Carbon management startup Carbon Direct is buying another carbon credit startup, Pachama. The companies announced the acquisition today. Pachama laid off around twenty employees this summer as voluntary carbon markets softened. The company had attracted investments from a range of prominent names, including Amazon’s Climate Pledge, Breakthrough Energy Ventures, Lowercarbon Capital, and several celebrity angel investors such as Ellen DeGeneres, Laura Dern, and Serena Williams.
When the layoffs occurred, Pachama’s CEO Diego Saez Gil commented on the challenging environment. He stated that the uncertain financial, economic, and geopolitical climate, combined with an anti-ESG agenda in the U.S., is affecting corporate sustainability budgets. He noted the impact is especially acute in the voluntary carbon market, which was already in a moment of correction.
According to PitchBook, Pachama had raised eighty-eight million dollars, while Carbon Direct had raised sixty point eight million. The terms of the deal were not disclosed.
Pachama was focused on nature-based carbon credits, which typically result from the restoration or preservation of forests. Carbon Direct operates more as a carbon market advisory and accounting firm. It helps companies track and report their carbon footprints and then vet carbon credits to offset them.
The carbon markets have faced significant uncertainty in recent years. Voluntary carbon markets have been criticized for falling short of their promises. For example, a major investigation by The Guardian found that more than ninety percent of one major verifier’s credits did not actually result in any carbon reductions. A primary challenge for nature-based carbon credits is determining whether the forests protected by the purchases were ever actually threatened with destruction.
While many large companies have dialed back their publicity around ESG measures, many remain interested in sticking to their net-zero promises. Carbon Direct’s customer list includes Microsoft, Shopify, American Express, JP Morgan, Alaska Airlines, and BlackRock.