Laura Zizzo has spent more than a decade advising large corporations and financial institutions on how climate change could hurt their business, and what they should do to stem the impact. But in the past couple years, her once-niche area of expertise has gone mainstream, and keeping up with the ever-growing demand for her services was becoming unmanageable.
To solve the problem, Zizzo, CEO and co-founder of Manifest Climate—formerly Mantle314—has teamed up with entrepreneur and software developer Jeremy Greven to build a technology platform to help clients identify and manage how climate change is impacting their business.
The tool is attracting interest from investors. On Wednesday, the Toronto-based company announced a $6.5-million seed financing round from funders including OMERS Ventures, Golden Ventures and Klass Capital. It marks the first private investment for the six-year-old firm, and the beginning of what it hopes will be a major expansion.
After rebranding and piloting a new software product, Toronto-based climate consulting firm Manifest has raised $6.5 million from investors including OMERS Ventures, Golden Ventures and Klass Capital. The seed round will help the firm scale its financial climate-risk disclosure technology to help meet the voracious demand from clients to identify and manage how climate change is impacting their businesses.
As global investors, money managers and regulators demand more information about the economic implications of a warming planet, companies are facing mounting pressure to disclose their own climate-related financial risks. However, the process for doing so is far from straightforward. “We wanted to create a software that could do the type of work we do on the consulting side but at scale for all the organizations that are needing to understand their climate-related risks and opportunities and how to organize that information and communicate it to investors,” said Zizzo.
The seed financing will help Manifest scale its new software system designed to help companies comply with the Task Force on Climate Related Financial Disclosures (TCFD), an internationally recognized financial risk-reporting standard.
Manifest recently piloted the software with over 15 participating firms, including energy company Teck Resources, real estate firm First Capital and printing and publishing company Transcontinental. The pilot also included several large financial institutions and two global telecommunications giants, Zizzo said.
The software works by scraping company documents—including financial statements and sustainability reports—to see whether and to what extent its clients’ practices align with the TCFD. It also identifies what the client needs to do to improve their compliance. It’s work that Zizzo and her team had been doing manually for their 100 or so corporate clients. “It’s a common consulting engagement, but now we can use much more rich information because we’re doing it at scale using a data model,” she said.
Manifest also plans to use its seed funding to grow its workforce from about 30 employees to more than 50 in the coming months. As president, Greven—who’s advised scores of startups through programs like the University of Toronto’s Creative Destruction Lab and Ryerson’s DMZ—will help spearhead the company’s growth.
Sean Cleary, executive director at the Institute for Sustainable Finance at Queen’s University, said while interest in climate-risk disclosure has taken off in recent years, many firms still struggle to fully align with standards programs like the TCFD. There are multiple standards to choose from, making it challenging to decide which to follow, said Cleary. “This is also a new thing, so companies can’t rely on past experience to guide them,” he said. “With respect to TCFD, in particular, companies seem to not be providing sufficient information, particularly around scenario analysis.”
The most recent TCFD status report, from October 2020, found that while nearly 60 per cent of the 100 largest public companies supported the recommendations, just one in 15 firms claiming to follow the program disclosed the impact of climate change on their business and strategy. “Climate-change scenario analysis is important for companies and suppliers of capital,” said Cleary, “so additional clarity around the process would help.”
The mainstreaming of climate-risk disclosure is largely a response from institutional investors demanding more transparency from portfolio companies. Last month, BlackRock, the world’s largest asset manager, called on CEOs of its investee firms to comply with the TCFD and/or another standard called the Sustainability Accounting Standards Board (SASB), as well as set ambitious net-zero-emissions targets. In November 2020, Canada’s eight largest pension funds signed a joint statement urging firms to report risks related to environmental, social and governance factors in line with the TCFD and SASB. That month, the U.K. became the first major economy to make financial climate-risk disclosure widely mandatory; U.S. President Joe Biden has also pledged to phase in mandatory disclosure.
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While Canada is so far lagging its peers on legislating financial climate-risk disclosure, regulation is “almost inevitable,” said Cleary. “The sooner that happens, the better, because it will unlock capital that requires better information before making investing decisions,” he said. “It’s hard to allocate your capital if you don’t have all the information.”
Investor interest in better disclosure from portfolio companies made the Manifest software an easy sell to funders, said Zizzo, noting that the seed round was oversubscribed. “We are trying to help inform companies and investors at the same time, but the companies themselves have to improve their disclosure so investors can actually make better decisions,” she said. “We’re trying to make it easier for companies to do that.”