Apr 11, 2023 - Energy & Environment

Carbon emissions accounting player grows as data demands escalate

Illustration of a ruler with smoke coming out of the top, like a smokestack.

Illustration: Allie Carl/Axios

Watershed, a startup that helps companies analyze and cut their greenhouse gases, is acquiring emissions accounting and data firm VitalMetrics.

Why it matters: It's an increasingly competitive space as demands rise on corporations to better track and report their climate footprints and reduce them.

Driving the news: Watershed's announcement this morning calls access to VitalMetrics' "Comprehensive Environmental Data Archive" (CEDA) a major competitive advantage.

  • "Watershed customers will be able to measure their emissions with new levels of global coverage and granularity, while meeting rising standards for verification and audit," it states.
  • Terms of the deal were not disclosed.

The big picture: In the U.S., all eyes are on looming disclosure rules from the Securities and Exchange Commission.

  • More broadly, companies face pressure to track their own emissions and supply chains.
  • That happens via voluntary groups like the Carbon Disclosure Project and European rules.

What we're watching: Whether there will be more consolidation as startups compete with each other and major accounting firms.

Catch up fast: Watershed backers include prominent venture firms Sequoia and Kleiner Perkins, and it counts Walmart, Airbnb, BlackRock and other heavyweights among its customers.

  • The company, founded in 2019, has raised a total of $84 million and claimed a $1 billion valuation in early 2022, when it announced a $70 million Series B round.

What's next: VitalMetrics' president and chief scientist Sangwon Suh — who founded the company in 2005 — will be lead scientist at Watershed, alongside Steve Davis.

  • Both are academics. Davis is a climate scientist at UC-Irvine while Suh's an environmental sciences professor at UC-Santa Barbara.
  • Watershed is making some of the CEDA data available free to academic and nonprofit institutions.
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