With climate imperatives intensifying, corporates across industries are turning to these platforms to manage their emissions. Here are the top-line bullets you need to know.
Today, 80% of the top-earning companies globally report on sustainability, an issue that many previously considered optional. Now, as many major corporations work to achieve carbon neutrality goals, they are seeking out platforms that can help monitor, manage, and offset their carbon emissions.
So far this year, carbon accounting and offset marketplaces have raised almost $100M in equity funding across 15 deals — both record highs — to meet the rising demand from corporates looking to manage their emissions.
Persefoni, for one, raised a $9.7M Series A in April 2021 to scale its AI-powered carbon accounting and reporting platform. Also in April, carbon offset marketplace Pachama raised a $15M Series C round from investors including Amazon, Breakthrough Energy Ventures, and Lowercarbon Capital. The company was highlighted in Jeff Bezos’ recent letter to shareholders as a part of Amazon’s Climate Pledge Fund.
Below, we examine why the space is heating up and what to expect next.
Our analysis includes companies in the Emissions Tracking & Management and Carbon Offset Tech & Marketplaces categories in the Carbon Capture, Utilization, and Storage (CCUS) Expert Collection.
What you need to know:
- Increased government and investor scrutiny are pushing companies to define their carbon accounting strategies. Policies paving the way toward a greener economy are on the rise. In late 2020, more than 110 countries, including the UK, Japan, and Korea, pledged to reach carbon neutrality by 2050. Meanwhile, in early 2021, the SEC created the first-ever Climate and ESG (environmental, social, and governance) Task Force to scrutinize companies’ ESG-related risk disclosures. Investors are also taking charge: Activist firm Engine No. 1 recently shouldered its way to 3 seats on ExxonMobil’s board to push for a more sustainable business strategy.
- Outside of the energy and chemicals sector, big tech is making moves toward more rigorous carbon reduction goals. Microsoft, for example, is working with offset marketplace Puro.earth to mitigate its emissions, while Apple recently launched a $200M fund with Goldman Sachs and Conservation International to invest in planting forests and other carbon removal initiatives.
- Corporates are looking for digital tools to efficiently and holistically manage emissions. While emissions tracking is typically linked to tracking greenhouse gases directly emitted from factories and supply chains, companies also need to consider emissions in more granularity. This means monitoring indirect emissions from business operations, such as CO2 released from business flights and heating and cooling office buildings. Companies like Pathzero and Sweep have built platforms to help clients calculate these emissions on a more detailed level.
- Carbon offset marketplaces lean heavily on nature-based offsets, like forest-planting, sustainable farming, and wetland restoration. For instance, NCX and Pachama act as middlemen between companies and forest developers, while Nori mediates transactions with farmers whose sustainable farming practices store carbon. However, nature-based offsets face several challenges. Forests, for example, take several years to grow, and it is difficult to confirm how much CO2 they absorb. While facing challenges like destruction by fire or double-counting, planting forests is still an important part of mitigating climate change.
