VCs Invest in CO2 AI, Sustainability Software Startup Launched By Boston Consulting Group

CO2 AI, a sustainability management software spin-off from Boston Consulting Group (BCG), has raised $12 million from two venture capital (VC) firms and BCG.

The VCs are Unusual Ventures and Partech. Valuation terms were not disclosed. Charlotte Degot (pictured, top of page), who led BCG's efforts to develop CO2 AI, is CEO of the spin-off. Silver Lake Special Advisor Jim Whitehurst -- a BCG veteran who was CEO of Red Hat and COO of Delta Air Lines -- is one of CO2 AI's key board members.

CO2 AI: Sustainability Software Business Background, Market Opportunity, Competition

CO2 AI's software "enables the world’s largest enterprises to measure, track, report, and ultimately reduce their environmental footprints at scale — even across the entire supply chain," the startup claims.

CO2 AI, originally created by BCG in 2020, is headquartered in Paris France. The company also has operations in Germany, the Netherlands, Spain and the United States. Headcount figures were not disclosed. Early adopters include American Tire Distributors, which manages a supply chain of 15,000 active products in 600,000 stocking locations.

CO2 AI has also partnered with the Carbon Disclosure Project (CDP) to build a new "Product Ecosystem." The goal: Empower organizations to "collaborate on producing product-level emissions data directly with their suppliers to measure, manage, and reduce their Scope 3 emissions at scale," the organizations said.

ESG Software Market Forecast, Competition: Demand for ESG software appears strong. Indeed, global ESG software sales will reach $1.5 billion in 2027, up from $700 million in 2022, according to a MarketsAndMarkets forecast. That's a 15.9% compound annual growth rate (CAGR), according to the research report.

Still, the ESG software market is crowded with competitors, investors, M&A activity and some political pushback in the United States.

BCG Spins-Off CO2 AI Sustainability Software: Executive Perspectives

In a prepared statement about the spin-off from BCG, Degot said: "Our latest carbon emissions survey showed only 10% of organizations fully measure their CO2 emissions, and only 1% achieve reductions. That percentage will rise dramatically over the next few years as more companies will need to take more drastic actions to manage their emissions. Companies get stuck at the reporting stage of their net zero journeys due to a lack of reliable data, robust action plans, and tools to empower their organizations to decarbonize at scale. They are committing to targets they will really struggle to achieve."

Added Sylvain Duranton, global leader for BCG X, the tech build and design unit of BCG: "With CO2 AI, we incubated an idea about how to address one of the world's most pressing issues—reducing carbon emissions. That innovative idea has grown, and the logical next step to help achieve our goals, and for CO2 AI to fully achieve its potential, was for it to become a thriving and independent company. This highlights our ambition at BCG X to encourage our teams to disrupt, act as entrepreneurs, and invent new business approaches that solve today's biggest challenges."

Noted John Vrionis, general partner at Unusual Ventures: "We are thrilled to partner with Charlotte and her team at CO2 AI as they build the most comprehensive, accurate, and reliable carbon accounting and planning platform on the market. Unlike other carbon accounting solutions, CO2 AI has a unique advantage of developing their platform over the past three years with unique insights and datasets in partnership with BCG's clients."

Concluded Alison Imbert, principal at Partech: "In the crowded space of carbon accounting software, CO2 AI truly stands out through its unique story. Building an enterprise-grade product with an extensive and comprehensive emissions factors database entails significant costs and requires consulting to build the approach. Leveraging the scale and resources of BCG, they managed to accomplish this feat in an exceptionally short period. Now, it is time for CO2 AI to soar and further expand its presence across Europe and the United States."

We'll be watching for CO2 AI's next moves.