French startup Carbon fact believes that the best carbon accounting solutions will focus on one vertical. That’s why the company decided to supply a carbon management and reporting tool exclusively for the fashion industry.
Carbonfact recently raised a $15 million funding round led by: Eleven, a French VC company that conducted a seed round for Carbonfact in 2022. Other investors in the round included Headline and one other Y Combinator investment.
Large fashion firms (and other industries) have to develop a carbon accounting strategy as regulations change in Europe and the US with the EU’s Corporate Sustainability Reporting Directive (CSRD), California’s Corporate Climate Data Accountability Act and NY Fashion Act Act.
That’s why there’s been a boom in carbon accounting platforms. The biggest ones prefer it Watershed, Persephone, Sweep Or Green have an industry-agnostic approach. They help track carbon emissions and create reports in a more or less automated way.
Just as Carbon Maps focuses exclusively on the food industry, Carbonfact focuses on the fashion industry so that its product could be more detailed and specific.
“For these industries – food is a very good example, fashion is a very good example – you have to be accurate in your calculations and you need industry-specific tools to model virtual products and improve your product offering in the future” – Carbonfact co – the founder told me and CEO Marc Laurent.
Product-level carbon emissions data
In more practical detail, Carbonfact pulls existing data from your ERP and other internal systems. It then calculates the footprint for each product using a life cycle assessment engine designed specifically for clothing items.
“[Clients] in addition they have data in the so-called PLM [Product Lifecycle Management software ] — is the software in which all product data is placed. Here you will discover product recipe cards. Sometimes they store the data on traceability platforms comparable to Retraced, Trustrace, Fairly Made in France, etc. And finally, sometimes they have the data in Excel files,” Laurent said.
Having centralized and normalized all of your data on one platform, since the fashion industry relies on a cascade of suppliers, Carbonfact desires to show you how to calculate your Scope 1, 2 and 3 emissions – specifically, Scope 3 emissions include indirect emissions from third-party suppliers.
The first run gives a broad idea of the primary emission points with a range of uncertainty. It then helps prioritize data collection with suppliers to refine data and improve reporting of greenhouse gas emissions.
Carbonfact can then turn into your carbon footprint dashboard. You can generate comprehensive reports and drill right down to a SKU-based level to see the environmental cost of each product. The platform can then be used to run what-if scenarios and see whether a material must be modified, a move to a latest country of production or a change in transport methods.
Image credits: Carbon fact
While many firms will focus on CO2 equivalence metrics first, Carbonfact can be used to trace other metrics comparable to water use, French Ecolabels and other environmental metrics – in the carbon accounting industry they call these metrics the Product Environmental Footprint Category Principles, or PEFCR.
Carbonfact has already acquired over 150 clothing and footwear brands, including New Balance, Columbia, Carhartt and Allbirds. “We track 100% of their subsidiaries, 100% of their suppliers and 100% of their products,” Laurent said.
Each customer pays tens of 1000’s of dollars a yr to make use of Carbonfact. Doing the math from the ground up, if we consider that on average a customer pays around $20,000 a yr, which means the French startup is already generating at least $3 million in annual recurring revenue.
It’s clear that sustainability management software is a growing segment in the enterprise software world. But it is also a young sector. So it should be interesting to see if several industry platforms can evolve into large firms or if there will likely be some consolidation in the future.