How a new class of climate startups could get a boost from the SEC


A refinery spews out greenhouse gases, one of the main causes of global warming, in the refining process of oil.
Image Credits: MattGush / Getty Images

Months of speculation will finally come to an end on Wednesday when the Securities and Exchange Commission votes on its much-debated climate disclosure rule.

If adopted, the rule would require companies to disclose greenhouse gas emissions, already a requirement in other economies, including the European Union and China. The bid would help inform investors about any climate- or energy transition-related risks publicly traded companies face.

With more and more consumers and regulators pushing companies to track and disclose their carbon footprints, a flurry of startups that specialize in tackling the problem have emerged. And depending on how far the SEC takes the proposed climate disclosure rule, many of these startups stand to benefit.

Companies report on greenhouse gas emissions using three buckets called Scope 1, 2, and 3 emissions. Scope 1 emissions are those that result directly from the company’s operations such as the burning of coal to heat a blast furnace at a steel mill. Scope 2 emissions come from purchased energy such as electricity, natural gas or steam. Scope 3 emissions are everything else and usually result from pollution produced throughout the supply chain.

Scope 3 emissions are the broadest category, and if the SEC would require their reporting, the effects would ripple far beyond just publicly traded companies. Many companies, including Walmart, ExxonMobil, Gap, and BlackRock, have publicly voiced their opposition to any Scope 3 reporting, and the requirement is unlikely to appear in the final draft, Reuters reported. Others, including Amazon, Ralph Lauren, and Chevron, are on record supporting Scope 3 disclosures.

If the SEC’s final draft does eliminate any Scope 3 disclosure requirements, the remaining Scope 1 and 2 emissions would represent a smaller but still significant chunk of the U.S.’s carbon pollution. They would also spur companies to bolster their current reporting processes, pushing many to seek outside help. Here are a few places they might turn.

Five startups

There are dozens of companies that handle carbon measurement, tracking, reporting and verification. This sampling illustrates the variety of early- to late-stage companies, which serve a range of organizations from large enterprises to scrappy startups.


Climate-tech unicorn Arcadia has spent years amassing electricity-related emissions data from households, companies, and utilities, and in 2022, it announced a partnership with Salesforce to integrate its Data Connector product into the SaaS giant’s Net Zero Cloud offering. The product works with 9,500 utilities and energy providers in 52 countries, allowing companies to automate tracking of their Scope 2 emissions and produce auditable reports. Given its focus on Scope 2, Arcadia is well positioned to benefit from the SEC’s new rules.

Arcadia has raised more than $575 million and is valued at $1.5 billion post-money, according to PitchBook. Look for it to be one of the first climate tech companies to list publicly when the IPO window opens.


Another climate-tech unicorn, Watershed handles emissions across all scopes with a focus on financial institutions, consumer goods companies and companies that want to rein in their Scope 3 footprint. The company has raised $210 million with a $1.7 billion post-money valuation, according to PitchBook, the sort of valuation at which investors might push for an IPO. The company has attracted some prominent investors, including Sequoia, Kleiner Perkins and Lowercarbon.

Planet FWD

Planet FWD was founded to sell carbon-neutral, organic crackers. As founder Julia Collins started diving deeper into her company’s carbon footprint, she realized that the real challenge lay not in developing the product, but finding ways to measure, reduce and offset its related emissions. So she did what many founders do — she pivoted.

The result was a carbon assessment platform tailored to the needs of consumer goods companies, especially those that sell food products. The company raised a $10 million Series A in 2022, and it’s valued at $40 million post-money, according to PitchBook.


CarbonChain stands out for its detailed approach. The startup, which raised a $10 million Series A last year, has spent the last several years amassing data that it says covers 80% of the world’s emissions. How did it get it? By working on the ground to gather information and by talking with companies in industries that are some of the world’s most polluting.

The founders used to work on oil and gas projects, and they have a familiarity with the industries that others may not. The startup works with lenders and insurers to help secure its customers discounted rates. The financial institutions have agreed because the data shows that low-carbon assets tend to have lower operating costs.


Corporate spend was a hot investment for a while, attracting billions in capital, but as the sector matured, specialization was all but certain to emerge. Enter Bend, a corporate spend startup that focuses not just on tracking expenses, but also on carbon emissions. It raised a $2.5 million seed round last year. Bend launched with a subscription-based API that companies could tap to speed their carbon accounting process, but it quickly pivoted to a corporate spend card with carbon accounting included for free. It’s a clever twist that should help companies large and small get a handle on their footprints.

Driving forces

It’s not just regulatory activity that’s driving the surge of startups: As AI has matured, startups have been able to harness the technology to provide more accurate reports of Scope 3 emissions, which often suffer from data gaps and are the hardest to estimate. As companies refine their AI approaches, Scope 3 estimates will only improve, perhaps softening some of the opposition to mandatory reporting at that scale. Already, some companies have fully embraced Scope 3 reporting, using transparency as a selling point.

Even if governments change course and lessen requirements, some degree of carbon accounting will likely be embedded in developed economies in the coming years, if it isn’t already. The question isn’t whether, but how much companies will have to report?

For startups that make that process simpler, questions and uncertainty can only lead to more opportunities.

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