Spend Matters is delighted to announce the 2022 roster for our “Future 5” list. For the fourth year in a row, our analysts have highlighted five start-ups that excited them the most. These Future 5 vendors are on track to qualify for next year’s “50 Procurement Providers to Watch” list. This year, the five companies that have proven themselves as potential future trend setters are Carbmee, Focal Point, OpenEnvoy, ProcureWise and Relish.
To warrant such attention, these vendors must have a product that is ideally two-to-five years old, is used by more than five customers and displays an innovative application of technology. Moreover, these vendors must have less than $10 million in revenue and our analysts must find them both sustainable and growing with a clear momentum. In this series of articles, we explain what these vendors offer, why they are likely to become future members of our “50 Procurement Providers to Watch” and “50 Procurement Providers to Know” lists and what challenges they may face.
Today, we wrap up the series on our Future 5 start-ups for 2022 with Carbmee.
What it does
Carbmee is a start-up focused specifically on carbon footprint calculation and managing emissions reduction plans with suppliers. The solution is capable of calculating Scope 3 emissions using a bottoms-up approach (material-based method) or, where supplier data/knowledge is insufficient (e.g., unknown mass of a specific item/good), makes recommendations based on plausible averages, which can later be overridden by users as needed.
In addition to Scope 3 calculation, Carbmee is building an “Environmental Intelligence System” that algorithmically recommends actions for suppliers to take to reduce emissions, and it helps buyers segment suppliers to focus on emission-reduction efforts to key suppliers that account for the majority of emissions.
Why we chose it
Carbmee immediately stood out as a Future 5 candidate due to its strong underlying technology, its ability to quickly find traction, its smart positioning in and partnership approach to the market and its compelling vision.
Compared against other carbon management specialists and adjacent players that are building their own capabilities to estimate and reduce carbon emissions, Carbmee already stands out with its deep support for primary emissions data collection and collaborative calculations approach that draws in data owners and experts to confirm data points, including internal engineers, ESG-employees, external suppliers or even customers. The firm embodies both deep procurement and lifecycle assessment (LCA) expertise, and the Carbmee team includes a set of experts who can both help implement the system and assist in knowledge transfer for how to get the best data out of the deployment.
What’s more, the Carbmee offering is uniquely positioned in the market as complementary to the existing ecosystem where a current solution does not exist. While some suite vendors, for example, are building out their own Scope 3 solutions via analytics-based methods to start, others are either opting for or evaluating Carbmee as a potential partner. In other cases, Carbmee is establishing itself as a partner in the consulting ecosystem, such as a formally announced partnership with EY in October 2022.
Last, we find Carbmee’s long-term roadmap especially compelling. The vendor ultimately aims to build an intelligent recommender system to guide emissions reduction strategies for buyers to prioritize and measure their suppliers against, going beyond building merely an “empty app” that calculates emissions estimates and leaves the work of decarbonization management to another toolset. Said another way, Carbmee has the larger goal in mind than serving as a mere compliance tool.
Any threats or challenges ahead?
While Carbmee has a strong solution and smart positioning, it will not be without competitive challengers as carbon management takes off as a category.
First is the competitive landscape that is forming around these capabilities. As our new TechMatch for Carbon Management illustrates, a range of providers are building or partnering to support carbon emissions estimation/calculation and decarbonization, all from different vantage points (e.g., as analytics vendors or supplier collaboration enablers). The threat Carbmee faces here is that a sufficient mass of potential customers may decide the solutions built by their current vendors are “good enough” to reach minimum compliance requirements, thus blocking future scale for Carbmee.
The second, and perhaps more vexing, challenge is the relatively low maturity at most companies with respect to carbon management. This area is not strictly a procurement topic — that is, it requires a knowledge of areas outside of supply management scope — yet it rolls down to procurement to manage suppliers in the reduction of Scope 3 emissions. Because of this, one could argue that consulting services have a major role to play in the implementation of decarbonization programs, as the education and implementation piece is critical to success.
At the same time, Carbmee is already working to partner with services firms (e.g., EY), so while some consultancies like BCG, which has its own carbon management tool, called CO2ai, Carbmee can reduce this threat by continuing its already wise strategy of seeking ecosystem partners early.
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