Environmental commitment: startups that measure and net out their carbon footprint

We live in a world (and in a way) that is no longer sustainable: this is what emerges from the report drafted by Global Footprint Network, an organization founded in 2003 with the aim of raising awareness among governments and individuals to reduce the our impact on the planet. Every product or service consumes energy throughout its life cycle and, consequently, emits greenhouse gases (GHG) that alter the climate. The amount of these emissions is called the carbon footprint, of which Spanish startups are increasingly aware.

These data feed the emissions estimates caused by a product, a service, an organization, an event or an individual. Back in 1997, the Kyoto Protocol defined which greenhouse gases should be factored in the calculation of the carbon footprint:

– carbon dioxide (CO2),

– methane (CH4),

– nitrous oxide (N2O),

– hydrofluorocarbons (HFCs),

– perfluorocarbons (PFCs),

– sulfur hexafluoride (SF6).

All these emissions are converted into a CO2 equivalent through parameters established worldwide by the IPCC, the Intergovernmental Panel on Climate Change, a body that operates under the aegis of the United Nations. The calculation of the carbon footprint must consider all stages of the supply chain, from the extraction of raw materials to the disposal of waste generated by the system itself, according to the LCA (Life Cycle Assessment) approach.

Investing in sustainability pays off 

The carbon footprint is a very important and useful parameter for public administrations and international organizations. On the one hand, it makes it possible to assess and quantify the impact of emissions on climate change in the context of sectoral policies, and on the other, it helps to monitor the environmental and energy efficiency of facilities and processes.

It is therefore not surprising that the proactive adoption of sustainability policies is becoming a key asset in business. For consumers, investors, institutions and companies—including Spanish startups—sustainability represents an opportunity to differentiate themselves from the competition. It is also an opportunity to develop innovative products and services, along with new business models.

Victor Manuel Sánchez, product manager at Sorbos, a startup that produces the world’s first edible and biodegradable straws, says that “the environmental or sustainable approach has become key to strategic marketing plans“.

This factor is strongly influenced by consumer pressure, as consumers pay increasingly more attention to carbon footprint when taking purchasing decisions. This is the opinion of ClimateTrade, a Valencian startup founded in 2017, active in the emission credit market through its blockchain-based system. Through the sale of tokens, it reduces the cost of transactions between 30% and 40%, in terms of value and time spent.

“Consumers are becoming increasingly demanding with the transparency and sustainability of the brands they buy from. In the future, the ecological footprint of products will be a very relevant purchasing criteria, so even if there is no premium price for sustainable products, those that are not sustainable will squander their market share,” stresses Benedito. He adds: “A startup that is founded today with no regard for the environment will probably not exist in five years’ time”.

There is also a generational angle to the environmental commitment of Spanish startups. According to Jotelulu, a Madrid-based startup that manages a cloud services platform to support small IT companies’ transformation into cloud providers, “younger entrepreneurs are not blind, they realize how society is changing and how the environmental angle is a factor to be taken into account and, in many cases, to be valued as a pillar of their business strategy”.

This is a point of view with which Climate Trade’s CEO Francisco Benedito agrees: “Younger entrepreneurs grew up with very acute awareness of the climate crisis, and that it is their own children’s quality of life that is at risk. This awareness, combined with their native digital skills, drives and hones their entrepreneurial efforts to combat climate change”.

Startups as a driver of change

The Nielsen Global Survey of Corporate Social Responsibility and Sustainability highlights how 66% of consumers would be willing to pay more for a responsible brand. Investors around the world are increasingly sensitive to sustainability and are looking for companies that meet ESG (Environmental, Social, Governance) criteria. The report ‘State of the Climate Tech 2021’, prepared by PwC, indicates that in the first half of last year alone, investment in this sector was 210% more than in the whole of 2020.

As Francisco Benedito stresses, there are mounting requirements in the financial sector regarding the disclosure of exposure to environmental risk and as a result, he prefers to make investments in companies with proven positive environmental performance. “We already observe differences in the valuation of assets according to their level of sustainability,” he says.

In a context that rewards suppliers of sustainable products or services, many companies choose to control greenhouse gas emissions as part of their corporate social responsibility program and corporate image, which reflects positively on their brand and makes it more attractive to customers, leads and investors.

“Sustainability and the environment are part of our DNA, they are taken into account in all processes—material purchases, choice of suppliers, travel, events, platform, shipping…—and they shape many of our decisions. For us, rather than a determining factor for the success of the project, it is a way of working, of being more efficient and managing better,” Jotelulu explains.

In Sánchez’s opinion, “it is much easier for a startup to be ‘green’ and financially sustainable than it is for a multinational with well-established infrastructure and products”. In fact, based on research by Innovate UK, reaching the goal of zero emissions is one of the top priorities for 80% of startups, which are leading the commitment to decarbonize the economy also through innovations proposed by the so-called climate tech.

The reduction of emissions requires as well technological upgrading and implementing energy saving measures that have positive impact on the company’s finances. Moreover, embracing an environmental commitment approach grants access to economic and financial instruments and incentives (such as the European Next Generation EU funds), which reduce the costs of modernization and efficiency, in a sort of virtuous economic and environmental circle.

The commitment of Spanish startups 

Without a doubt, calculating the carbon footprint is the first step in identifying strategies to reduce emissions. This service is offered, for example, by the US startup Cloverly, but also by the Spanish startups E-verde, GreeMko, Ashiato and AgTech. Once the carbon footprint has been measured, concrete and profitable measures must be implemented.

Among other actions, Jotelulu calculates and offsets its carbon footprint, establishes processes for responsible purchasing or looks for suppliers with a similar philosophy to its own in terms of sustainability. In addition, this Spanish startup tries to raise awareness among its clients through a tool that allows them to immediately visualize the emissions saved using its platform. It also publishes a report analyzing its carbon footprint, which includes emissions produced by staff travel.

Measures to cut emissions can be integrated with measures to net them out, actions that seek to offset emissions with other more efficient activities, which mayhave a higher return in terms of image. For example, renewable energy production or tree planting.

These types of measures help to alleviate, in part, the contradiction of a digital revolution that is committed to the fight against climate change, but is based on energy-intensive servers.

“The energy transition to renewables will solve this contradiction: the day we reach 100% green electricity, the carbon footprint of the servers that power the digital revolution will disappear,” explains Francisco Benedito. 

What is to be done until then? What technologies will help us offset carbon emissions? “While we are not there yet, calculating and offsetting carbon footprints is necessary and possible, using traceable, verifiable carbon credits, such as those offered by ClimateTrade’s marketplace—local carbon capture systems are a disruptive technology to offset emissions”, add Benedito.

He mentions some technologies, such as the water filtering devices developed by companies such as Biomitech, or waste to energy mechanism to process waste locally at low costs—waste that would otherwise emit large amounts of methane into the atmosphere.

Benedito says he does not conceive “innovation without social accountability”. His company and Jotelulu are on the same page: “we are all accountable, as individuals and corporations”.