A few common things guide any successful strategic initiative: executive sponsorship, thoughtful planning, tenacious execution, and focus, focus, focus. Building an impactful, scalable climate program is no different. A successful program is not dependent on capacity but rather dedication, even if you only have a small amount of time and budget to put forth.
- Have top down, executive committee wide sponsorship.
- Fold into existing strategic planning frameworks.
- Celebrate small wins and connect them to the big picture.
- Make climate an employee-led initiative or just for a sustainability team.
- Make climate a “side of desk” or extracurricular activity.
- Expect your team to innately understand how small actions can add up to big wins.
Climate programs are only successful when they start at the top. The founding team and senior leadership must be closely involved by setting the vision and connecting execution activities into it, leading by example, and empowering the organization. The vast majority of startups and Fortune 500 companies alike that have stalled climate programs have made at least one of two common missteps.
The first is creating a sustainability/climate team without executive level leadership and therefore without true decision making power or influence. The second is “outsourcing” sustainability to be an employee-led, ground-up initiative. The latter suffers from a similar dullness in effect as the first misstep; no true decision making power or influence.
When do things get done? When they actually get a budget, whether financial budgeting or time and resource budgeting in your Objectives and Key Results (OKRs) or Key Performance Indicators (KPIs).
If your climate program is not accounted for in your company’s standard operating procedures, it will not succeed. Again though, it does not need majority representation; it just needs some representation.
Maybe you have five annual objectives each with five key results. You could make climate an objective unto itself, but that would be 20% of your company’s annual focus and perhaps that’s more resource than you have available out of the gate. A more iterative approach would be to include climate goals as one or two key results under a main objective that it can logically align to. Then, we’d only be talking about 4% of your company’s annual focus, a much more reasonable starting place.
Just like your other initiatives, most of your team members may struggle to connect the bits and pieces to the bigger vision and mission. You know why getting product out the door for feedback sooner means more success in the long run, and you know why retaining a large customer account is crucial for your overall investability. But your team may not due to a lack of experience, context, or just the busy pace of day-to-day operations. That’s why you’re there to keep the train on the tracks and everyone motivated toward your vision.
Your climate program is no different. Call out even the littlest of wins, something as simple as including climate as 1 of 25 Key Results for the first time ever. Communicating this future indicator of success is a first step toward becoming carbon negative, and it’s important for you and your leadership team to convey and remind the greater team of that vision to keep the momentum going.
Alright, let’s get into the heart of things - emission measurement. While we strongly recommend you have a third-party expert manage this for you, it’s still important for you as your company’s founder or leader to know how to properly manage this aspect of your climate program. You’ll see as we dive into emission measurement strategies that there’s a level of complexity here that makes in-house execution cost and time prohibitive as well as prone to errors.
That being said, it’s so important for you to have a well informed opinion on strategies, tools, and shortcuts so you can pressure test the experts during the vendor Request for Proposal (RFP) and properly challenge and manage them throughout the engagement. Your climate program ultimately connects back to your operations, finances, brand, and investability so even if you outsource parts of it, keep it under close watch.
- Leverage third party emission measurement expertise to save time and money.
- Utilize directional emission measurement techniques to easily build momentum early on.
- Plant the seeds for a scalable emission data pipeline.
- Teach yourself the ‘in the weeds’ details about a complex, regulated space.
- Worry about perfect emission measurements.
- Implement handmade processes that will prevent you from measuring emissions more quickly the next time.
Emission measurement is a complex field with compliance implications as your company seeks investment from certain funds or nears an IPO. Leveraging outsourced solutions for the parts of your business that are not tied to your core IP is a tried and true strategy; you’re likely doing it today for things like Real Estate, Human Resources, and Customer Relationship/Data Management (CRM/CDM). Again, emission measurement is no different. We recommend utilizing a combination of consulting with experts and software. Here’s a crash course on how to talk the talk, including what to look for when you’re considering your options:
Brace yourself for some heavy acronyms and long-winded names for global climate initiatives. We’ll introduce and briefly define them to help you familiarize.
