Climate management and carbon accounting company Persefoni has announced $50 million in funding and the next step in AI for corporate carbon accounting.
- Persefoni is one of the largest startups addressing the carbon accounting and climate data issue.
- Carbon accounting is a rapidly growing market being driven by regulation of climate risk in a range of jurisdictions – according to BCG, 10% of companies measured emissions in 2022 and regulation began to impact in 2023.
- The market is expected to grow from just under $13 billion in 2023 to over $64 billion by 2030 making AI a potentially critical advantage.
The funding, which takes the company’s fundraising to date to $150 million, was led by TPG Rise and included participation by Clearvision Ventures, ENEOS Innovation Partners, NGP Energy Technology Partners, Prelude Ventures, Parkway Ventures, Rice Investment Group, Bain and Co., EDF, and Alumni Ventures.
“This Series C round represents a significant vote of confidence in our strategic vision, our product and sales execution, and our commitment to bringing best-in-class climate software solutions to our customers,” said Kentaro Kawamori, chief executive and co-founder of Persefoni. “This new investment not only ensures our ability to provide industry-leading support to our global customers, but it also enables us to double down on our existing, successful AI developments.
What does Persefoni do?
At its most basic, Persefoni provides businesses, financial institutions, and governmental agencies with the software framework needed to manage their organisation’s climate-related data, disclosures, and performance with the same level of rigour and confidence as their financial reporting systems. This is known as carbon accounting, and is intended to help organisations understand and manage their greenhouse gas (GHG) emissions, contributing to informed sustainability decisions and efforts to mitigate climate change.
The company’s software enables users to simplify the calculation of their carbon footprint, identify decarbonisation strategies and perform climate trajectory modelling aligned to temperature rise scenarios set forth by the Paris Agreement, and benchmark their impact by region, sector, and/or peer groups.
The need for carbon accounting has evolved from a nice-to-have to a must-have for the effective management of climate risk. Some of these risks include being inadequately prepared to address climate-related supply chain disruptions, ultimately compromising the company’s long-term resilience, as well as committing greenwashing intentionally or inadvertently.
Companies also expose themselves to the risk of failing to comply with regulations. In the UK, large corporations now have to report on their UK energy use and related Scope 1 and 2 GHG emissions and the market seems to be moving towards regulation of Scope 3. In the EU, their peers will have to start reporting on the financial year 2024 under the Corporate Sustainability Reporting Directive, which will apply to all businesses operating in the bloc, even if they are based overseas. It’s worth noting that, already, under the CSRD, European countries may apply “effective, proportionate, and dissuasive” sanctions, including monetary penalties, against companies that fail to disclose climate information.
Is AI driving the development of carbon accounting?
Alongside the funding, Persefoni announced the launch of PersefoniGPT, the company’s AI co-pilot product for carbon accounting and management. Among the many challenges of effective carbon accounting is the complexity of the data required, as well as the means of collecting it – this makes ensuring data quality and reliability a challenge.
Kawamori said: “[We] are pleased to expand upon this early success with the step-change capabilities that generative AI represents. Breakthroughs in GPT and LLM models will drive huge innovation in the Climate Tech space, and Persefoni is excited to be at the forefront here with the launch of PersefoniGPT.”
To date, the existing AI portfolio has been largely aimed at easing the complexities of the data journey within the world of carbon accounting and the subsequent assurance and audit processes. PersefoniGPT represents the company’s entry into what will eventually become a “near-autonomous AI Agent whose technical knowledge across carbon accounting, climate management, and the Persefoni platform will simplify vast areas of this journey.”
While the company acknowledges it will take a few years to get to that level of capability, Persefoni says the first versions of PersefoniGPT will already be able to assist users in becoming significantly more efficient in their carbon work – in terms of querying data, making calculation selections, learning how to use the platform, and receiving real-time support.
Persefoni is not the only company to explore how AI can improve carbon accounting, alongside rivals such as Watershed, Energy.AI, Emizio, Plan A, Deeper Insights and many more.
AI is driving internal development
Persefoni’s increased investments in generative AI are not only visible in customer-facing products shipping in Q4 2023, but they will also have a significant impact on reducing operating expenses moving forward. Aside from the release of PersefoniGPT, the company said it has launched several AI capabilities into its core carbon accounting and management platform, which Persefoni’s customers have already employed.
The company says these innovations are already radically simplifying the complexity of enterprise data management with the help of models that enable, among other functionalities, anomaly detection, natural language data matching, and automated data error resolution.
Kim Stroh, co-founder and head of AI at Persefoni, added: “Our early shift to invest in the transformative power of AI and machine learning technologies continues to pay dividends. Not only are we able to reduce costs, we’re propelling our solutions into a new model of efficiency and intelligence. This innovation drives sustainability and efficiency simultaneously, and it’s a key reason why Persefoni is trusted by partners leading in their respective markets, like Workiva, Deloitte, ERM, and Bain & Co.”
Artificial intelligence algorithms and machine learning analytics can provide useful additions to the process of developing effective carbon accounting measures. There is little question that they will be able to help overcome some of today’s hurdles to effective measurement of data.
What needs to happen now is for companies to understand that data is only one hurdle. Once we solve the data challenge, we need to start looking at how we drive supplier collaboration across sectors and how we can get more effective at setting credible targets in line with the science – and actually achieve them.