Introduction

Carbon accounting is a rapidly growing field that is becoming increasingly important in today’s world. The demand for carbon accounting services has been increasing in recent years, driven by a range of factors, including regulatory pressures, voluntary pressures from customers and investors, and rising concern about carbon emissions.

As a result, there has been a surge in the number of companies providing carbon accounting services, and some of the top acquirers in this space have emerged as major players in the market. In this article, we look at the many driving forces behind the surge in M&A activity, the top players in the market and the top acquirers in the carbon accounting space.

What are the Driving Forces behind the Surge in M&A Activity?

Demand from clients

The demand for carbon accounting services is being driven by clients who are seeking to manage their carbon emissions more effectively. Companies are under increasing pressure to reduce their carbon emissions, both from regulatory bodies and from customers and investors who are demanding more sustainable practices. This has created a significant demand for carbon accounting services, as companies seek to measure and manage their carbon emissions more effectively.

Carbon emissions

Carbon emissions are a major focus of the carbon accounting sector. Companies are under increasing pressure to reduce their carbon emissions, and this has created a significant demand for carbon accounting services. Companies need to measure their carbon emissions accurately so that they can identify areas where they can reduce their carbon footprint and improve their sustainability practices.

Regulatory pressures

Regulatory pressures are another key driver of the demand for carbon accounting services. Governments around the world are introducing regulations to reduce carbon emissions, and companies need to comply with these regulations. This has created a significant demand for carbon accounting services, as companies seek to measure and manage their carbon emissions more effectively.

Voluntary pressures

Voluntary pressures from customers and investors are also driving demand for carbon accounting services. Customers and investors are increasingly demanding more sustainable practices from companies, and this has created a significant demand for carbon accounting services. Companies that can demonstrate that they are managing their carbon emissions effectively are more likely to attract customers and investors who are looking for sustainable practices.

Different types of software vendors

There are different types of software vendors in the carbon accounting sector, and each type of vendor provides different types of software and services. Some software vendors provide critical software for environmental, health, and safety (EHS) management, while others provide consultancy services that are tailored to specific sectors. Some vendors provide governance, risk, and compliance (GRC) software that helps companies comply with regulations, while others provide accounting software that helps companies manage their carbon emissions more effectively.

Buyers from Different Disciplines

One of the key drivers of the demand for carbon accounting services is the fact that buyers come from different disciplines. In the carbon accounting sector, buyers range from being sustainability managers to finance professionals, compliance officers, and risk managers. Each of these buyers has different needs and requirements when it comes to carbon accounting, and they may require different types of software and services.

William Berrington, M&A Advisor at Goldenhill International says:

“We’re seeing a surge in M&A activity in the carbon accounting software space, driven by growing demand from buyers in different disciplines, such as sustainability, finance, and compliance. Companies are under increasing pressure from regulatory bodies and investors to reduce their carbon emissions, creating a significant demand for carbon accounting services and software.”

The Top Players in the Market  

Several big players have emerged in the carbon accounting sector. These companies have established themselves as leaders in the market and are well-positioned to meet the growing demand for carbon accounting services.

Some of the top players in the market include:

ERM:

ERM (Environmental Resources Management) is a global sustainability consulting firm that provides a wide range of services, including environmental and social impact assessments, compliance and permitting, sustainability strategy and reporting, and more. ERM has been involved in several M&A transactions in the carbon accounting space, including the acquisition of BrownFlynn, a sustainability and corporate social responsibility consulting firm.

Enablon:

Enablon is a leading provider of sustainability management software that helps organizations manage their environmental and social impact. Their software solutions cover a wide range of areas, such as carbon accounting, energy management, sustainability reporting, and more. Enablon has been involved in several M&A transactions, including their acquisition by Wolters Kluwer, a global provider of professional information services.

ESP:

ESP (Environmental and Social Performance) is a software and consulting company that specializes in sustainability and environmental management solutions. They offer software solutions for carbon accounting, energy management, water management, and sustainability reporting, among other areas. ESP has been involved in several M&A transactions, including their acquisition by ENGIE Impact, a global sustainability consulting and services company.