The World Resource Institute (WRI) is a global non-profit that was established by the MacArthur Foundation in the ‘80s. Among its critical initiatives to improve the world are the Greenhouse Gas Protocol (GHGP) and the Science Based Targets Initiative (SBTi). Both have become the international standard for emission measurement and management and are important for any climate program for any company at any stage to understand and utilize.
There are two other important global initiatives to take note of: the Carbon Disclosure Project (CDP) and the Task Force on Climate Related Financial Disclosures (TCFD). Both are frameworks focused primarily on reporting climate-based financial risk to investors and are most relevant to public companies or companies preparing for an IPO. For this reason, we will not go in-depth on either in this guide, but it is good to have awareness of them. You will hear their acronyms frequently and it’s likely the proposed SEC rule change for climate disclosures to investors will be based on TCFD, making it mandatory instead of optional as it is now. Fear not, this guide will get your climate program in a place where you will be well prepared for these disclosures as you near an IPO!
The Greenhouse Gas Protocol (GHGP) breaks down emissions into three categories:
- Scope 1: direct emissions from owned assets, e.g., factories, fleets, or real estate, etc.
- Scope 2: indirect emissions from the purchase of electricity, steam, heat, or cooling, etc.
- Scope 3: value chain emissions from activities of assets not owned by the reporting entity, e.g., supply chain, employee travel, rented office space, services, etc.
These categories not only help with consistency and compliance, but also create the beginning of a roadmap of how to catalog all of your emissions. Generally, Scopes 1 and 2 are status quo and easiest to figure out because you are in direct control of the data. Most companies start there, but that’s not necessarily a smart move (more below). Scope 3 is more complicated because you are relying on data from third party partners, suppliers, distributors, etc.
From an impact perspective, Scope 3 can be the most critical. Depending on your business model you may find that the majority of your emissions are Scope 3. Most startups fall into this category because they tend to be “asset-light.” If you’re asset-light and you want to prioritize impact and quality of outcomes, Scope 3 is the place to start. If you need further evidence of why to hire third party expertise to manage emission measurement and strategy, the Scope 3 standards are explained in a 182-page document. Fear not though, consulting and software can dramatically simplify this process for you.
The Science Based Targets Initiative (SBTi) sets the standard for how to create a net zero target and subsequent carbon reduction plan for corporations. See more on this in the Analyze section below, though the SBTi is a mechanism primarily for larger organizations and it isn’t always relevant to startups and growth stage companies.
Now you can consider what third party emission measurement solution best suits your needs. Here are the key things to consider when selecting carbon accounting software and consultants. We recommend you leverage a vendor that:
- Offers service and software as part of a single package
- Has experience working with companies in your industry with similar product lines given that emission measurement gets very specific at the operational level
- Has experience working with companies that are a similar size and stage as your own
- Offers pricing and packaging that can scale alongside your business
- Expresses willingness and experience using carbon footprint estimations to start (more on this below in ‘Utilize directional emission measurement techniques’)
- Expresses willingness and experience using a “crawl, walk, run” strategy that prioritizes action and impact over comprehensive and perfect measurement
Here’s a shortlist of vendors that likely meet the selection criteria above:
- SME Climate Hub: the UN, Oxford, Google.org, and Normative have gotten together to create a free, DIY emission measurement tool.
- Emitwise: software and service, generalist with a focus on complex supply chain (Scope 3) emissions, especially in CPG, manufacturing, and real estate.*
- Watershed: software and service, generalist with a focus on the technology sector; has carbon removal capabilities built into their platform.
- Persefoni: software and service, generalist with a focus on enabling financial institutions to meet stakeholder and regulator climate disclosure requirements.
- Capegemini: service, generalist, specifically for larger organizations.
- 3Degrees: service, generalist, can work with a range of company sizes.
* Emitwise is a True Ventures portfolio company. We recommend you include them in your RFP. We also recommend that you include others in your RFP to ensure you align with a solution that is the best fit for your business.
The GHGP provides four different methods for calculating Scope 3 emissions (and similar methods for calculating Scope 1 and Scope 2 emissions). While the initiative encourages businesses to leverage primary data from suppliers wherever possible – and it’s necessary over the long run – it’s a huge barrier to entry.
