Carbon management startup Carbon Direct has acquired another carbon credit startup, Pachama, the companies announced today.
Pachama laid off about 20 employees this summer as a result of the voluntary carbon market softening. The company had attracted investment from a variety of celebrities, including Amazon’s Climate Pledge, Breakthrough Energy Ventures, Lowercarbon Capital, and prominent angel investors including Ellen DeGeneres, Laura Dern, and Serena Williams.
“The current uncertain and volatile financial, economic and geopolitical climate, in addition to anti-ESG policies in the United States, are certainly having an impact on corporate sustainability budgets,” Pacama CEO Diego Saez Gil told Trellis at the time of the job cuts. “The impact will be particularly severe on voluntary carbon markets, which were already in a period of adjustment.”
Pachama raised $88 million and Carbon Direct raised $60.8 million, according to Pitchbook. Terms of the deal were not disclosed.
Pachama focused on nature-based carbon credits. This is usually obtained when forests are restored or preserved. Carbon Direct, on the other hand, is more of a carbon market advisory and accounting firm, helping companies track and report their carbon emissions and vet carbon credits to offset them.
Carbon markets have been roiled by uncertainty in recent years, but not all of it is the result of political whiplash in the US and elsewhere. Voluntary carbon markets have been criticized for not delivering on their promises.
For example, an extensive study by the Guardian found that more than 90% of one verifier’s credits actually resulted in no carbon reductions. One of the biggest challenges facing nature-based carbon credits is whether the forests protected by the purchase were under threat of destruction in the first place.
Although large companies are cutting back on advertising around ESG measures, many are still interested in sticking to their net-zero commitments. Carbon Direct’s customers include Microsoft, Shopify, American Express, JP Morgan, Alaska Airlines, and BlackRock.
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