Pause and scan the device in front of you: have you ever considered the true cost that was transferred between the overseas manufacturing and the day that you first powered it on? Many companies are zeroing in on this information as a result of any number of recent events – from the Paris Agreement to COVID-19 – leading to a re-evaluation of service and manufacturing processes and the emissions they discharge.
Decarbonization, beyond its surface definition, generally is condensed into four ‘pillars’ as defined by the U.S. Dept. of Energy: energy efficiency; industrial electrification; low-carbon fuels, feedstocks, and energy sources (LCFFES); and carbon capture, utilization, and storage (CCUS). It represents one strategy that industrial businesses (which account for ~24% of all annual carbon emissions in the United States) are utilizing as a tool to mitigate climate change – as defined in the Paris Agreement as the increase in the global average temperature to well below 2°C above pre-industrial levels. Conscious consumers are also demanding greater transparency in their purchases (ex. B Corporation), building off of labor practice certifications, sustainability efforts (ex. Bluesign Certified) and wariness of ever-present greenwashing – whether through overstatement of claims or lack of accountability.
Though these sentiments are not new, there are a number of nascent businesses and large corporate initiatives trailing consumer trends and government action as demand for change has bubbled. New tools (especially AI) and accessible data inputs allow for carbon baseline evaluations with higher certainties than in the past. This is valuable for two reasons:
- McKinsey & Co defines the value-chain decarbonization process with three key measures: Finding a baseline (generally a rigorous and complex process), defining a target and identifying actionable steps, followed by a period of implementation and monitoring. Quantifying an organization’s Scope 1,2, & even Scope 3 emissions gets increasingly difficult as the scope is widened, especially for large corporations, and has been a major barrier.
- Dissected value-chain mapping in a centralized database can provide incredible utility in setting baselines for companies with similar metrics where there was formerly major ambiguity. Using tools such as AI for filling data gaps, creating constant monitoring systems, and improving accuracy of data over time are all part of the iterative process in calculating emissions according to the 2011 Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
With new technologies, quantifying emissions under generally accepted standards (as the U.S doesn’t yet have a baseline for Scope 1 & 2 accounting) is becoming a legitimate possibility. A few notable carbon-accounting incumbents with heavy investments in the last year include:
- Watershed: Series B closed $70 million
- Normative.io: Series B closed $31 million
- SINAI Technologies: Series A closed $22 million
In the recent startup space, there are a few prominent movers:
- Cloverly: Seed round closed $2.1 million
- Sumday.io: Pre-seed round closed $2 million
- The Climate Choice: Pre-seed round closed $2 million
Quantifying emissions through the supply chain will continue to be an area of great focus: In Europe, beginning in 2024, approximately 49,000 companies will be required to disclose Scope 3 emissions data in compliance with the EU Corporate Sustainability Reporting Directive. Global startups are rising and will continue to drive forward with solutions to meet ambitious targets, each year pushing possibilities in emissions measurement, accountability, and action towards a cleaner, greener future.