Primary data are emission calculations based on the specific inputs and outputs of your business, down to things like exactly how many liters/gallons of fuel you use and how the process/technology it goes into utilizes it. It can take years to collect this type of primary data, so try taking directional approaches in parallel so you can start reducing emissions sooner. This is why the GHGP also provides two methodologies that don’t rely on primary data and are entirely estimation based. Those include average-data and spend-based methods (see below).
In terms of legitimacy and compliance, all four measurement methods are valid. This is a great place to deploy a crawl, walk, run strategy to get off the ground. It’s also an important place to have an informed opinion and to make sure the software/consultant you hire shares the same views. You will encounter folks who try to talk you into primary data from day one; these are either academics who don’t fully understand business pragmatism or sharks angling for a more complex process that will result in a higher bid/package/engagement for them. Stand your ground. The four methods include:
- Supplier-specific method – collects product-level data from goods or services suppliers.
- Hybrid method – uses a combination of supplier-specific activity data (where available) and secondary data to fill gaps.
- Average-data method – estimates emissions for goods and services by collecting data on the mass of goods or services purchased and multiplying by industry average emission factors.
- Spend-based method – estimates emissions for goods and services by collecting data on the economic value of goods and services purchased and multiplying it by industry average emission factors.
Ask your third party expert about methods 3 and 4 (above) as a way to test their competency and alignment with your strategy. You don’t have to go deep on the methods right now (that’s why you’re hiring help), but you should conceptually understand the four methods so you can get the right folks in the door and create a climate program that prioritizes impact early on in your company’s journey.
Finally, you and your third party expert should leverage common sense in the measurement process. For example:
If your company’s main product line is software, your team (travel/commute), office space (remote/rented), and hosting (Amazon Web Services, etc.) are going to be your largest emission sources 99% of the time. You and your third party expert don’t need to create an emission measurement framework that looks across every scope and every sub category on day one (again, an opportunity for philosophical alignment in the RFP process). Instead, focus on the aforementioned three categories first and then create breadth from there.
If your business model leverages a marketplace or network, it’s going to be important for you to have an opinion on where you draw the boundaries of your emissions. Should Lyft be responsible for all the drivers in its network? Should Airbnb be responsible for all its hosts? Maybe, maybe not. But it’s foundationally the most important emission question for those two businesses. If they are “net zero, except for their network” then what is the value of that net zero from a climate and brand perspective? To investors? Don’t punt on this hard question; every business has some version of it in their Scope 3.
Emission measurement is an ongoing process, not a one and done activity, at any stage. You wouldn’t buy a CRM that only measures your sales funnel for a single year. This is no different. The easiest way to solve this is to buy software, which we’ve discussed above, but if that’s not in the cards then think about how you can achieve it through process implementation and cloud-based spreadsheet solutions (Google Sheets, Airtable, etc.). You’ll likely need those tools working in concert with your software anyway. Afterall, you don’t need scale on day one; we know there’s only so much you can and should commit to this with your limited time and resources. But you should be thinking about scale and have your third party experts thinking about it too.
You’re probably inundated with news about companies and countries making 2050 net zero pledges or announcements about reaching carbon neutrality. Microsoft has even pledged to be carbon negative to make a splash on the scene. What does that even mean!? We’re going to disambiguate these concepts and give you strategic and tactical advice on how to build a carbon plan that’s right for your company.
This is another area of your climate program where a third party expert, ideally the same one who’s helped you with measurement, can lend a hand. If you have the reins of the strategy, it can make the engagement much less expensive and much more effective. If you’re implementing a carbon plan in-house on your own, this will serve as a foundational blueprint to follow.
- Create an iterative carbon plan that doesn’t require a roadmap to net zero to get started.
- Set the foundation of your iterative carbon plan with marginal abatement cost curves.
- Give yourself permission to make decisions with only 80% of the “required” information.
- Focus solely on your net zero carbon plan.
- Create carbon abatement options for every inch of your business.
- Wait to start taking common sense actions.
