Berlin-based tech startup The Climate Choice raises $2M in funding to decarbonize industrial supply chains

Climate change is one of the biggest threats of our time. According to some estimates, losses due to weather-related events have increased nearly ten-fold over the last four decades, from a ten-year global average of $12 billion in 1980 to $119 billion in recent years.

One of the biggest contributors to global warming and carbon emission is the supply chain sector. According to the World Economic Forum, Scope 3 emissions, or CO2 in supply chains can make up as much as 90% of a company’s carbon footprint and worldwide more than 50% of all emissions can be traced back to only 8 supply chains. However, companies are struggling to reduce these emissions.

It’s for this reason that Berlin-based tech startup The Climate Choice is on a mission to help decarbonize industrial supply chains. Decarbonization is the process of eliminating or reducing the carbon dioxide (CO₂) emissions that contribute to climate change from energy sources and through the use of low-carbon power sources, and the conversion to an economic system that sustainably reduces and compensates for the emissions of carbon dioxide (CO₂).

To help address the increase in legislation and challenges for companies around Scope 3 emissions in the U.S. and E.U., The Climate Choice announced today it has raised $2 million in pre-seed funding. The round was led by Gutter Capital along with Possibilian Ventures, with participation from existing investors West Tech Ventures and Business Angels.

The Climate Choice will use the fresh capital infusion to further the development and expansion of its Climate Intelligence Platform, which helps companies understand climate performance, comply with reporting requirements, and take actions to realize climate transformation in the supply chain.

Commenting on the funding, Dan Teran, Co-Founder of Gutter Capital, said: “It is not enough to turn off the lights at HQ. Corporations need to take full accountability for their carbon emissions, and that means getting serious at Scope 3 emissions reporting, and reduction. There are many startup companies focused on carbon accounting software at the corporate level. Without suppliers on board, the analysis is skin-deep. The Climate Choice platform provides a fast and painless solution for corporate procurement teams to understand their supplier’s carbon footprint and mitigation plans.”

In November 2022, the European Commission awarded the Climate Intelligence Platform with the “Best Digital Solution” award, recognizing its “high-impact potential to the greening and digitalization of European industry.” In addition to this recognition, customers from around the world are already using the supply chain decarbonization software tool to automate time-consuming processes from data collection to monitoring and engagement, as well as to support suppliers on their decarbonization journey.

Enterprise customers include telecommunications service o2 Telefónica and HiPP, an organic baby food company. o2 Telefónica is using The Climate Choice software platform to collect climate-focused data from 1,000 suppliers and HiPP uses The Climate Choice to manage climate risk and emissions data, which serves as the basis for collaborating with suppliers on reducing emissions in the value chain.

Co-founded by CEO Yasha Tarani, tt the heart of The Climate Choice’s solution is the digital management and secure sharing of climate-relevant corporate data. This topic is becoming increasingly important for companies with new climate disclosure requirements along with financial institutions increasingly including Scope 3 emissions in their guidance to borrowers. This means that even with strong targets on Scope 1 and Scope 2 emissions, and some elements of a credible climate transition plan in place, financing could be at risk as well.

According to the Oliver Wyman Stepping Up report from February of 2023, around half (49%) of European companies report having a climate transition plan in place to limit warming in alignment with the Paris Agreement. However, when it comes to the ambition and transparency of those plans, less than 5% of companies show the advancement transition readiness required to achieve the Paris Agreement’s goals. With regulations on the horizon, The Climate Choice is setting companies up for a clear path to decarbonize their Scope 3 emissions and achieve their climate targets together with suppliers.

“There is still a large disconnect between the aspirational climate targets and the reality of actions taken– and yet every company now requires a clear and effective approach for reducing their emissions. Data-informed, streamlined processes are key for monitoring, tracking and engaging suppliers in their decarbonization journey for any large supply chain,” Tarani said. “We’re very excited to team up with Gutter Capital to develop our Climate Intelligence Platform delivering scalable and accessible decarbonization for corporate supply chains globally.”