Why We Invested in Climes

Climate change is perhaps the biggest crisis of our generation. Extreme weather events like heatwaves, cold snaps and floods are already exacting a heavy toll on lives and economies around the world. Scientists have warned that the world is on course to exceed a global warming threshold of 2°C during the 21st century, potentially leading to increased coastal flooding, beach erosion, salinisation of water supplies among other disastrous impacts on humans and ecological systems. 

Greenhouse gas emissions like CO2 accelerate climate change. About 36.3B tonnes of CO2 were released into the atmosphere in 2021 from human activity. In 1950 the world emitted just 6B tonnes of CO2, and this nearly quadrupled to 22B tonnes by 1990. India is currently the third-largest emitter of greenhouse gases and accounts for 2.46B tonnes of carbon or 6.8% of the total global emissions.  

Deep reductions in greenhouse gas emissions are thus imperative in the coming decades. Advances in clean tech may help curb our carbon footprint to a degree, but there are limitations. The bulk of our emissions today come from sectors key to our livelihoods such as electricity generation (25%), agriculture (24%), industry & manufacturing (21%), transport (14%), and buildings (6%). 

Purchasing carbon credits on voluntary carbon markets is one way to offset unavoidable emissions. These credits drive capital towards climate-action projects in areas like renewable energy, reforestation and carbon sequestration. Each credit compensates for the emission of one tonne of CO2 or equivalent gases. Once bought, the credits are retired and can no longer be traded. Moreover, these projects have many additional social and economic benefits such as job creation, public health improvements and bio-diversity protection. 

In 2021, ~300M voluntary carbon credit trades took place, with a market value of ~ $1B, according to research firm Ecosystem Marketplace. By 2030, McKinsey estimates that the market for carbon credits could be worth $50B. Forestry and Land-use credits accounted for 61%, while Renewable Energy credits made up 38% of all transactions. While B2B transactions dominate this market, we expect consumers’ participation to create a great deal of value, in light of rising awareness among consumers to embrace carbon neutral lifestyles. 

Why Kalaari invested in Climes?

Climes is a first-of-its-kind B2B2C voluntary carbon credit purchase platform that aims to make it easy to neutralise carbon from lifestyle activities. They bring together consumers & businesses (demand) and verified decarbonisation projects (supply), to unlock untapped sources of capital for climate solutions to drive the change our planet needs.

We believe Climes has created a well-architected solution for consumer-facing brands to offer their customers access to a climate-neutralising tech stack with seamless API integration. Climes’ offerings are atomised to an extent that consumers can neutralise emissions with each purchase order.

On the supply side, independently certified (Verra, Gold Standard etc.) climate projects based in India have been onboarded on to the platform. These projects work on carbon avoidance and carbon removal initiatives with measurable impact. Thus, Climes seamlessly ties together brands’ need for climate action, consumers’ intent for going carbon-neutral and access to capital for sustainability projects – a win-win outcome for all parties.

They are starting off with integration into Aviation & Transportation and will steadily make inroads into brands across the spectrum.

Co-founders Siddhanth Jayaram & Anirudh Gupta bring deep passion and domain knowledge, reinforcing our confidence in their ability to build a disruptive solution for one of the world’s most pressing challenges. We have a great working relationship with Siddhanth from the five years he previously spent at Kalaari Capital. His entrepreneurial spirit and commitment to execution are well known to us.

Siddhanth & Anirudh said:

“While climate-tech is still in its infancy, we believe Kalaari brings the ability to comprehend the fast-growing carbon-finance opportunity and share with us interesting insights about potential business models. We are looking forward to learning from Vani’s wisdom of having helped build large category defining businesses. In a world where capital is easily accessible and quality makes the difference, the leverage Kalaari provides should make them any ambitious founder’s choice .“

We’re excited to support Climes in their mission to democratise climate action by giving consumers the option of carbon-neutral consumption.

Kalaari Capital is an early-stage, technology-focused venture capital firm based out of Bengaluru, India. Since 2006, Kalaari has empowered visionary entrepreneurs building unique solutions that reshape the way Indians live, work, consume and transact. The firm’s ethos is to partner early with founders and work with them to navigate the inevitable challenges of fostering ideas into successful businesses. At its core, Kalaari believes in building long-term relationships based on trust, transparency, authenticity, and respect.