A new set of technology-based solutions are proving effective at managing the carbon footprint of a wide range of users. Global warming leads to new record temperatures year after year and greenhouse gas (GHG) emitting human activities are directly responsible. Current GHG emissions levels must be halved by 2030 and net-zero emissions must be reached by 2050 to contain global warming at a sub-catastrophic level. The rapid commercialization of carbon management solutions is vital to quickly decarbonizing the economy over the next decade.
The business-to-business (B2B) market is dominated by carbon intelligence startups while the business-to-consumer (B2C) market is dominated by carbon offsetting startups; B2B carbon offsetting and B2C carbon intelligence startups are somewhat limited. This can be attributed to the presence of established non-software offsetting players in the B2B offsetting market and the lack of monetization opportunities for pure-play carbon intelligence companies in the B2C market.
Most of the startups in the climate tech software industry are relatively young, having launched in the past two to three years. And despite relatively low levels of capital infusion, these startups have grown quickly. Nearly two-thirds of these startups are in the early-stage but only a handful have raised more than USD 10 million in funding.
France-based EcoVadis provides sustainability ratings for businesses and supply chains. EcoVadis follows a SaaS model with one-year subscriptions for business ratings ranging from EUR 725-EUR 5,145 (USD 874-USD 6,202) for a medium-sized company with 100-999 employees.
EcoVadis assesses a company’s policies, actions, and results, as well as inputs from third-party professionals and external shareholders before giving a rating. Ratings are based on four broad themes of environment, labor and human rights, ethics, and sustainable procurement.
As of March 2021, EcoVadis has assessed more than 75,000 companies and trade partners across more than 160 countries. Procurement teams at 600 companies, including more than 450 multinationals, use EcoVadis ratings to make purchasing decisions. Johnson & Johnson, Nestle, Louis Vuitton, and L’Oréal are some of EcoVadis’s high-profile clients.
EcoVadis’s most recent funding was in January 2020, where it raised USD 200 million from CVC Capital Partners. The transaction is considered one of the largest in the industry, and EcoVadis expects to utilize the funds to scale globally. As of March 2021, EcoVadis is the highest funded business-to-business carbon intelligence software startup.
B2B Carbon Intelligence:
B2B Carbon Offsetting:
B2C Carbon Intelligence:
The business-to-business (B2B) carbon intelligence segment is dominated by leading enterprise resource planning and risk management software providers. Most incumbents offer B2B carbon intelligence software as cross and up-selling opportunities to complement their existing enterprise solutions and have done so by leveraging in-house experience and capabilities.
These companies have the advantage of already possessing vast amounts of data related to their customers’ operations, enabling them to offer broad, comprehensive, and turnkey carbon intelligence solutions across the value chain. In contrast, most disruptor and watchlist providers have a more limited scope, focusing only on a few business areas and across limited industries.
Apart from the B2B carbon intelligence segment, the presence of large incumbents remains limited, although traditional (non-software) carbon offsetting companies that already sell carbon offsets online have the potential to expand into software solutions in the future. Nevertheless, as of March 2021, Native is the only traditional offsetting player to offer carbon management software.
SAP Product Carbon Footprint Analytics (SAP PCFA) is the latest carbon emission management solution offered by SAP. SAP PCFA provides carbon emission insights for a company’s products by plant, profit center, or cost center. SAP PCFA was introduced in June 2020 and is the first solution in SAP’s Climate 21 program to support enterprise goals in achieving sustainability commitments.
Based on SAP S/4HANA, SAP Analytics Cloud, and SAP Cloud Platform, the application delivers transparency around the carbon emissions of a product across the entire value chain, including production, raw materials, energy use, and transportation. SAP PCFA is offered to SAP’s existing enterprise resource planning (ERP) customers and leverages existing base data such as bills of materials, energy usage, procurement data, and master data.
SAP also offers the SAP Sustainability Performance Management 4.0 solution to manage and report the social and environmental impact of a business. Available to existing ERP customers, the software allows businesses to define a reporting structure, framework, and key performance indicators (KPIs) to evaluate sustainability performance, collect necessary KPI data, and publish results both internally and externally.