Iterative Carbon Plan
Large enterprises and governments have an incessant focus on reaching net zero. This is in part because the biggest contributors to global GHG emissions require a complete plan to make a real dent in reducing them, in part because they have ESG compliance reporting requirements from investors, and in part because it’s a convenient delay tactic. Let’s give everyone the benefit of the doubt for a moment and assume it’s just the former two things. As a startup, before you grow to become a Fortune 500 company, you don’t need a complete plan to take action and you likely don’t have ESG reporting requirements from investors yet. If you don’t need these things, then why would you need a net zero plan? Great question. You don’t, not yet at least. You do need an iterative carbon plan. Let’s start by taking a quick look at the different high-level carbon plans that are out there, in order from most resource-intensive to least:
- Carbon Negative – your company is net zero and you’re eradicating all of your legacy emissions since business inception via carbon removal based offsets.
- Net Zero – you’ve reduced your Scope 1, 2, and 3 emissions as far as is technologically possible and offset the rest (more on offsetting in a later section of this guide).
- Carbon Neutral – technically you’ve balanced your emissions to zero, but you’ve taken a shortcut to offset emissions for parts of the business where you could have installed emission reduction technology instead of purchasing offsets.
- Iterative Carbon Plan – you intend to reach some combination of the carbon plans above eventually, but you’re prioritizing impact and action over comprehensiveness at the start.
Choosing an iterative carbon plan is a critical place to be aligned with your third party expert (if you’re using one). Pressure test their philosophical alignment during the RFP phase and stand your ground while guiding your overall climate program in the strategy and execution phases of getting it off the ground. Your third party expert should be able to help you with almost everything in the Analyze section of this guide.
Marginal Abatement Cost Curves (MACCs)
Everything you’ve done to this point has set you up for success. But you can’t build a MACC without quality emission measurements.
MACCs will enable you to quickly isolate the lowest cost, highest impact carbon abatement options. Abatement options are lower carbon processes and technologies that replace existing higher carbon processes and technologies within your business.
So what exactly is a MACC? Let’s look at a global MACC from McKinsey & Co as an example.
The MACC above shows all of the emission abatement options for planet earth that are technologically and economically feasible. On the X-axis you’ll see cost. Negative cost means the option is actually less expensive over time versus business as usual. On the Y-axis, you’ll see abatement potential, also known as emission reduction potential; the wider the bar the more potential it has.
The Goldilocks abatement options are the ones with the highest negative cost and largest abatement potential. Though, in sum, a bunch of lower potential abatement options can seriously add up in terms of emission reduction impact. If you’re good with charts, you’ve already beat us to it. Grab all of the negative cost abatement options and you’ve got a solid starting point for your iterative carbon plan. Yes, you can both reduce your emissions and eliminate costs on your P&L at the same time. See the green circle in the image below.
To illustrate this further, here’s a deep dive on the ‘electric vehicle abatement option’ in the MACC above:
“The majority of the world’s private vehicles are currently diesel or gasoline-powered. Our baseline or ‘business-as-usual’ scenario in this case would be that everyone continues driving vehicles run on fossil fuels, and that growth in the car market continues in line with market projections through 2030. One option we might consider to reduce CO2 is to begin replacing these with electric-powered vehicles. Electric vehicles (at least currently) are typically more expensive than similar gasoline-powered vehicles, so buying an electric vehicle would require a notably higher investment than ‘business-as-usual’. However, with time, the running or operating costs of an electric vehicle are lower than a traditional car (as a result of efficiency gains and lower cost of electricity relative to liquid fuel), so we will begin to get some economic return on our initial investment.” Source: McKinsey & Co and Our World in Data
Your MACCs will be specific to your company, but the only high-level difference from yours and the global MACC we just viewed is instead of macro socioeconomic abatement options, you’ll have abatement options for all the carbon-producing activities and operations at your startup. As an example, that could include switching your fleet (if you have one) to renewable fuels and/or electric.
Give yourself permission to make decisions with only 80% of the information. As you may recall from earlier in the guide, our key themes are prioritizing action, leveraging estimates, using common sense, and setting up an iterative strategy – not copy/pasting process from the Fortune 500. In light of these, we need a similar theme for decision making. As much of a science emission measurement is, it’s equally an art form. If you measure your emissions perfectly for a year, but it took you an entire year to do it and now your perfect data is outdated (and you haven’t taken any action), then what does perfect really mean? This is a common hamster wheel ‘trap’ in emission measurement, so let’s avoid it!
