A new wave of startups in Japan is emerging, eager to equip domestic and international businesses with the tools to measure and subsequently reduce their carbon emissions. In just the last two years, several firms have come forward to create a new market for software tools that claim to identify Scope 1, 2 and 3 emissions for clients, while also presenting data in an easy-to-grasp manner. Many of these providers also hope to leverage their data offering into advisory services based on CO2 reduction strategies.

Since the 2015 Paris Agreement, which encourages enhanced transparency and reporting of climate impact by businesses, the private sector has been under increased pressure to provide more info on its carbon footprint. To help with such disclosure, entities such as the Task Force on Climate-related Financial Disclosures (TCFD) were formed. The TCFD, for example, provides guidance on climate-related financial reporting for companies, including how to measure and report greenhouse gas (GHG) emissions. But applying such guidance is tricky.

At present, such reporting in Japan is voluntary. However, more and more of the country’s listed companies are feeling pressure from the Tokyo bourse, their shareholders and other stakeholders all asking them to explain their environmental impact and that of their supply chains. For blue chips with significant global sales, it’s become imperative to align disclosures with internationally recognized frameworks such as the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP). Based on such circumstances, the market for CO2 measuring and visualization tools is booming.