These companies are top players in the carbon accounting M&A market due to their strong track record in sustainability and environmental management, their innovative technologies and services, and their ability to provide comprehensive solutions to meet the needs of their clients. As sustainability continues to gain importance in the business world, these companies are well-positioned to continue leading the way in the carbon accounting M&A market.

Kevin O’Neill, M&A Advisor at Goldenhill International says:

“The carbon accounting software market is highly competitive, with several big players emerging as industry leaders. Companies are investing heavily in software solutions that can help them manage their carbon emissions more effectively, and software vendors are offering a range of solutions to meet this demand, including critical EHS software, consultancy services, GRC solutions, and accounting software.”

The Top Acquirers in the Carbon Accounting Space

Recent M&A acquisitions reflect a growing interest in sustainability and ESG management among companies and investors. As organisations seek to reduce their carbon footprint and improve their sustainability performance, they are increasingly turning to software providers that can help them track, manage, and report their ESG metrics. Here are just some of the top acquirers in the carbon accounting space:

Diligent acquired Accuvio

Transaction Type: Cross-border

In February 2021, Diligent Corporation, a provider of governance, risk, and compliance (GRC) software, acquired Accuvio, a provider of cloud-based sustainability reporting and carbon management software. With the acquisition of Accuvio, Diligent aims to expand its GRC platform to include sustainability reporting and carbon management capabilities. The deal is expected to help Diligent’s clients meet their sustainability goals and comply with environmental regulations.

Ideagen acquired Processmap

Transaction Type: Cross-border

In May 2021, UK-based Ideagen, a provider of compliance and risk management software, acquired Processmap, a provider of cloud-based environmental, health, and safety (EHS) software. The acquisition will help Ideagen expand its product offerings to include EHS management and sustainability reporting capabilities. The deal is expected to help Ideagen’s clients improve their environmental and sustainability performance while also managing EHS risks.

OneTrust acquired Planetly

Transaction Type: Cross-border

In November 2021, One Trust, a provider of privacy, security, and governance software, acquired Berlin-headquartered Planetly, a provider of carbon accounting and sustainability analytics software. The acquisition will enable One Trust to expand its ESG (environmental, social, and governance) capabilities and help its clients measure, manage, and report their carbon emissions and sustainability performance. The deal is expected to help One Trust’s clients meet their sustainability goals and comply with ESG regulations.

International Business Machines acquired Envizi

Transaction Type: Cross-border

International Business Machines, a US-based company, acquired Envizi, a carbon management software platform based in Australia in January 2022. This acquisition builds on IBM’s growing investments in AI-powered software, including IBM Maximo asset management solutions, This cross-border transaction indicates that companies are looking to progress towards more sustainable and socially responsible business operations amid mounting pressure from regulators, investors and consumers.

Visma acquired SmartTrackers

Transaction Type: Cross-border

Visma, a Norwegian company, acquired SmartTrackers, a carbon management software provider to small and medium-sized enterprises, construction companies, governments, and financial institutions, in May 2022. This transaction suggests that companies are looking to diversify their product offerings and expand into new customer segments.

The Sage Group acquired Spherics

Transaction Type: Domestic

The Sage Group, a strategic buyer, successfully acquired Spherics, a developer of carbon accounting software, in October 2022. The acquisition reinforces Sage’s commitment to sustainability and in helping SMBs to get to net zero. This domestic transaction highlights the trend of strategic buyers looking to acquire technology that allows them to measure, manage and justify their performance in the fields of sustainability, social responsibility, and quality.

BMO Financial Group acquired Radicle

Transaction Type: Domestic

BMO Financial Group, a domestic company, acquired Radicle, a provider of emissions management and consulting services, in December 2022. The transaction advances BMO’s Climate Ambition to be its clients’ lead partner in the transition to a net-zero world. This transaction indicates that financial institutions are also getting involved in the carbon accounting space as they recognise the importance of sustainability in their operations, to reach climate targets.

