Carbon-accounting startups see green in Scope 3

Carbon-accounting startups are wading into the tricky waters of Scope 3 emissions measurement with the hope of standing out from the crowded market.

Why it matters: Competition is heating up for lucrative enterprise emissions-tracking contracts among the Big Four, Big Tech and venture-backed startups to help prepare for the proposed new SEC disclosure rules.

Driving the news: Watershed, a carbon accounting startup backed by Sequoia Capital and Kleiner Perkins, said Tuesday it was adding supply-chain-emissions tracking to its suite of enterprise software products.

• The company says it is using a combination of public and private data from suppliers to estimate the emissions footprint of the larger supply chain.

Context: Driving the demand is the SEC's proposed disclosure rules that include requirements for reporting Scope 1 and 2 emissions starting in FY 2023 and Scope 3 emissions in FY 2024, should the rules be adopted as currently drafted.

Quick take: Adding a Scope 3 measurement tool is one way for startups to solidify their market penetration because it pressures suppliers to use the same software providers as their customers instead of operating with a slapdash approach of different measurement standards and tools.

Zoom in: Carbon180, which works on carbon removal policies, released a new framework Tuesday, first shared with Axios Generate.

• Carbon180 hopes the framework will jump-start policy discussion around ways to measure, report and verify carbon removal project effectiveness.
• Lacking standardization is especially tricky in measuring Scope 3 emissions as many companies utilize similar suppliers but may count their vendors' emissions differently.