I’m excited to announce that we’ve raised $32 million in our Series A funding round! This new investment, co-led by Index Ventures and Insight Partners, with participation from Local Globe and Salesforce Ventures, will allow us to support the growth of effective carbon markets by providing definitive data to market participants. These markets need to work better, and to scale rapidly, for the world to deliver net zero and stay on a 1.5 degree track.
This vote of confidence wouldn’t be possible without the dedication of our team, and the support and trust of our investors, partners and customers. Thank you to every one of you for your commitment, past and future!
But why is Sylvera needed?
The challenge: no definitive data source for carbon markets
We have less than a decade to reduce greenhouse gas emissions by around 50%. In the next 5 years, we need to achieve an astonishing 20% cut. I’ll let that sink in….
To achieve this unbelievably challenging goal in time, we’ll need to use all the tools at our disposal, including public policy and the private market.
The voluntary carbon market (VCM) is where voluntary carbon credits, sometimes known as “carbon offsets”, are traded. Being private, it has the potential to rapidly move huge sums of capital to fund avoidance of emissions and sequestration of carbon. But you’re probably aware that the quality of carbon credits is under intense scrutiny from the media and activist organizations.
What’s going wrong and why?
In the past, carbon credits have been associated with “moral hazard”.
Because it has been cheaper to buy offsets than reduce emissions, the fundamental changes required to decarbonize industrial systems have been disincentivized. What’s more, some of these offsets appear not to reduce emissions or sequester carbon at the level that they claim.
This would be the worst of possible scenarios: if the VCM acts to slow decarbonization and excuse accountability.
However, it’s not the end of the story — if the price were high enough to incentivize decarbonization, and the emissions reductions and sequestration claims were universally real, then the incentives would flip: the VCM could accelerate change and provide an effective balancing mechanism for the shortfall of any corporate on their net zero trajectory.
But how can this be achieved?
The opportunity: independent data to fix incentives and power a net zero transition
Independent rating systems have developed in other markets to align price to quality. Moody’s bond credit rating system is a case in point. We’ve applied this concept to the VCM.
What Moody’s ratings are to bond credits, Sylvera’s ratings are to carbon credits.
Our ratings render the invisible distribution of quality suddenly visible, and buyers want the best, most real credits. What does this do to the VCM?
If weaker credits are removed from the market or discounted, supply tightens.
When buyer confidence in quality increases, demand, and willingness to pay, grows.
The net effect is price growth — this price growth is already incentivizing our customers to accelerate their decarbonization. Offsets are no longer a get-out-of-jail-free card, they’re a penalty.
Even more excitingly, when offsets are known to accurately deliver climate benefits, corporates will be increasingly expected to use them to achieve 1.5 degree compliant targets. Failure to decarbonize now has a quantifiable financial liability associated with it — one that every CFO should be aware of and start to manage.
What’s under the hood of the rating?
To create Sylvera carbon credit ratings, my co-founder Samuel Gill and I, put together a team of industry leaders with diverse experience in carbon markets, climate policy, credit ratings, artificial intelligence, geospatial technology and environmental sciences.
We’ve built a platform that rates voluntary carbon credits on a scale from AAA to D, using exceptionally rigorous ratings frameworks, enhanced by using insights from our machine learning technology.
We’ve designed Sylvera carbon credit ratings to be accessible, while also providing comprehensive and in-depth information. We make these project assessments available through our web application platform or API.
Independence is non-negotiable
It was also critical to make sure Sylvera carbon credit ratings were independent. For this reason, we don’t, and never will, sell any carbon credits. It would be disastrous to the market to introduce this conflict of interest. Of course, we also don’t charge developers to rate their projects, again, to stay completely unconflicted.
By shining an unbiased light on all carbon projects, we can reveal those that have the best environmental impact and help investment flow toward them. For the first time, a developer can expect a premium for quality.
If our team’s analysis assigns a poor rating to a project, we can, at zero cost, work with a project developer to improve the project’s processes and, most importantly, increase environmental impact.
Our independence allows and requires us to be structurally honest — over time, this will increase the number of good and great credits on the market.
Our success: the best benchmark for carbon credit quality
In less than two years, the market has accepted us as the benchmark for carbon credit quality, and actors representing over half the market transaction volume now use, distribute or access our data.
Today, our customers include corporate buyers, like Delta and Salesforce, that use carbon credits as part of their climate commitments. Delta is one of the largest corporate buyers of voluntary carbon credits. Organizations that invest in carbon projects, such as Cargill and Shell, and those that advise on net zero, such as Bain, are also our customers. In addition, carbon credit exchanges, such as Xpansiv CBL and Climate Impact X, integrate our data into their platforms.
When asked why her team relies on Sylvera, Stephanie Zhu, General Manager of Sustainability at Delta Air Lines, said, “it’s important that we have access to the best data available to ensure we’re making an impact.”
How will we use the trust our investors have put in us?
Though we are well-known for our work on forest carbon, a key use of our new funding is to expand our coverage to all types of carbon credits currently available on the market.
We’ll also be investing further in unrivaled accuracy in our datasets. One of the exciting projects that we’ll be scaling up this year is our global ground-truthing campaign which calibrates and validates our satellite estimates of biomass by capturing petabytes of data on the ground with world-leading accuracy.
This campaign is revolutionizing the ability of satellite data to provide highly accurate information on changes to carbon in natural systems such as forests- and this is just the start.
To achieve our goals, we’re doubling down on our technical leadership across the board and are looking to hire world-class experts in their field. If this sounds like you, I’d like to invite you to apply here. We’re doing challenging, innovative and critically urgent work.
Take action: manage your carbon liability now
If you’re an organization on your net zero journey, or an asset manager looking to finance new project development, or to transition to a net zero portfolio, then we’re here to help.
Dr. Allister Furey CEO and Co-Founder