There is no set of data points or graphs or anything else that will tell you exactly what changes you need to make to decarbonize your business. You’re a startup founder and you know that businesses aren’t built in a classroom or boardroom; they’re built in the trenches. Decarbonization is the same. Executing, failing, and executing again better the next time is the name of the game. The science of it can inadvertently turn off the most shrewd, strategic, operationally excellent business minds because of its academic nature. The good news is, you just have to summon your startup roots, roll up your sleeves, and get after it.
Maybe you don’t even need to measure and analyze your fleet’s emissions to know that you should switch it to renewable fuels and/or electric. Prioritize that impact and action without the perfect dataset. It will save time, money, and the planet. It’s how you built your startup in the first place!
For sake of example, if you have a large fleet at the core of your operations, you don’t need to measure and analyze your entire carbon footprint to start thinking about abatement options for the fleet, you can just quickly move toward renewable fuels and/or electric engines. This analogy holds true for every business out there regardless of if you have a fleet. Often, startups actually catch a break here; the smaller your operation, the easier it is to identify carbon hotspots and see which are most feasible to tackle (abate) first. Don’t worry about juggling Scopes 1, 2, and 3 simultaneously. You don’t even need comprehensive emission data or a net zero plan to get started.
In this section, we’ll help you think through your carbon hotspots and how to create abatement options for them. We’ve done our best to break things down by industry and scope to serve as a guide for your climate program. Ultimately, you (and your third party expert, if you have one) will need to find the carbon abatement options that hit right at the intersection of helping your startup grow while helping the planet.
- Think about each scope as a distinct workstream.
- Leverage analogous businesses and common sense to isolate carbon hotspots.
- Start with carbon abatement options that drive startup growth.
- Overreach and tackle carbon reduction across all scopes simultaneously.
- Reinvent the wheel.
- Get discouraged or distracted by the full field of carbon reduction options.
Think about each scope as a distinct workstream. Your degree of control over each scope varies pretty dramatically, and as such each has a different high-level strategy guiding decarbonization within them:
- Scope 1: direct emissions from owned assets. Since these are your assets, you have the most control over them, making them the most plausible areas for deploying your carbon abatement options.
- Scope 2: indirect emissions from the purchase of energy. Since this scope refers to purchased energy, you will primarily seek to buy and manage energy differently.
- Scope 3: value chain emissions from suppliers, partners, and the broader ecosystem connected to the creation, delivery, and use of your products. Since these are emissions that mostly require a change to another business, you will primarily adjust your partnering/purchasing strategy.
Let’s break it down further.
For Scope 1 you’ll need to deploy carbon abatement options. You may be wondering how to come up with abatement options and how they fit in with the rest of the strategies in your climate program. Remember, an abatement option is just a reduction or replacement of a carbon emitting process within your business.
We like to think of them as cards to play. Just like in a card game, you need to know how each card works and then strategically lay them down for the greatest benefit. The classic way the Fortune 500 and governments approach this area of business is very linear and tends to delay action (as we’ve highlighted previously). That process includes the following steps, for reference:
- Inventory all emissions.
- Create business-as-usual scenarios for every process in your company.
- Create abatement options for every business-as-usual (BAU) scenario. Often one BAU scenario will have multiple abatement options.
- Build reduction pathways that land in your net zero target. Often companies will have many different carbon plans to net zero to ensure they are accounting for contingencies.
If you aren’t beholden to a publicly announced or mandated net zero target then you don’t need to go through this linear process, at least not right away. To be clear, that doesn’t mean your goal isn’t net zero eventually. You can start painting your decarbonization canvas in a more efficient way now though.
Why are we spending so much time on a process that’s not exactly suited for you? Well, knowing the system also means we can change it or shortcut it. If you remove the idea of having a target, then we get to skip right to the planet saving part: isolating carbon hotspots within your operations and deploying abatement options against them. We’ve tried to think through carbon hotspots and potential abatement options for different types of businesses below in part 2 of this section.
For Scope 2 you’ll be working to decarbonize purchased energy. In the past, the complication with Scope 2 was that depending on if you owned or leased an asset, such as an office building or factory, you may or may not have been responsible for the emissions.
