Looks like there’s still hope for the planet.

Nearly half of employees and consumers believe it is important for companies to disclose their environmental impact and climate-related risks, according to a PwC study. The 2024 confidence survey shows (PwC is a sponsor of this newsletter). When it comes to building trust in an age where people have so many ways to share information, Aidan Madigan-Curtis believes such honesty is paramount.

“Be upfront and truly transparent about your business: what it is East to do, what is it not doing, what it stands for and everything else is more important than ever,” says venture capital firm partner Eclipse Companies. “Especially in a world increasingly filled with misinformation and noise. »

Eclipse leads by example.

The company, which manages approximately $4 billion, sits at the intersection of digital transformation and heavy industry: think transportation, manufacturing, logistics and supply chain. These industries representing about 75% of global greenhouse gas emissions, it invests in companies using technology to reduce this pollution.

Over the past few years, more and more institutional investors have asked Eclipse about the carbon footprint of its portfolio. Madigan-Curtis and his colleagues estimated that the positive climate impact could be significant over time.

“But when we tried to find a (system) to measure this – how much carbon would be avoided or mitigated by taking advantage of modern technology in these industries – we couldn’t find one,” she told me since Nevada.

So Eclipse built its own. With an analysis company Rho Impactshe developed the Eclipse Carbon Optimization (ECO) framework, which calculates the climate impact potential of a new business. Eclipse then applied ECO to 13 portfolio companies representing a cross-section of heavy industry.

The essentials, published in a 2023 Report: By 2050, these companies could reduce their annual carbon dioxide emissions by 172 million tons, or about 4% of total US C02. released today. This is equivalent to the annual emissions of 22 million homes.

“We found it very helpful to have this type of standard,” Madigan-Curtis says of ECO. In addition to helping Eclipse companies convey their carbon impact to potential customers, this solution has been well received by other venture capital firms interested in using such a framework.

Madigan-Curtis also sees a path forward for any company wanting to build trust in its climate reporting. According to her, many companies could do better.

“If you look at, for example, Amazon or Google’s reports on their carbon footprint, there are many reasons to be potentially disappointed,” says Madigan-Curtis, who previously worked at Apple and operations provider connected. samsara.

Many carbon reduction targets and statements take offsets into account, she notes. “It is quite well known that carbon offsets are not the most reliable.

It’s true. A study found that more than 90% of rainforest carbon offsets approved by the world’s largest certification body are likely “phantom credits” that could make global warming worse.

Eclipse prefers the rigor of carbon “inserts,” says Madigan-Curtis. For businesses, this means taking steps that reduce carbon emissions, such as upgrading HVAC systems and investing in new technologies that reduce energy consumption.

“These are the types of actions we like to measure,” says Madigan-Curtis. “That’s why we’re promoting this framework, rather than the higher principle ‘Set a goal, then use carbon offsets to get there if you can’t get there.’

To be fair, Google has changed course. As walks away By purchasing carbon offsets in bulk, the tech giant is aiming for net zero emissions by 2030.

Madigan-Curtis sees big potential in offset trades for inserts.

“Consumers, investors and employees are smart, and a lot of people care about climate and how companies are doing on climate,” she says. With this in mind, Madigan-Curtis believes there is ample opportunity for businesses to take the lead by doing “real work” to decarbonize and measuring and reporting the impact.

Those who succeed “will be the ones who, over time, get more investment, have happier customers and have greater employee loyalty,” she predicts. “Because people are smart and they really look under the hood.”

Ideally, this vehicle is electric.

Nick Rockel
[email protected]

This story was originally featured on Fortune.com