The past six months have brought a flood of money for climate-centric enterprise software ventures, with tasks such as carbon accounting at the center of those funding rounds.
It’s one reason I believe chief sustainability officers (CSOs) should be forging far closer relationships with the chief information officers (CIOs) or chief digital officers (CDOs) that share their corporate management suite. Close to 80 percent of the 1,000 senior executives surveyed in spring 2020 by consulting firm Cognizant indicated that sensors and the internet of things were important for achieving sustainability goals: 72 percent pointed to artificial intelligence and 60 percent cited big data initiatives and blockchain as instrumental. (I’m with them.)
As companies rev up net-zero goals that apply to their supply chains, interest in big data plays related to traceability is understandably intensifying. Even Palantir, one of the most well-funded analytics software companies in this space with a $15 billion valuation, is working on a project with a goal of helping decarbonize supply chains.
There are pilots galore, but some of those efforts are starting to scale. One company to watch is London-based Circulor, which in early June scored a $14 million Series A funding round led by The Westley Group (which backed Tesla and Trove, among others) and with participation from Salesforce Ventures and BHP Ventures. It also has money from Boeing Horizon X, which isn’t surprising given that the aerospace company is planning a big project with the Circulor software.
Circulor CEO Douglas Johnson-Poensgen describes the category it seeks to claim as "traceability as a service." As he explained in a recent interview with Climate Tech VC: "A life cycle assessment spits out a total embedded carbon number but doesn’t help with an approach to actually reduce Scope 3 carbon footprints. We’re attracting attention because we’re combining insights with action."
Circulor’s software is built on Oracle databases and cloud services, including its blockchain platform. The venture’s early customers, including BHP, Daimler, Jaguar Land Rover, LG Energy Solutions, Polestar, Total and Volvo Cars, are using the software to verify the origins, carbon footprint and human rights risks associated with raw materials such as cobalt, nickel, lithium and mica. "The basic data is information about provenance and participants in the supply chain. It could be about human rights or it could be calculating an attributable slice of carbon emissions," Johnson-Poensgen told me.
Circulor’s work on mapping materials related to companies working on electric vehicles is particularly extensive — for both recovered scrap and freshly mined materials. Aside from the materials listed above, it is working on projects related to copper, plastics and leather.
These aren’t pilots anymore. The software is used at scale by Volvo, which originally deployed Circulor’s system to trace the cobalt in batteries for the XC40 Recharge P8, its first fully electric car. Johnson-Poensgen says the goal is to make all of the critical ingredients traceable over time, by adding suppliers methodically. "It takes pressure downstream to create the network effect," he said. Four of the largest battery manufacturers, including LG Chem and CATL, are actively encouraging their customers to use Circulor’s software.
In most cases, the deployments are happening at the business division level — especially among chief procurement officers seeking to reduce their exposure to risky sources — but the forthcoming Boeing is being influenced by both the CSO and CIO, Johnson-Poensgen noted. Another reason to get those lines of communication open.