The global wave of ESG-focused regulation continues to provide an opportunity to private markets investors. Carbon accounting business Normative raised €31 million in a funding round led by Blume Equity, a growth equity firm, in July. Also participating in the fund round were Horizons Ventures, ETF Partners, 2150 and Future Five.
As a “carbon accounting engine” Normative is set to benefit from a raft of new rules around the world requiring businesses to report accurate emissions data both for their own operations and for their supply chains.
“Regulation and standardisation are hugely important and significant to Normative’s growth,” CEO of the company Kristian Rönn told New Private Markets. Rönn pointed to the incoming Corporate Sustainability Reporting Directive in the EU, a regime requiring around 50,000 companies to report on sustainability “in a standardised digital format”; to equivalent rules in the UK under the Streamlined Energy and Carbon Reporting Policy; and to the recently proposed US rules requiring large listed companies to report emissions.
“Whilst there is work to be done in terms of regulation, we are seeing promising measures being proposed and adopted by governments globally,” she said.
As businesses grapple with the arrival of new rules, product providers in the market are vying for market share ahead of exploding demand for carbon management software. Research and advisory firm Verdantix has tracked investment of $418 million into the sector in the last 12 months.
“The size of the prize for software firms that can develop holistic solutions is vast and so, we expect this to change as developers race to bring new solutions to the market,” said Jessica Pransky, principal analyst at Verdantix. “The period ahead will be one of rapid innovation driven by large-scale investment and high levels of competition between incumbents and new entrants.”
Blume Equity is a women-led private equity firm raising its debut fund with a target of €200 million, a source previously told New Private Markets. Blume did not comment on fundraising. The firm has a “healthy planet, healthy people” mantra, and as well as Normative, the firm has backed femtech business Elive and foodtech business Motatos.