With the emergence of Scope 3 value chain emissions being considered one of the most important areas for decarbonization (more on Scope 3 below), the short answer is that you will ultimately take ownership over both scopes, so it doesn’t matter if the energy comes from an owned asset or a leased asset. If it’s an asset you leverage in your operations then it should be in your plan to decarbonize eventually.
In terms of measurement, there are two approaches:
- Location-based: this approach takes averages based on your local grid. It is less complicated but also less accurate as it tends to undercount if you have opted into renewable sources.
- Market-based: this approach allows an organization to apply more specific emission factors that give credit to and account for renewable consumption.
The most common options for decarbonization through Scope 2 are:
- Reduce energy consumption — for example, switch off lights and unplug unused consumption points.
- Install efficiency upgrades — for example, keep a building at a constant temperature through smart sensors and controls.
- Switch on-site energy supply to low carbon sources — for example, purchase solar panels for your roof.
- Switch off-site energy supply to low carbon sources — for example, purchase renewables from your grid.
Since most startups and growth stage companies are asset-light and not in direct control over decarbonizing energy sources, it may be most helpful to think about your energy consumption through the lens of Scope 3 emissions. We’ll talk about that in depth now…
For Scope 3 you are working to decarbonize your value chain, which primarily means deploying strategies to manage your suppliers. There are a couple outliers like team member travel and office space which require different approaches (we’ll return to those later). When thinking through the decarbonization of suppliers, most businesses have four options to consider. You may use some combination of all of them. They are:
- Purchase offsets.
- Switch to low carbon suppliers.
- Work with suppliers to help them decarbonize.
- Own your supply chain so you’re in direct control of abatement options.
Frustratingly, there’s an inverse relationship between ease and impact. The list above is ordered from easiest/least impactful to hardest/most impactful. As the founder of a startup, your options are likely limited to purchasing offsets and switching to low carbon suppliers. Working with your suppliers to help them decarbonize is rarely a possibility for startups because it requires purchasing power and relationship leverage that is hard to come by as a smaller organization, though you could imagine the effect of Apple threatening to take its business elsewhere if suppliers don’t decarbonize.
Before we jump to offsetting Scope 3, let’s look at some reasons why it’s worth the cycles to think about low carbon suppliers. Switching to low carbon suppliers is going to have immense benefit to your company as your startup scales. You are still in a stage where the foundations of your business are not fully cemented and even the simple act of having carbon as part of your evaluation criteria for suppliers can be a big deal for your supplier strategy and climate program as you grow. You’ll nab some low hanging fruit right away by using a few low carbon suppliers and you can add more as time goes on. Eventually, you can lead in this category and have something like Patagonia’s Supplier Standards. If you’re not familiar, they’ve created an entire ecosystem of sustainable supply chains that benefit their business and others in the industry because they focus on low carbon suppliers. (That will be you too.)
Let’s look at some prompts that can help to identify carbon hotspots:
- Is software your primary product? What infrastructure supports your software? Do you own the infrastructure? Are you an infrastructure provider?
- Are your primary suppliers mostly producing manufactured components, or are you directly sourcing raw materials? Do you own or rent the production facilities? Do you own, rent, or sell the products you produce?
- Are you producing a physical good? Is software or a marketplace a primary component of your business model? What’s the mix of raw materials versus manufactured components in your supply chain?
- Are you sourcing ingredients or raw materials? Are you growing food? What does transportation look like from farms or to distributors? Is last mile delivery a key component of your model? What are packaging and storage considerations?
- Is software or a marketplace a primary component of your business model? Do you own the infrastructure? Do you own or rent the supply side of the market? Does your software connect to real world operations?
- Other: If you’re manufacturing something, see if the “Deep Technology” questions shown in this kit help you. You can access those questions by adjusting your selections at the top of the righthand navigation of this Guide.
- What parts of the ecosystem are you working on: Layer 1, Layer 2, infrastructure, NFTs, etc.? Do you own any infrastructure? How closely connected are you to high intensity mining efforts?
- What does your office space footprint look like? Are you going to account for remote team member home office space? How much team travel and commuting is there across your company? How is this likely to change in the near future?
