More funding for sustainability reporting: Sweden’s World favoritean early mover platform focused on building digital infrastructure to support supply chain transparency and meet organizations’ ESG (environmental, social, governance) reporting needs, has €10.2 million in Series A funding brought in to step on the growth gas.
The Series A was led by SEB Private Equity, part of the Scandinavian investment bank SEB, which also included existing investors Brightly Ventures and Spintop Ventures. The increase brings the total amount raised from Worldfavor to € 13.4 million.
Over the past five years, a growing number of supply chain transparency and sustainability reporting startups have sprung up as consumer pressure on ethical and environmental issues (not to mention the frustration with ‘greenwashing’) piles up. – coupled with increased attention and tough reporting requirements from policy makers, such as through EU regulation linked to the European green dealwith the block aiming to be “climate neutral” by 2050.
Worldfavor Co-Founder and CEO Andreas Liljendahl says he welcomes the ever-expanding pack of sustainability reporting players – envisioning a future of rich collaboration and start-up capabilities to meet increasingly comprehensive and intertwined reporting requirements.
“We are very happy that more and more players are on the field. There’s still room for many, many different players because there’s a huge problem — there’s a lot of different needs in this space,” he tells londonbusinessblog.com. “There are different needs in different sectors and so on.
“Over time, I think we’ll see an ecosystem where the players in the ecosystem will work together more than they do now.”
For now, Worldfavor’s positioning looks like a broader platform game versus some of the more specialized reporting/transparency tools emerging to cater to specific industries or products. “We strongly believe in [being a] cross industry [tool] – to make it easy for a single company to share their information with multiple actors, reducing the reporting fatigue they currently have,” he affirms, noting: “We have multiple stakeholders – the buyers, the investors, the big companies.”
“It’s kind of a network problem because companies are more connected than ever and we don’t know that much between companies so… if you’re an importer of, say, wine and you have to understand the emissions of the products you’re selling, you don’t understand that yourself – you have to ask your producer and the producer has to understand the farms in different layers,” he explains, explaining why a platform approach makes sense for cross-cutting ESG reporting on complex global supply chains.
Founded in 2016, the startup says its network is used by more than 25,000 organizations in more than 130 countries to access and share information to support decision-making on ESG goals, such as those related to carbon emissions reductions. or to respond to human rights issues.
According to Liljendahl, customers fall into three main categories: Purchasing organizations with a focus on supply chain sustainability; investors & private equity firms that need to conduct sustainability research on their portfolio and/or on potential investments; and larger companies that need reporting to package their own subsidiaries also so they can understand the ESG journey of the entire group.
To get Worldfavor’s network off the ground, first of all, enough provider data had to flow into it to create the kind of utility that can build momentum — but here, more than five years later, the mission looks easier as network effects kick in. and work to increase and deepen participation.
The increasing attention of policymakers to sustainability also seems to stimulate demand in the near future.
Liljendahl says the team has tackled the “chicken-and-egg” startup problem by focusing on getting larger entities on board, leveraging those companies’ dominion over their own supply chains to source tranches from suppliers. encourage you to sign up and start reporting data.
But he argues there are increasing incentives for providers to plug in, as it means they can increase their visibility to Worldfavor’s network of data accessors looking for vendors they can quantify. In other words, having data already accessible through the reporting platform can be a competitive advantage. “The providers gain the value from sharing information with one or more stakeholders on the platform – understanding where they are now and could more easily know how to improve their own operations,” he suggests.
An important thing to note is that data providers in the Worldfavor platform are self-reporting data – so it doesn’t actively monitor any of these ESG related claims; rather, it strives for greater transparency (and access to data), delivering “disinfecting sunlight” and supporting higher standards of accountability. (Although the delivery of the latter is likely a new startup opportunity for teams focused on innovation around data verification/auditing — who would position themselves to partner with platforms like Worldfavor.)
“The first basic need is to have an infrastructure to allow information to flow more easily,” Liljendahl argues. “Then we make sure the information is shared super transparently — who shared it, when, and so on, so you can track as well.”
He says the team has some tools to do some level of analysis and comparisons — to offer some basic checks on reports. But it hopes to develop more sophisticated tools, and even some form of automated auditing, where it would apply machine learning technology that could identify abnormal-looking claims or changes in reporting history to accommodate erroneous reporting.
Emissions reporting requirements have already led to a number of important scandals so incentives to economise (or worse) and pump out ‘ESG hot air’ can linger like a bad smell, even if increased transparency across all industries and sectors should – hopefully – work against bad actors by making it harder to get away with falsifying key types of sustainability data.
But for now, Worldfavor’s focus remains on growing usage to achieve serious scale – so self-reporting (vs active auditing) is clearly the more scalable strategy for that. “Maybe it’s a dream in the future that the information itself can be controlled, but only if we increase transparency between companies,” he says, adding: “Our main mission is to create the transparency that is lacking today. – completely missing.”
The plan with the Series A funds is growth on all fronts: data providers, data accessors and the number of data transactions that take place on the platform on a daily basis, according to Liljendahl. Of course, they also shoot to boost ARR with the usual view of scaling the startup to a sustainable foundation as a company. “We have big goals,” he adds. “We’re growing a little over 100% when it comes to annual recurring revenue – and a little more, double when it comes to user base. And we’re super happy about that.”
Commenting on the funding, Babak Etemad, Investment Director at SEB Private Equity, added: “We are delighted to join Worldfavor’s impressive team in their pursuit of raising the bar on sustainability and helping organizations share crucial information on sustainability. . We are confident that Worldfavor will play a pivotal role in this industry in the coming decade and we look forward to supporting them in doing so.”