental problem over time. Likewise, a modest reduction in energy consumption, packaging or production waste becomes meaningful when it is repeated across an organisation.
The value of Kaizen, therefore, is not that every improvement is dramatic. It is that improvement becomes continuous.
Reducing Waste Can Become an Environmental Practice
Waste reduction is one of the clearest connections between Kaizen and the environmental dimension of ESG. In a conventional business process, waste may be treated simply as an unavoidable operating cost. A sustainability-focused business can view the same waste differently:
- Unused material represents both lost capital and wasted environmental resources.
- Excess energy consumption creates both an immediate financial cost and a potential environmental impact.
- Repeated production errors require additional materials, energy and labour to rectify.
Kaizen encourages businesses to examine these processes rather than treating them as the default.
A useful real-world example comes from Beaumont Health System in the United States, where environmental Kaizen teams examined everyday operations for low-cost ways to reduce energy and water consumption. As reported by Trellis, the programme generated recurring resource and financial savings. The lesson for startups is not that every company should copy a healthcare operational model. It is that sustainability improvements can be identified by examining ordinary, ground-level processes.
A startup does not necessarily need to begin with an expensive, capital-heavy technological transformation. It can begin by asking where resources are being unnecessarily consumed today. That same principle appears in our guide to building an ethical startup without greenwashing: sustainability is more credible when it is embedded in business decisions rather than added later as a branding exercise.
Employees Can Become Participants in Sustainability
Environmental improvements are only one part of the picture. Kaizen also emphasises the knowledge and experience of the people who perform the work.
This has implications for the social dimension of ESG. Frontline employees often see operational problems long before management does:
- A worker may know that a particular workflow creates unnecessary and exhausting repetition.
- A warehouse employee may recognise avoidable packaging waste in incoming shipments.
- A technician may know that a machine regularly consumes excess resources because of poor calibration.
- A customer-service agent may identify a recurring process failure that management-level data does not immediately reveal.
Creating a mechanism to bring these observations into regular discussion and testing can give employees a genuine role in organisational improvement rather than treating them merely as recipients of top-down decisions.
For a young company, this can be particularly valuable. Startups are still developing their organisational cultures. If employees are encouraged to identify problems, suggest improvements and participate in solutions early on, continuous improvement can become part of how the company operates.
That does not automatically make the company socially sustainable. It does, however, create a practical mechanism that supports employee participation and can contribute to better workplace practices.
Standardisation Can Make Improvements Last
A sustainability improvement has limited value if it disappears as soon as management’s attention moves elsewhere.
Suppose a startup discovers that a particular production process wastes material. The company changes the process and waste falls. The next question is simple: How does the organisation ensure that the improvement continues?
Kaizen provides a cycle of identifying problems, implementing improvements, observing results and refining the process. Once an improvement proves effective, it can be incorporated into standard operating procedures.
This creates a connection between continuous improvement and governance. Good governance is not simply about producing high-level policies. It also depends on whether organisations know how decisions are made, whether responsibilities are clear and whether processes can be monitored.
A startup that documents its processes, assigns responsibility and measures whether improvements are actually producing results is better positioned to understand its own operations.
However, Kaizen should not be presented as a shortcut to an institutional ESG rating. ESG assessments use different metrics, methodologies and approaches. The OECD’s analysis of ESG investing highlights challenges involving consistency, data quality, methodology and comparability. Kaizen can support the operational side of sustainability, but it cannot replace the measurement and accountability mechanisms required to evaluate formal ESG performance.
From Small Improvements to Measurable Outcomes
This distinction matters because sustainability claims increasingly need to demonstrate concrete evidence.
Consider a simple example. A startup identifies excessive packaging as a recurring source of material waste. It tests a smaller packaging design, measures the amount of material saved, checks whether product damage remains within an acceptable range and then standardises the new process if the results are satisfactory.
The company has done more than make a sustainability statement. It has created an operational improvement that can be measured and, where appropriate, documented or audited.
The same logic can apply to energy consumption, water use, packaging, employee participation, process errors and workplace practices. The exact indicators will differ between businesses.
