Scope 1 and 2 emissions cover direct and energy-related GHGs, while Scope 3 emissions, hidden in supply chains, make up the majority and are harder to track
By now, there are numerous platforms for carbon accounting and emissions management. Nevertheless, firms monitoring emissions issues tend to commence with the most straightforward issue: the direct greenhouse gas emissions from sources that a company owns. In the climate industry, these are referred to as “Scope 1.”
GHG emissions from the energy consumed by a company are referred to as “Scope 2” emissions. Scopes 1 and 2 collectively account for only approximately 25% of global emissions. The remaining emissions are classified as Scope 3 and are difficult to monitor due to their concealment within supply channels.
Startups are addressing these supply chain emissions. For instance, recently secured a $4.3 million pilot round to address the emissions associated with transportation in supply chains.
Another illustration of this is that the 113 million tons of CO2 emissions Nestlé generates are equivalent to Belgium’s total greenhouse gas emissions: The supply chain generates more than 107 million emissions.
Investors are currently interested in another “vertical” bet. This time, in the form of a venture striving to decarbonize the supply chains in agriculture.
Root assists food and beverage companies in acquiring primary data regarding their agricultural supply chains. The RootOS platform was introduced in October 2023 by co-founders Eric Oancea and Maurice Hensl. The company has since secured clients from fast-food chains and dairy facilities, although it has refrained from disclosing its clientele. To date, it has collaborated with over 10,000 producers.
Project A, HelloWorld, Arc Investors, and other startup operators, including P9 alumnus Robin Dechant and Cargo.one CTO, Mike Rötgers, contributed to Root’s €8 million pilot round, led by Christoph Janz at Point Nine.
According to Root, its platform is employed by sustainability and procurement teams at food companies to gather verifiable primary data from farmers, who are required to respond to a few straightforward inquiries. Subsequently, the remaining data required for calculating GHG emissions is obtained from existing documents and other data sources.
Root subsequently simulates the environmental impact of each product, enabling organizations to identify the “emission hotspots” in their supply chains.
Oancea believes emissions-tracking companies like Sweep, Watershed, and Normative are too “one-size-fits-all.” “These companies are utilizing secondary data and industry benchmarks to determine that, on average, one piece of aluminium has a carbon footprint of 5 kilograms of CO2,” Oancea stated. “Alternatively, a carbon footprint of 2 kilograms of CO2 is associated with 1 litre of milk.” However, in actuality, those figures are vastly different.
According to him, the food industry must transition from using generic software solutions or climate consultancies that rely on market benchmarks to a system or process that enables companies to aggregate activity data from their supply chains.
Naturally, this necessitates a high degree of detail. For example, the hundreds of thousands of farmers who may supply McDonald’s emit CO2 by a bewildering multitude of variables, including the number of cows, the type of feed they receive, and the type of fertilizer they employ.
According to Oancea, these variables “will result in significant discrepancies in greenhouse gas emissions among suppliers. Consequently, making more informed decisions to reduce carbon emissions is impossible until we reach this point and collect data from these suppliers.”
He claims that major food companies’ sustainability managers and procurement managers utilize Root’s platform to communicate with their suppliers, including farmers. It can connect to a farm management information system and procure pertinent data. “We input it into our carbon calculator, which generates a customized score for each supplier that accurately reflects the situation on their farm.”
Root is only accessible in the German-speaking DACH market and select Eastern European countries. However, the company intends to broaden its reach throughout Europe this year.