Specialist
Former executive at CarbonChain.io Ltd
Agenda
- Carbon accounting software tool adoption rate and outlook
- How carbon accounting software tools work
- Vendor competitiveness across geographies and industry verticals, focusing on Emitwise, Watershed (LON: GFTU), Persefoni and Sinai Technologies
- Player differentiation and value-adds
- Potential threat larger software providers such as SAP (ETR: SAP), Microsoft (NASDAQ: MSFT) and Salesforce (NYSE: CRM) represent to point carbon accounting software vendors
- Revenue model and pricing outlook
Questions
1.
How should we think about the penetration rate of carbon accounting software as it stands right now? How will this differ across industry verticals or business sizes?
2.
It seems the larger side of the market still has a large amount of green space – potentially 70% market opportunity if penetration is 30%. How easy is it to sell a carbon accounting software tool? Is it driven more by the regulatory side? Emitwise focuses on arguing the financial benefits of carbon accounting to improve profitability. What tactics typically worked best in selling this type of software?
3.
Who typically is the decision-maker for SaaS tools?
4.
How did you see demand for SaaS evolving given that businesses can do it through Excel or via consultants? How might demand for these SaaS tools progress?
5.
Who are the largest carbon accounting software players in Europe?
6.
How do carbon accounting tools work? What systems are they connecting into and how do they capture data? Do we have to break this down by whether the use case is scope one, two or three emissions that they’re trying to capture?
7.
How much of the initial implementation is typically manual? Is it largely a manual process but once up and running, the tools are very much automated in the way they capture data?
8.
How do these accounting tools actually convert data from the ERP [enterprise resource planning] system into information around the carbon footprint? Emitwise claims to have a proprietary emission factor database. How does it all work? Are they essentially tied to industry methodologies such as the greenhouse gas methodology or TCFD [Task Force on Climate-related Financial Disclosures], to convert these into an actual output?
9.
Can players differentiate much on scope one emissions? If they are largely plugged into ERP tools and the actual calculation frameworks are largely based on a handful of key, publicly available ones, presumably the database is quite similar for making the calculation. Is anyone differentiated or are they mostly similar in the output and insights they can provide a business?
10.
It seems that businesses focus most on the ability to provide insights around scope three and the supply chain – it seems to be the largest challenge. Can players differentiate more in this area? Which players are better-positioned to capture scope three data in a more compelling or comprehensive way?
11.
What happens when taking on a tool such as Emitwise to measure scope three? Does the business have to ask all its suppliers to install the tool? Is this potentially a seven-month implementation process for each company in the entire supply chain? When we think about these value chain modules, are these much easier integrations?
12.
Can you elaborate on which players are performing particularly well? Which players – Watershed, Emitwise, Sinai Tech or others operating in Europe – are growing particularly fast, being notably aggressive or doing something differentiated?
13.
Do players mostly have the same level of alignment in complying with calculation methodologies such as the greenhouse gas protocol, or are there opportunities to differentiate?
14.
Are any providers particularly well-placed on specific industry verticals or have most taken more of an industry-agnostic stance for the industries they’re aiming for?
15.
How significant is the threat from large software vendors moving into the space? We’ve talked about Salesforce rolling out its net-zero cloud, while Microsoft has cloud for sustainability and SAP has a product as well as a partnership with BCG’s [Boston Consulting Group’s] CO2 AI product. Do you think eventually there’s no room for a stand-alone product for such carbon-accounting tools, and they just get subsumed into a wider ERP, CRM [customer relationship management] or another tool which is often integrated into?
16.
How does the revenue model typically work on the carbon accounting segment?
17.
What typical deal sizes have you seen across industries or customers where there is greater uptake and larger businesses? Clearly it will vary but what are the averages?
18.
You mentioned a level of price sensitivity and the software piece ranging USD 20,000-70,000, but do you think initial deal sizes are relatively sustainable in this industry? How might price or its role evolve, especially with SAP and other players encroaching?
19.
Can you explain the actionability from the insights driven? If using a Watershed, what would a company do with the information, especially if wanting to reduce carbon emissions? Could Watershed advise the client? Which value-add areas become more capital intensive for players because you need the industry experts, the consultants actually at the software firm?
20.
Is there anything to reinforce about the carbon accounting software market more broadly or specific businesses? What should analysts wanting to get to grips with this market look into or understand in more depth?
