Carbon management startup Carbon Direct is buying another carbon credit startup, Pachama, the companies was announced today.
Pachama was fired about 20 employees this summer as voluntary carbon markets eased. The company had attracted investment from a number of prominent names including Amazon’s Climate Pledge, Breakthrough Energy Ventures, Lowercarbon Capital and several celebrity angel investors including Ellen DeGeneres, Laura Dern and Serena Williams.
“The current uncertain and volatile financial, economic and geopolitical climate, added to the anti-ESG agenda in the US, is indeed having an effect on corporate sustainability budgets,” Diego Saez Gil, Pachama’s CEO, told Trellis when the layoffs took place. “The impact is particularly strong on the voluntary carbon market, which was already in a moment of correction.”
Pachama had raised $88 million, while Carbon Direct had raised $60.8 million, according to PitchBook. Terms of the deal were not disclosed.
Pachama focused on nature-based carbon credits, which typically result when forests are either restored or preserved. Carbon Direct, on the other hand, is more of a carbon market consulting and accounting firm, helping companies track and report their carbon footprints and then audit carbon credits to offset them.
Coal markets have been plagued by uncertainty in recent years, and not all of it has been the result of political turmoil in the US and elsewhere. Voluntary carbon markets have come under fire for failing to deliver on their promises.
For example, a great research by The Guardian found that more than 90% of a verifier’s credits did not actually lead to any carbon reduction. One of the biggest challenges facing nature-based carbon credits is the question of whether the forests protected by the markets were threatened with destruction in the first place.
And while major companies have scaled back their publicity on ESG measures, many are still keen to keep their net zero promises. Carbon Direct clients include Microsoft, Shopify, American Express, JP Morgan, Alaska Airlines and BlackRock.