A software startup will not have the same environmental footprint as a manufacturer. A food company will face vastly different resource and waste questions from a financial-services business. The point is not to force every startup into the same generic Kaizen programme. It is to make improvement relevant to the organisation’s actual and material impacts.
This practical focus also aligns with the broader challenge explored in our article on sustainable business growth: environmental goals become more useful when they are connected to the way a company actually creates value and operates day to day.
What Startups Can Learn From Toyota
Toyota remains one of the most globally recognised examples associated with Kaizen. But the example needs context. Toyota is a massive, long-established multinational corporation, not a startup or a unicorn.
Its value as an example is therefore not that early-stage companies should blindly imitate its production architecture. The relevant lesson is cultural and operational.
Toyota describes Kaizen as a continuous effort to improve business operations and eliminate waste. Its approach combines continuous improvement with attention to people, teamwork and direct engagement with the realities of work. That discipline can exist at a much smaller scale.
A startup does not need global factories to ask employees where processes fail, identify unnecessary waste, test an improvement and measure whether the change worked. The scale is completely different. The underlying discipline is not.
Kaizen Is Not ESG
There is a vital limitation to this argument: Kaizen is not an ESG framework.
ESG provides a framework for understanding and assessing environmental, social and governance risks, impacts and performance, while Kaizen is an operational philosophy centred on continuous process improvement.
The two therefore answer different questions:
- ESG asks: What sustainability-related issues and systemic impacts should the organisation understand and address?
- Kaizen asks: What can we improve right now, and how can we keep improving it?
Confusing the two risks turning Kaizen into another sustainability buzzword.
A company cannot claim to have a complete ESG strategy simply because it has adopted continuous-improvement loops. It still needs to understand its material environmental and social impacts, establish appropriate objectives, measure performance, maintain accountability and comply with applicable requirements.
Kaizen can support that work by making improvement part of everyday operations. It is not a replacement for it.
The Risk of Making Kaizen Another Corporate Slogan
There is a clear danger in treating Kaizen itself as a superficial sustainability label.
A startup could announce that it has adopted Kaizen while continuing to waste materials, consume unnecessary energy or ignore employee concerns. The terminology would change, but the underlying impacts would not.
This reflects a broader challenge facing ESG: sustainability becomes less meaningful when public language becomes more important than measurable change.
The strongest case for Kaizen is therefore modest. It does not promise to solve every climate problem, eliminate the need for external ESG measurement or protect a company from macroeconomic risks. It provides a disciplined way to look at everyday work and ask whether it can be done better.
For sustainability-focused businesses, that question is valuable precisely because it is practical.
From Sustainability Ambition to Everyday Improvement
Startups often face a difficult balance between survival, growth, limited resources and long-term responsibility. Because of this pressure, sustainability can struggle to compete with immediate operational priorities.
Kaizen offers a different way of looking at the relationship:
- Reducing material waste can lower operating costs while reducing resource use.
- Improving energy efficiency can reduce resource consumption and utility expenses.
- Better employee feedback systems can reveal operational bottlenecks earlier.
- Clearer processes can improve consistency, quality and managerial accountability.
None of these outcomes is guaranteed simply because a company uses the word Kaizen. They depend entirely on whether the organisation actually identifies problems, tests solutions, measures results and continues improving.
That is where Kaizen’s relevance to ESG lies.
Sustainability does not always require a separate activity performed alongside the business. Built correctly, it can be embedded directly into everyday operations.
The core question is not, “Does Kaizen make a startup sustainable?” It cannot do that on its own. But it can change the way a startup approaches the challenge.
Instead of treating sustainability as a statement made once a year in an annual report, a company can examine its operations continually. The strongest sustainability strategy is rarely the one with the most impressive corporate terminology. It is the one that can demonstrate what changed, why it changed, how much it improved and whether the improvement lasted.
Kaizen begins with a simple premise: there is always room to improve.
For an ESG-focused startup, that may be less a complete sustainability strategy than a valuable operating discipline.
About the Author
Prabhav Khandelwal is an independent writer from India whose work explores the intersections of management, sustainability, culture and contemporary social issues. Writing across disciplines, he examines how ideas, institutions and human behaviour shape the societies we inhabit. His work has also been published by the U.S.-based independent publication Dissident Voice. More of his published work can be found on his Dissident Voice author page.