Why the Business of Counting Carbon Needs More Time
The Role of CMAPs and the When Scalability Isn't the Most Impactful
If you're interested in carbon accounting, carbon taxes, or carbon marketplaces, there's no doubt you've heard of Persefoni, a software-enabled climatech company that recently raised $100+ million for the first-of-its-kind CMAP.
Persefoni is a SaaS-based climate management platform that quickly enables the planning, monitoring, analysis, reduction, and reporting of corporate carbon footprint. And if you're wondering whether climate management is a viable new growth market or another VC-hyped, flash in the pan, look no further than the corporate logo parade featuring an ever-growing list of private equity companies that can't sign up fast enough.
So, what's CMAP?
Although CMAP (Climate Management & Accounting Platform) or Climate ERP may be new terms, carbon accounting has existed long before Persefoni's founding last year. In fact, the majority of companies in the space were founded more than 3+ years ago and each have enlisted their own impressive roster of climate experts, product features, and key sustainability partnerships, with new integrations on the horizon.
In this vein, carbon accounting/climate management has evolved from spreadsheets and consultants (think AECOM and Carbon Trust), to a SaaS/consultant hybrid (think early Plan A and planetly), and finally a fully-integrated, AI-enabled carbon tracking platform (think Persefoni and Watershed).
Yet, despite the growing number of carbon accounting and climate management platforms in the marketplace, more continue to appear, claiming segments of the corporate landscape and doubling down on their niche offerings. In the last 5 years alone, 5 more notable CMAPs have formed, and with them a considerable term sheet with an average check size of nearly $7M.
In 2019, Emitwise was founded with the mission to "empower businesses to automatically measure, report, and reduce their carbon footprint in real-time," Watershed was founded as a "software platform for running a world-class climate program. Start reducing your carbon footprint in weeks, not years." The next year, PathZero "made it easy for companies to disclose their carbon emissions and the actions being taken to address them," and shortly after in 2021, Pledge formed to "make it simple for businesses of every size to understand and manage the climate impact of their products."
You get the picture.
With so many eyes vying for the same business model, you'd think new entries might be scared away. Not so.
Let's be very clear, I started down a path to launch another CMAP knowing full well that the industry was saturated, but I was determined to find a path forward and set out to talk to as many people in sustainability, carbon accounting, and regulatory markets that would accept a Zoom call. Like any other business opportunity, I weighed the Pros and Cons of throwing my hat into the ring. The project was named Beacon — and despite my decision to bench the project, I'm still a vocal advocate for the business opportunity.
CMAP continues to command a growing space in my free thought. If you've read some of my past calls to climate action, you'll quickly realize that I advocate for individual climate advocacy as a groundswell for major climate action. In the past few years, after learning more about climate change and witnessing very real present-day impacts, I was determined to find my own path to create change.
I personally found an early interest in city planning and urban redevelopment as a driving force for climate mitigation at scale. Without a better strategy, I enlisted in the Climate Reality Project Leadership Corps and buried myself in policy, eventually joining a policy action squad with a group of local leaders to push for legislation to decarbonize existing building stock.
What I learned early on isn't that cities lack the resources to take significant climate action. In reality, cities need their citizens to lead them to the most pressing issues. It is impossible to tackle every major issue within urban centers, so the people need to vote not only with their ballots but also with their time. And for many activist groups, including my own, that meant collecting data and making a case for our policy.
Fast forward to early 2021, I began to realize that many of the leading climate technology companies were hyper-focused on individual sectors of industry, many requiring specialized science backgrounds where talent became the bottleneck. As I learned more about the companies that became the envy of the climate-conscious talent pool, I realized that they're still businesses, with board members, OKRs, and financial statements. Despite the greatest intentions, scale would have to happen from within the world's largest polluters. Can startups really afford to spend the time to educate and convince corporations and cities on proactive climate action?
Beacon still is an exploration into driving climate action from within the world's largest emitting entities by using data, but perhaps the more impactful climate work is the non-scalable type? Maybe it starts with us, the citizens, pushing for regulation — for a legal path to require emissions counting at every level of our economy.