Do Climate Solutions Live in the Cloud?
When SaaS Makes Sense for Sustainability
The cloud meaning the very real network of servers hosting software and databases accessible globally via the internet; not ‘in the clouds’ in the impractical, fantastical sense.
Climate change is here to stay, but fortunately we have entrepreneurial warriors flanking the issue from all angles. You may have heard of some of the following bleeding edgers:
Heirloom, a direct air capture technology harnessing the natural power of limestone to permanently remove billions of tons of carbon dioxide from the atmosphere
TenderMeat, an alternative protein brand that ‘spins’ meat replacements from plant fibers
AMP Robotics, an AI-powered recycling technology that allows real-time materials characterization, sorting, and value capture
Rondo Energy, manufacturer of low-cost, zero-carbon batteries charged by intermittent renewables to generate efficient, high temperature, and continuous heat
Bio, ag, waste, and energy solutions often take the form of hardtech. Creating physical technologies through research and development seems on its face the most impactful approach to addressing secular sustainability issues—deforestation, plastic pollution, grid failure, and natural disasters to name a few. More and more, however, software solutions are infiltrating the climate market, with a primary goal of centralizing and democratizing data.
But can software address the full scope of our climate challenges? Have we reached the point of over-SaaS-ification?
This article will explore the key ingredients to successful, sustainable software solutions.
An Algorithm for Adaptation
Software for sustainability has transformative potential. By collating data, it can help inform decision-making, prioritize limited resources, and build collaborative relationships. Many facets of the wicked problem of global climate change, namely its grand uncertainty, scale, and expenses, can be distilled by software. Some notable assets of SaaS include:
Low Initial Costs: For both developers and users, SaaS models lower upfront investment. Price and product flexibility is particularly important in the volatile market of sustainability standards, where near-term compliance is a priority for many organizations but regulations are still undergoing active surgery.
Scalability: SaaS solutions can easily scale with customer growth, accommodating increased demand without significant infrastructure changes. As climate accountability climbs and technologies experience mass deployment, having the software in place to support that transformation will be critical.
Accessibility: The fact that SaaS solutions are accessible from anywhere with an internet connection makes them more convenient for users. Cloud connection boosts the willingness and ability of clients to integrate a new platform, promoting transparency and prompting action.
Continuous Improvement: Adaptability is the dialect of climate change and resilience. The fact that startups can continuously update their software to reflect regulatory, economic, technical, and climate realities without requiring users to install updates manually has incalculable value.
Debugging Your Decarbonization Platform
At the same time, sustainable SaaS comes with a unique set of risks.
Working at an environmental consulting company, I’ve been personally barraged with cold calls from dozens of ESG software companies. Needless to say, the market is becoming, if not already, completely saturated. New entrants to the space will find it harder to differentiate themselves among the slew of other full stack data management platforms. On a societal level, this fierce competition ensures only the best and brightest solutions (those with the most simple and/or scientifically validated algorithms) will come out the other end. But it can pose major challenges for founders and their teams.
Additional issues for climate SaaS include customer retention and data security. Because sustainability is an ongoing process of enhancing efficiencies, reducing risks, and reporting performance, long-term relationships for data management are essential. A strong sense of loyalty and trust must exist between software providers and their clients to avoid platform switching and ‘starting from square one’ during each reporting period.
The longevity of client relationships is also a reflection of the seamless–or not so seamless–integration of the SaaS solution into existing systems, tools, and platforms. Data is not derived, nor should it live, in a vacuum. A substantial lift and consistent client collaboration is required to gather meaningful data needed for softwares to execute to their full potential. Your goal as a competitor in this space is to make that journey as painless as possible—which is much easier said than done.
Successful, Sustainable SaaS
For climate tech startups nailing their customer acquisition and data integration strategies, success often hinges on a unique value proposition, excellent customer support, and a product innovation rate that exceeds evolving market challenges. Based on recent trends in climate tech funding, we can boil down companies ‘ticking all the boxes’ to one of five categories:
Calculating Impact: In the ambiguous world of greenhouse gas accounting, creating code paths to simplify the measurement of emissions (especially scope 3) and setting targets can be critical. California’s Corporate Climate Accountability Act (SB 253) and the Securities Exchange Commission Climate Change Disclosure Rule require companies to disclose their carbon emissions, so software solutions that can expedite and ensure their compliance are enticing. Persefoni and Watershed are two leading platforms helping companies measure, report, and act on their carbon emissions.
Optimize Resources: Financial savings are another incentive for adopting climate tech software, particularly those that monitor resource efficiency. For instance, Rheaply, a portmanteau of ‘research’ and ‘cheaply,’ is a Chicago-based circular economy (“smart inventory”) marketplace capturing the value of used workplace resources through exchange. Other successful resource optimization platforms include those around energy management and sustainable supply chain management.
Mitigate Risks: Just as there are financial ‘carrots’ to be gained from investing in climate data platforms, there are also sticks to be avoided through enhanced risk management. Companies such as Orennia and WeaveGrid provide risk insights for investors in the energy transition and transportation electrification sectors. Other prevailing risk mitigation softwares focus on physical risks through climate scenario analysis, such as Climate X.
Enhance Transparency: Integrity leads to impact. So many sustainability challenges and solutions are cast aside due to the fact that concrete data to prove their validity is unavailable. Climate SaaS tackles that problem. Platforms verifying voluntary carbon markets and reforestation projects and enhancing supply chain transparency have proven successful in recruiting users and boosting overall accountability and trust in climate solutions.
Report Performance: Most climate software has some relevance to or element of reporting. Some sustainability reporting tools operate cross-sector and cross-geographies, while other companies, for example Regrow Ag, focus on baselining emissions and assessing climate action for particular industries (in this case, agriculture). Another example is Scope Zero, a “carbon savings account (CSA)” created to advance corporate sustainability efforts by gathering and reporting employee home energy data and efficiency upgrades.
The Bottom Line on Climate SaaS
Regardless of their unique value proposition, successful climate softwares offer user-friendly, automated, and precise solutions to complex sustainability issues. They offer actionable, data-driven insights to enable businesses and governments to effectively manage and reduce their environmental impact.
While many startups adopting the SaaS model in the climate tech sector bring substantial benefits, the potential for market saturation and challenge with dead-end data should not be overlooked.
If you are a founder in the space (or if you’re founder-curious), be sure to carefully consider your target niche and the broader ecosystem in which you’re operating. There’s enough room for each of us to play a role in solving the climate crisis; make sure yours isn’t already taken.
Connect with me to share your sustainability startup’s story.
P.S. As a sustainability buff, I know this space is constantly evolving and can be particularly siloed. All to say, I welcome your fact-checking and feedback. Working together to improve our collective understanding of sustainability is the goal of my page!
P.P.S. The views in this article are my personal perspectives and do not necessarily reflect the view of my employer or any other person or entity.
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