ESP

Transaction Type: Domestic

In May 2022, ESP a strategic buyer, acquired BraveGen, a developer of data management software. This domestic transaction suggests that companies are looking to acquire technologies that can help them manage and analyse data related to their carbon footprint.

Overall, these acquisitions suggest that there is a growing interest in the carbon accounting space, and companies are increasingly looking to acquire technology to enhance their sustainability practices and gain a competitive edge. The trend of cross-border transactions also indicates that companies are seeking to expand their reach globally to gain access to new markets and technologies.

Top Carbon Accounting Investment M&A Deals

Investment in carbon accounting and offsetting companies has increased several times over, as companies seek out innovative solutions to manage their carbon footprint and meet their sustainability goals. These companies offer a range of services, from carbon accounting software to offsetting solutions, and are attracting significant investment from venture capitalists and other investors. Here are just some of the top carbon accounting deals from recent years:

Watershed Technologies raised $70 million

Watershed Technologies is an all-in-one enterprise climate platform that provides tools for measuring, reducing, and reporting emissions. Sequoia Capital’s investment in Watershed Technologies in February 2022, in a Series B round, suggests a growing interest in companies that can help organisations reduce their carbon footprints and meet sustainability goals. It also confirms investor enthusiasm for digital net zero solutions.

Persefoni raised $100m in Series B Funding

Global Cleantech leader and Climate Management and Accounting Platform (CMAP), Persefoni, raised $100 million Series B funding in 2021, which was led by Prelude and TPG. The aim of Persefoni is to help asset managers, banks and financial institutions calculate their financed emissions footprint.

Plan A raised $10m

Carbon accounting startup, Plan A, raised $10 million, a round which was co-led by HV Capital and Keen Venture Partners. The investment is off the back of the increased demand from corporates seeking to track, report and ultimately reduce their carbon emissions.

Figbytes secured $14.5m funding

In November 2022, ESG Insights Platform, FigBytes, secured $10 million incremental funding from existing investor Quantum Innovation Fund, in addition to a $4.5 million debt facility from Silicon Valley Bank. FigBytes plan to use these funds to support additional product development activities of its leading SaaS solution for sustainability and ESG management in North America, Europe and India.

Carbon Clean Solutions raised $16 million

Carbon Clean Solutions is a carbon capture technology company that provides solutions to industrial companies. In June 2021, the company raised $16 million in a funding round led by WAVE Equity Partners. The funding will be used to deliver an existing pipeline of global projects to lower emissions from industry and expand their modularised carbon capture technology to heavy industry.

Sweep raised $71m

Sweep is a carbon accounting software platform that helps companies track and reduce their carbon emissions. In June 2021, Sweep raised $71 million in a Series B funding round led by Energy Impact Partners. The funding will be used to accelerate the company’s growth and further develop their all-in-one carbon tool that helps large enterprises build science-based and data-driven climate programs.

The Future of Carbon Accounting M&A

Based on the information outlined in this article, it is likely that the carbon accounting M&A space will continue to see growth and consolidation in the coming years. Companies are recognising the importance of sustainability and the need to manage their carbon footprint, leading to increased demand for carbon accounting software and services.

The trend of cross-border transactions is also expected to continue as companies seek to expand their reach and gain access to new technologies and markets. Financial institutions are also expected to play a larger role in the space as they recognise the importance of sustainability in their operations.

Additionally, strategic buyers will continue to acquire technology to strengthen their offerings and gain a competitive edge. As more companies prioritize sustainability, the demand for carbon accounting software and services is expected to grow, leading to further M&A activity in the space.

Book A Bespoke Consultation

By acquiring or partnering with Carbon Accounting software companies in different regions, companies can gain a better understanding of local Carbon Accounting M&A trends, regulations, and standards, and tailor their offerings to meet the needs of diverse customer bases.

If you are looking to merge with or acquire a Carbon Accounting software business, get in touch with one of our specialist M&A advisors for a bespoke consultation today.