To demonstrate carbon hotspot identification and carbon abatement options at a greater level of detail, let’s look at American Airlines’ net zero plan (in the chart below).
American has identified its carbon hotpots:
- Aviation fuel
- Air traffic control efficiency
- Airplane efficiency
Then, American identified carbon abatement options to mitigate its hotspots:
- Sustainable aviation fuel
- Air traffic control modernization
- Next-generation aircraft (electric or sustainable fuel fleets)
In examining the chart further, we can see the light gray dotted line on the top of the graph represents the business-as-usual emissions while the dark gray dotted line toward the bottom of the graph represents the company’s net zero target. The colored bars across the middle are American’s abatement options. Over time we see how the abatement options eventually drive the company to its net zero goal.
Now wait a minute… Didn’t we just tell you not to set a net zero target and not to copy and paste strategies from the Fortune 500? We did. And we’re glad you’re keeping us honest. You do not need a net zero plan with abatement pathways mapped out like above. But this illustration can provide helpful context as you think about carbon hotspots and abatement options for your company. Remember, if you know the system, then you can intentionally change it to make it work for you.
With a little creativity and research, you will quickly find carbon abatement options that can cut costs, improve product value, increase brand equity, drive talent acquisition/retention, and create a more efficient workforce. This list is far from comprehensive, but our big hope is that it shows what’s possible and inspires you to search for the impact-driving moves that are at that beautiful intersection of climate improvement and startup growth.
Let’s look at a few more examples:
Product Differentiation: If you get creative with sourcing, you’ll find that there are tons of material inputs out there that are low/no carbon and highly marketable, from carbon negative plastics to carbon neutral milk. These companies are building great brands on top of their climate conscious products, so sourcing from them and thinking about opportunities for brand partnerships could be a real win-win.
Digital Infrastructure: Amazon, Microsoft, and Google all offer cloud infrastructure that is mostly or entirely powered by renewables. You don’t automatically connect to their green sites, so do some digging and push it forward in your product marketing. If you are leveraging Web3 infrastructure, not all providers are the same. For example, Chia* is a highly efficient and therefore lower carbon footprint blockchain platform that you could build on top of. (*Chia is a True Ventures portfolio company and we think they have an amazing team and great product, but you should obviously think through the blockchain that is the best for your company.)
Travel, Commute, & Culture: You are probably already working on your ‘People Ops 3.0’ model to have a fully or partially remote team and/or a hub-and-spoke office space that has a smaller overall footprint than you would otherwise need for your workforce. You may encourage digital meetings over in-person as you’ve seen sales and productivity remain steady despite two consecutive years of remote only work. Regardless of the origins of your Future of Work model, you can start viewing it through a climate lens. Think about how you can improve your talent acquisition and retention, your efficiency, and your cost model, but also think about how those same things impact your carbon footprint and climate program. This is an easy win if it’s done well.
A carbon offset is a reduction or removal of emissions of CO2 made in order to compensate for emissions made elsewhere. Offsetting and carbon markets are complicated and controversial. Not all offsets are of the same quality and effectiveness and not everyone believes that offsetting is a viable decarbonization path — some even think it’s a distraction. Fear not because in this section we will demystify offsets and dramatically simplify what kind to purchase, where to purchase them, how to apply it to your business, and how to communicate your choices to your customers and investors. The real distraction is applying a black and white view to this critical sector that’s unequivocally required for a low carbon economy.
- Prioritize offsets that are carbon removals with long-lived storage (high permanence).
- Implement an offsetting strategy that aligns with planetary-level drawdown initiatives.
- Purchase/invest in a portfolio of offset solutions from easy-to-transact marketplaces.
- Use offsets that are only emission reductions or have short-lived storage (low permanence).
- Purchase only one type of offset from one vendor or create custom offset projects.
- Utilize offsets as a way to delay critical reduce-and-replace initiatives.
