Start-up Hara Software is betting that businesses need to get smarter about managing natural resources and carbon emissions even before regulations force them into it.
The Silicon Valley start-up on Monday is scheduled to come out of stealth mode after 18 months to announce the details of its software service which it designed for what its founder calls a "post-carbon economy era."
The 25-person company received $6 million in venture capital from Kleiner Perkins Caufield & Byers, where partner Al Gore played a role in getting Hara funded. It's the second software-focused investment after PC power management company Verdiem that KPCB has funded as part of a push first launched in 2006.
The software also has a content database to share information on effective efficiency programs and green technology products that a company can use, explained CEO Amit Chatterjee, who left SAP to start Hara. Its product is now being used by about 12 organizations, including Coca-Cola and the city of Palo Alto, Calif.
Chatterjee argues that metrics related to the environment, such as energy consumption, water use, and waste, are often indicators of how well a corporation performs financially. Companies with sustainability programs tend to run efficiently, have a positive brand, and have minimized the risk from things such as environmental fines, he said.
"Businesses are now becoming unprofitable because of the way they manage natural resources," he said. "Now (managing) natural resources is a core element of a business' processes."
City planners at Palo Alto, for example, were able to cut out $2.2 million in expenses related to waste and energy use.
Once caps on greenhouse gases are in place, which will affect large corporations, then Chatterjee predicts there will be a "tidal wave" of attention in tools to mitigate carbon emissions. Statements from President Obama on the importance of climate change regulation drove some businesses seeking better tools to Hara, he said.
The American Clean Energy and Security Act of 2009, a bill making its way through the House, would impose a nation-wide cap on greenhouse gases and force heavy polluters, such as utilities, to report and lower their own emissions. The bill has a long way to go before becoming law, which would be next year at the earliest, and caps will be phased in over many years.
But even with the absence of a national carbon regulations, there is a growing number of software companies developing programs focused on helping businesses improve their environmental profile.
In a sign of consolidation among providers, SAP last month purchased Clear Standards, one of several companies young software companies with tools for tracking carbon emissions. Some focus on giving a very accurate picture of emissions and the impact of energy-efficiency programs, while others are designed for purchasing carbon offsets in voluntary or regulated markets.
The basic idea behind carbon regulations is to put a price on putting pollutants in the atmosphere. Within businesses, analysts expect that carbon will be treated as a commodity which financial planners will have to account for and track the price of.
Hara plans to sell its software to financial planners as well as business people responsible for purchasing energy and sustainability officers. Chatterjee said the company seeks to differentiate itself from others by tracking a number of environmental attributes, not just greenhouse gases and energy use.
There are already many programs, called Environmental, Health and Safety software, to help companies comply with environmental regulations. What remains to be seen is whether the latest generation of software focused on climate change abatement will be used for a relatively narrow function, such as energy procurement, or for more strategic initiatives.
Chatterjee said Hara's software is designed to be flexible so that companies can manage relatively straight-forward initiatives, such as fuel reduction, and make plans for deeper changes with the company, such as adopting on-site renewable energy or developing new products.
"This is not another ERP package. Because the business is changing, you want something that is flexible, not something institutionalized," he said.