Tracking CO2 emissions for supply chains leads Normative to a €10M fund raise

Increasingly, companies are being encouraged by governments to engage in carbon accounting, but of course, only a small number of companies actually do. Even those probably count only 10% of their emissions because they don’t account for the emissions of their supply chain, which, when looked at, probably account for 90% of their total emissions. It’s the equivalent of handing in your financial report on the back of an envelope. But tracking supply chain emissions is fiendishly tricky.

Perhaps that’s why Normative, an emissions “accounting engine”. which can track supply chain emissions, has now raised €10 million from a clutch of European and U.S. climate tech funds. The round was led by 2150 and ETF Partners, but also includes new investors Chris Sacca’s Lowercarbon Capital, while existing investors ByFounders and Luminar Ventures also participated.

Stockholm-headquartered Normative’s emissions database has made a name for itself by landing partners such as the United Nations Race to Zero campaign (which aims to drive change to a decarbonized economy ahead of COP26), the U.K.’s SME Climate Hub (through which thousands of U.K. companies have committed to “net zero” on their climate emissions) and a free starter plan in collaboration with for small businesses.

Normative’s approach is to standardize the often inconsistent, expensive and people-intensive process of carbon accounting.

Co-founder and CEO Kristian Rönn said: “Ahead of COP26, it is time for everyone and businesses, in particular, to be courageous. We are in a climate emergency and we must take action, real action. But businesses also need to be pragmatic — and realize that removing carbon inside their operations and their supply chains makes good business sense. The cost of carbon is a huge liability on your balance sheet and you need to act to ensure that your business will survive.” Rönn was previously a global risks analyst at the Future of Humanity Institute at Oxford University.

Jacob Bro, partner and co-founder at 2150, said: “Carbon accounting is the first truly global software vertical in climate tech and we see accelerating demand as millions of companies realize that measuring, reporting and managing their carbon footprint is a necessity to remain competitive and compliant.”

Fabrice Bienfait, a partner at ETF Partners, said: “Businesses know they need to have better, more accurate data on their emissions, both for compliance purposes but also so they can have a credible plan to get to net-zero.”

Speaking to me over a call Rönn added: “We have built the first emissions accounting engine. Our clients upload all of their accounting data, every single transaction — invoices for heating offices, invoices for transportation, business travel, specific raw materials — and then we basically assess the carbon impact of everything that they have ever purchased.”

He says the big difference between it and its competitors is that it “really gets them up to 100% of their carbon accounting. So our competitors still account for emissions in the supply chain, but it all has to be manual. We have seven years’ experience in this space and can process the carbon impact of millions of suppliers.”