For many companies, Scope 3 emissions make up most of their carbon footprint, but it is time-consuming and expensive to monitor. As much as possible regulation mandatory reporting of Field 3 is approved, however, it is important that they do so. That’s where Avarni comes into the picture. The Sydney-based startup helps companies measure carbon emissions, identify hotspots in their supply chains and strategize how to reach net zero goals.
Avarni announced today that it has raised AUD$2.5 million (approximately US$1.64 million) in an expansion round from returning investor Main Sequence and new backers Sprint Ventures and AfterWork Ventures. This follows a $3 million funding round in November 2022 and brings Avarni’s total raises to date to $6.1 million.
Avarni’s target customers are large business organizations with public SBTIs (Target science initiative) or zero targets. Clients come from sectors such as professional services, engineering, pharmaceuticals, hospitality, energy and manufacturing, and include Schneider Electric, Jacobs, KPMG Australia and Morrison Hershfield. Other clients come from the public sector, including the City of London Corporation. Avarni says it has analyzed more than $1.58 trillion worth of data across 311,000 suppliers across hundreds of industries and identified more than 487 million tons of carbon dioxide.
Field 3 broadcasts they come from sources within an organization’s value chain that it does not own and can account for 65% to 95% of its carbon impact, according to PwC. More laws are being passed requiring companies to report their Scope 3 emissions, including a recent Senate bill in California which is expected to affect regulations around the world. In Australia, the govt plans to introduce mandatory climate reporting for companies and financial institutions next yearincluding Scope 1, 2 and 3 emissions.
Avarni co-founder and co-CEO Misha Cajic told TechCrunch that getting accurate and comprehensive data on indirect emissions can be challenging for companies due to limited transparency and data from their suppliers and other partners. In addition, field 3 emissions must be collected from upstream and downstream sources, requiring a lot of communication, cooperation and, in some cases, incentives.
Avarni co-founders Anuj Paudel and Misha Cajic
Avarni’s platform makes the process simpler by looking at the percentage of a company’s supply chain that has already set SBTI-validated targets. It does this by taking a first pass on supply cost data, identifying which suppliers contribute the most to their supply chain’s emissions. Organizations can then use Avarni to send suppliers personalized questionnaires and free access to the platform to collect their procurement spend and activity data. Avarni uses cost and activity data provided by suppliers to calculate emission factors for specific suppliers, which results in more accurate calculations and information. Avarni also includes forecasting and initiative planning tools to model future emissions based on different business scenarios and can give users actionable steps to take based on emissions data from their suppliers.
Cajic says Avarni has seen an increase in new clients from the United States as businesses work to make sure they have processes and systems in place before the reporting requirements take effect.
“We spent some time in the US in September and our key takeaway was the speed of mobilization and the willingness of companies to work directly with their suppliers to decarbonise,” he said. “We expected it would take longer for companies to get their supply chain business up and running, but US companies are trying to move quickly to engage their supply chain, having recognized decarbonisation as a major challenge to overcome.”
In Australia, Cajic expects demand for Avarni to increase as new decarbonisation regulations come into effect for some companies and financial institutions by July 2024. He notes that only 22% of the ASX200, or about 43 companies, have some form of Field 3 emission target and strategy. 110 companies report their emissions in Scope 3, but have yet to implement a strategy to reduce their emissions footprint.
Avarni’s direct competitors include larger ESG and carbon accounting platforms, but Cajic says these are limited because they only perform carbon footprint calculations based on procurement spend data. Avarni’s differentiator is its ability to allow organizations to invite suppliers to add and manage their emissions data to Avarni for free. This in turn enables Avarni to calculate a supplier-specific emission factor, generate more accurate calculations and help stakeholders in a value chain to collaborate.
In a statement, Main Sequence chief investment officer Alezeia Brown said: “In the race to net zero, accurately measuring emissions—especially Scope 3—remains a significant challenge. Companies rely on third-party data or unverified numbers from suppliers, leaving them with inaccurate carbon accounting. Avarni is pioneering new ways to tackle this problem head on. In the urgent journey to net zero, Avarni’s technology will enable organizations to plan and reduce impacts across their entire supply chain like never before.”