Prioritize carbon removal offsets with long-lived storage (high permanence). Offsets can be broken down into five categories which the Oxford University Principles for Net Zero Aligned Offsetting has classified in this (relatively) simple taxonomy. You’ll see that impact, quality, and permanence increase from left to right:
(permanence = time length that carbon is sequestered)
Oxford Taxonomy of Carbon Offsets
It doesn’t take a genius to distinguish which of these options are high impact climate solutions and which are generally ineffective. Paying to help with more fuel efficient cookstoves in a developing nation or tarping a landfill for methane abatement just do not stand up to the quality, effectiveness, scale, or permanence of planting trees (which store carbon for 50+ years) or investing in emerging technologies like direct air capture and mineralization (both of which store carbon for 1000s of years) and yet somehow these are all under the same umbrella as “offsets”. Through this lens, you can see why offsets can get a bad reputation. Perhaps we need to rebrand them, but that topic is for another day.
Offsetting was originally created to help companies and governments “balance their carbon budget.” Unfortunately, this philosophy has led to a race to the bottom, encouraging organizations to purchase the highest volume of cheapest offsets to reach the goal of “climate neutral.” As we learned above, the cheapest offsets are also the least effective.
However, if you focus on impact you will quickly gravitate toward an offsetting strategy that prioritizes high quality removals and helps planetary scale drawdown initiatives. Quality removals are expensive and can quickly eat away at a carbon budget, but it’s worth it. It’s not about reaching zero at all costs, it’s about reaching zero in a way that actually helps the planet and is defensible for your brand and operations.
There are a handful of thought leaders shifting the narrative around offsets toward high quality carbon removals, including Stripe, Shopify, and Microsoft. We think their offsetting strategy is right on the nose and we recommend drawing inspiration from them or joining them.
Stripe has even made it possible to contribute directly to its carbon removal purchases through its Stripe Climate program. They’ve done all the hard work on diligence, transactions, marketing, and thought leadership. Jumping on board is the easiest and most effective way to offset.
There are very, very few “easy buttons” for any climate program and when you do find one, it’s usually smart to be skeptical of its impact. However, Stripe Climate is a rare exception. We strongly recommend you leverage it when starting your offsetting journey.
Purchase/invest in a portfolio of offset solutions from easy-to-transact providers. If you’re choosing individual carbon removal projects, we recommend you select 3-5 projects and distribute funds evenly between them. Just like other types of investing, a portfolio approach is best for offsetting as well.
Our top recommendations are:
- Mentioned above, Stripe Climate gives you instant access to a portfolio of solutions like, and including some of, the projects below.
- Climeworks is the preeminent direct air capture (DAC) solution. The solution literally pulls carbon from the atmosphere, mineralizes it, and stores it underground for thousands of years. Cost is pretty high, but the subscription breaks it down in a way that makes it approachable for startups. Skip their B2B sales process and get rolling in a few clicks.
- Eion is a mineralization solution leveraging and speeding up a natural cycle the earth has used for billions of years to remove carbon from the atmosphere. They use a process called enhanced weathering that locks carbon away permanently into rocks and has the co-benefits of increased soil health, improved ocean alkalinity, and strengthened rural communities.
- Carbo Culture from the True Portfolio offers carbon removal by converting CO2 from plants into stable carbon and locking it away for 1,000s of years. They turn naturally biodegrading materials, that would otherwise decompose and release CO2, into new materials that trap CO2 and can be used for things we need like soil enhancement. It’s essentially “hacking” the natural carbon cycle, works at scale, is comparatively inexpensive, and has permanence on the scale of millennia.
- Puro.earth is an emerging certification body and marketplace for carbon removal.
- Pachama offers carbon removal through afforestation and reforestation. It’s not really emerging technology other than its IP around AI-driven verification methods. The cost is low and the project aligns more closely to traditional offsetting than emerging technology for carbon removal and storage. That’s important for a portfolio approach, but less attractive from a permanence perspective. Pachama offsets are verified by traditional certification bodies and qualify for certain Environment, Social, and Governance (ESG) reporting standards, if you have them. This is a good option for buying a large volume of quality offsets through a super easy transaction.
Well, that about does it for now. You made it to the end of our guide. We thank and commend you for making the time to prioritize decarbonization. To reach guide co-author and team True’s climate tech investor Priscilla Tyler, tap her on Twitter. To learn more about implementing a decarbonization strategy, link up with Peter Nocchiero.