The vitally important demand for clarity and transparency around corporate plans to reach net-zero emission commitments, offset greenhouse gases in their operations, and credibly account for their environmental footprint is creating a wave of new tech tools and businesses.
As one of the top U.S. regulators of public companies weighs requiring companies to disclose their greenhouse gas emissions, services are coming to market to give investors and businesses more insights into just what their emissions profile is, how effective emissions offsets are, and how their reduction plans line up with international emissions targets.
These tools are lining up large corporate advocates and investors to accelerate adoption as the window within which the world can avoid what are projected to be catastrophic climate scenarios narrows.
While many of the world’s largest companies have internal tools to assess the environmental footprint of their activities, most do not. And a wave of investor-backed companies have launched over the last few years to address corporate concerns over just how much their operations contribute to global climate change.
Enter, companies like Persefoni, the Tempe, Ariz.-based startup that’s just raised $101 million from some of the biggest names in private equity investment and finance to scale its greenhouse gas monitoring and accounting tool for the financial services industry and beyond.
Persefoni’s in a newly crowded market where investors have thrown cash at competitors like Watershed Climate, Sinai Technologies, Carbon Analytics, and a host of others creating emissions accounting systems.
But its latest round of funding makes it one of the most well-financed of the bunch and its backers include a who’s who of big financial firms, including Bain & Co., Sumitomo Mitsui Banking Corp. and TPG (through its impact investment arm, The Rise Fund).
The presence of these big investors isn’t an accident. Persefoni went after calculating financed emissions first to help asset managers, banks and other financial institutions calculate their financed emissions footprint.
For months, financial services institutions have been making the wrong kind of headlines for their involvement in funding fossil fuel operations, backing companies that engage in deforestation, and generally falling on the wrong side of the climate divide.
Many of those firms — four of the 10 largest global private equity firms and four of the world’s 20 largest banks — are now using Persefoni to calculate and disclose their financed emissions footprint, along with several global insurance companies and pension/endowment funds.
“Carbon and climate disclosures will be the biggest compliance market since the advent of Sarbanes Oxley and GDPR, but with even greater complexity,” said Kentaro Kawamori, the chief executive and co-founder of Persefoni, in a statement.
Once companies have assessed their carbon footprint using tools like Persefoni’s, the next step is to create a plan to reduce those emissions.
That’s where new offerings from organizations like the Science Based Targets initiative come in. The group formed in 2015 to monitor and assess corporate commitments to mitigate climate change, and it just launched the Net-Zero Standard to provide an independent assessment of corporate net-zero targets.
“The Net-Zero Standard gives companies a clear blueprint on how to bring their net-zero plans in line with the science, which is non-negotiable in this decisive decade for climate action. Because we are running out of time,” said Johan Rockström, Director of the Potsdam Institute for Climate Impact Research (PIK) and Professor in Earth System Science at the University of Potsdam.
The goal for the SBTi is to help companies actually align their climate actions with limiting global warming to 1.5 degrees.
“Companies are currently self-defining net-zero targets without credible and independent assessment of their ambition and integrity,” said Alberto Carrillo Pineda, Co-Founder and Managing Director of the SBTi, in a statement.
So far, businesses including the big drugmaker AstraZeneca, the retail pharmacy and healthcare provider CVS Health, and the Nordic energy giant Ørsted have had their science-based, net-zero targets verified by the organization.
Under the stringent SBTi Standard, companies have to cut their emissions in half before 2030 and achieve emissions cuts of 90% to 95% before 2050 to align their targets with the latest science.
Many of these emissions reduction plans rely to some degree on carbon offsets to balance emissions from operations with either zero emission energy projects or with carbon sucking solutions ranging from low tech tree planting to high tech direct air capture and permanent sequestration.
New businesses like NCX (Natural Carbon Exchange) and Pachama have formed to provide marketplaces for forestry offsets while other large and small businesses are racing to establish carbon as a new cash crop for farmers.
But these offsets themselves need to be validated. And that’s where a company like SustainCERT comes in.
The business, which just raised $10 million from investors including the $1 billion Microsoft Climate Innovation Fund, the French impact investor, Citizen Capital, and tech investment firm, Innovacom; aims to provide a verification tool for carbon emissions and a certification for Gold Standard for the Global Goals
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The company’s digital carbon project application is supported by organizations like the World Wildlife Fund, which is also an investor, and has been used to approve over 1200 energy, land-use, waste, and community service projects, according to a statement.
With the new funds, SustainCERT aims to unlock “near real-time” issuance of carbon offsets through adoption of its monitoring, reporting and verification tools.
“The rise in climate commitments signals a turning point in global awareness on the need to curb emissions to Net-Zero. Without credible solutions to verify that those impacts claimed are real, we will fail. SustainCERT’s role is to bring transparency and credibility to the many efforts taken to achieve Net-Zero.” said SustainCERT CEO, Marion Verles, in a statement.
These tools, and others like them, are going to play a vital role in the move to a decarbonized economy, because of the visibility they can provide into areas where businesses are falling short.
“What gets measured gets managed,” Simon Fischweicher, head of corporations and supply chains at CDP North America, a global sustainability consultant that provides disclosure tools for businesses and organizations, told Canary Media earlier this year. “It’s really exciting to see the emergence of businesses that are really going to help companies do a better job on accurately accounting for their emissions and also make it an easier, less cumbersome process, so they can focus on reducing those emissions and building out low-carbon transition strategies.”