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Meet the ESG software startup prioritizing SMBs

ESG for SMBs

Young man sitting using a computer to analyze ESG strategy. Image via Shutterstock/D.ee_angelo

There is no shortage of enterprise software firms vying to meet the needs of large companies seeking to calculate and manage carbon emissions information in a more automated, verifiable fashion. There are far fewer tools catering to small and midsize businesses — ironic when you consider that these enterprises account for at least some of the Scope 3 impact of bigger corporations.

New York-based startup Sustain.Life, launched in 2021 by a group that includes three former Walmart and Jet.com executives, aims to fill that void. In May, the company raised $16 million in seed funding — led by its co-founder Mike Hanrahan along with early-stage Tapestry VC. 

"The carbon accounting and offsets industry is shifting from a marketing exercise and cottage industry to a key bastion in the global fight against climate change, accelerated by a recent industry and regulatory awakening on the issue," said Patrick Murphy, co-founder and managing director of Tapestry VC. "The Sustain.Life team has some unique insights on the problems real businesses have with adopting and managing climate accounting. They’ve created a unique solution that removes the intermediaries and enables companies of all sizes to put control of their carbon accounting back in their own hands."

Hanrahan, who led Walmart’s acquisition of the Jet.com e-commerce site, told me his interest in starting a company focused on addressing climate change stems from his own experience trying to decarbonize his personal life. He recalls being challenged at every turn, particularly by outdated regulations and permitting requirements that make it difficult to adopt clean energy technologies. "It just seemed to be one block after another. I thought, ‘What hope do businesses have of being sustainable?’" he said.

The decision to focus on the midmarket builds on the Sustain.Life team’s experience with smaller companies. Its software focuses on tasks that aren’t all that unique to tools in the carbon accounting category: measurement of emissions from internal operations and supply chains; reduction calculations based on changes made to processes for energy, water and waste; and reporting of progress to stakeholders including investors, customers and employees. The platform can gather relevant data from a plethora of sources, including enterprise resource planning systems and utility reports, Hanrahan said.

A unique twist is the automated advice that the software provides, based on expertise from the Sustain.Life sustainability team, and the fact that many customers are early in their journey to address environmental, social and governance issues. "It is programmatic guidance along with management suggestions," said Sustain.Life CSO Alyssa Rade. The topics range from environmental justice to the physical risks related to energy and water that companies face due to the impact of climate change. "We gathered this content from practitioners," she said.

[Want to learn more about entrepreneurs with innovative technologies, products and services across the climate tech landscape? Check out the VERGE 22 Startup Program, taking place in San Jose, CA, Oct. 25-27.]

Sustain.Life doesn’t disclose how many customers it has, but Hanrahan said 20 percent of them are public companies. One early adopter is Turtle Fur, a small, 40-year-old headwear and accessory maker in Morrisville, Vermont. Meghan Ksiazek, vice president and head of design for the company, said her team started using the software last fall after hearing about it during conversations with members of Climate Action Corps, an initiative of the Outdoor Industry Association that includes Patagonia, Burton, New Balance and REI. 

Turtle Fur doesn’t actually have a dedicated sustainability manager: The task of coordinating across teams and business functions falls to Ksiazek. But the company embraced the technology to help it track Scope 1, 2 and 3 emissions, and otherwise prepare for its application to earn a B Corp certification, she said.

Sustain.Life’s software is used across the Turtle Fur team to record data and share information, as well as to create its roadmap for the future, Ksiazek said. "The main thing is that the software is approachable. It didn’t require a lot of training. People could get into the tool and start using it."

You’ll see Sustain.Life sell its application through several channels, including partnerships with the likes of Interactive Brokers, the largest U.S. electronic trading platform; Avetta, which sells supply chain risk management software; and the Sustainable Cannabis Coalition, which advocates Sustain.Life to its members.

As the focus on addressing supply chain emissions intensifies among large companies, many of which are hoping to inspire their smaller partners, Sustain.Life is likely to see competition from some of the biggest of the big enterprise software companies, such as Microsoft and Salesforce, which are both building out expansive sustainability management software platforms. It is also likely to find itself competing with Persefoni, which is also hoping to capture the attention of smaller and midsize companies. Persefoni disclosed a record-breaking, $101 million Series B round in October. In mid-July, the firm introduced a version of its application that is being carried in the Stripe marketplace, which is focused squarely on that community.

Editor's note: This story was updated July 21 to correct the description for Turtle Fur and clarify how the company hear about the software.

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