Co-authored by Rebecca Kaden

Of the world’s 2,000 largest public companies, at least 21% now have net-zero commitments. To fulfill these commitments, companies need to understand their full emissions. Despite increased efforts, there are still two major obstacles to comprehensive emissions accounting. 

First, most companies disclose scope 1 emissions (direct emissions from sources owned or operated by the company) and scope 2 emissions (from electricity bought and consumed by the company). Scope 1 and 2 are what most companies have access to. They often ignore scope 3 emissions (from indirect sources, such as upstream operations in a company’s supply chain) which can add up to 85% or 90% of companies’ total emissions

Second, most emissions reporting is based on indirect methods that use generic emission parameters for certain activity measures. In this case, emissions reporting is as accurate as its inputs. And when the inputs are estimates, the likelihood of error is higher. This is especially true when a company tries to estimate the activities of distant suppliers. The complex web of supply chains (that makes up scope 3) is challenging to untangle. 

Our recent investment, CarbonChain, helps organizations measure their scope 3 emissions, by building a bottom-up and asset-level data approach that covers the end-to-end supply chain. CarbonChain’s initial focus is the commodities sector (traders, trade finance, logistics, manufacturing). Traders use CarbonChain to automatically track, report, and reduce their emissions, while financial institutions like Societe Generale and ING use CarbonChain to tackle portfolio carbon risk and engage clients on climate strategies. CarbonChain enabled Societe Generale to sign a pioneering agreement with Concord Resources to pilot access to sustainability-linked loans.

To date, CarbonChain successfully tracked for its customers around 400 megatonnes of CO2e (nearly 1% of global emissions). Moving forward, it will use these datasets, models, and relationships to expand to manufacturing (approximately 80% of global emissions). 

At USV, we invested in companies that reduce and remove emissions. These companies include nuclear energy, retail electricity, electric vehicles, waste fuel and e-fuel, soil and forest measurement, organic and inorganic carbon removal and capture. For these wide-ranging companies, understanding the CO2 emissions involved or reduced is a shared requirement. Proper carbon accounting is a prerequisite to any mitigation efforts and this is what CarbonChain offers.

The team at CarbonChain is led by Adam Hearne and Roheet Shah whose expertise covers commodities, supply chain management, machine learning and data science. We are excited to co-lead CarbonChain with one of the climate-focused funds we admire most, Voyager. If you want to be part of this amazing mission and team, they are actively hiring.