Automated carbon audits: a booming market

Faced with growing interest in environmental issues, and the regulatory requirements for companies with more than 500 employees, more and more startups are entering the automated carbon footprint market.

Carbon footprints: a legal obligation for certain companies

For some time now, we've been witnessing the proliferation of software that enables companies to determine their carbon footprint by automatically analyzing their data. Behind these SaaS (for "Software as a Service") products, generally offered on a subscription basis, are a growing number of start-ups.

These include Greenly, which has just raised €21.5 million from Energy Impact Partners and XAnge, as well as Traace, which came into being at the end of 2020 and has just completed a €2.5 million round of financing, and also Carbo, Sweep and Sami.

The growth of the automated carbon footprint market can be explained first and foremost by consumers' growing interest in environmental issues, and companies' desire to communicate on their actions in this area to differentiate themselves from their competitors.

In addition, companies with over 500 employees are legally obliged to draw up their own carbon footprint, or GHG footprint (greenhouse gas emissions balance). By 2024, companies with more than 250 employees should also be subject to this obligation.

Startups have also been able to take advantage of a subsidy from Ademe, the French agency for ecological transition, which was in force until the end of last year, allowing very small and medium-sized businesses to benefit from an 80% subsidy for their carbon footprint, with a ceiling set at 5,000 euros.


Automated carbon assessment: two different approaches

To develop their software for automated carbon footprints, startups use various existing methodological standards, such as ISO14064, the GHG Protocol or the calculation methods developed by Ademe.

However, automated carbon footprints are no substitute for a genuine climate strategy. For this, companies call on the services of sustainable development consultancies, which the startups providing carbon audit software are not intending to replace.

Among the various startups specializing in automated carbon balances, there are two approaches: a physical approach, which takes into account real, quantifiable data such as consumption in kilowatt-hours or the number of kilometers traveled, and a monetary approach, which estimates the quantity of greenhouse gases emitted by a service or product based on its price.

Although Ademe considers the monetary method to be less precise, it is sometimes the only one that can be considered, particularly for a company's very first carbon footprint.

Some startups mix approaches, and the methodology is becoming more refined as they expand into new business sectors.