Software start-up Sumday is helping accountants from suburban practices to big four firms grapple with tallying their clients’ emissions.
Tassie firm aspires to become the ‘Xero of carbon accounting’
A Tassie software company that started as a suburban accounting practice has been backed by some of Australia’s biggest venture capital firms to become the “Xero of carbon accounting”.
Two years ago, Jessica Richmond (pictured), a partner at Ellis Richmond, an accounting firm in Burnie, Tasmania, noticed that her clients were increasingly interested in their sustainability and emissions output.
“We wanted to be the ones doing it,” she said, but found a dearth of suitable software. “That's when we realised there was a huge opportunity for the whole industry.”
Ms Richmond, alongside partner and co-founder Lindsay Ellis, hired a software developer and built a carbon accounting tool for accountants. By last December, Ms Richmond and Mr Ellis had sold their firm and founded Sumday, securing $2 million in pre-seed round funding from investors including Blackbird Ventures and Possible Ventures.
Armed with the additional investment, Sumday grew to a team of 13 across two offices in Tasmania and New Zealand, developing the carbon accounting tools to help fellow accountants tally their clients’ emissions as reporting requirements evolve.
“Most accountants don’t know where to start when it comes to carbon accounting, and a lot of platforms have almost taken advantage of that, getting them to refer over their clients,” she said.
Ms Richmond emphasised the benefits of upskilling over referring clients to external platforms.
“As an accounting firm, we believe that accountants are the ones that are best placed to use their professional judgment and their skills to actually deliver the carbon accounting service.
All they've really needed is a Xero for carbon behind them and support and education to deliver that. They don't need a platform where they refer their clients on to.”
Sumday combines carbon accounting software with education and support services. Users are guided through a comprehensive online training course to earn a spot on Sumday’s adviser directory.
The directory currently features 20 partners, including BDO, Baker Tilly, Pitcher Partners and KPMG, and is the first of its kind for accountants and bookkeepers in Australia.
Ms Richmond said she was proud of the directory for representing “the breadth of firms that are playing in this arena for the first time – something quite unique for this industry.”
“If you look back a year ago, most of the accounting profession would be wrapping their heads around this. And now when you look at that list of partners, all of these mid-market firms, not just the Big Four, realise they need to get their head around this because clients are going to be caught in supply chains,” she said.
“We've even seen really small businesses, one-person freelancers, paying to access support to do this type of accounting for the very first time.”
In June, the International Sustainability Standards Board (ISSB) released two reporting standards requiring companies to disclose their full greenhouse gas emissions by 2025. These would include a company’s Scope 3 emissions, defined as indirect emissions in their value chain.
These global standards are set to be incorporated in the government’s proposed climate-related financial disclosure legislation. As a result, Ms Richmond said that “carbon accounting has become an extension of financial accounting and reporting”.
“Every accountant probably will need to be at a point where they just have a basic understanding of what the global standards require of a company to complete this type of work,” she said.
While large corporations were responsible for the bulk of emissions, smaller businesses in supply chains would inevitably get caught up in reporting requirements.
Ms Richmond said that one of Sumday’s biggest “driving forces” was to ensure that no business would be left behind in the transition to a low-carbon economy.
“If a bigger company like Coles has to report on its emissions, it can't do that unless it knows the emissions of all the companies it's buying from. So suddenly you've got this trickle-down effect where Coles is tapping the local farmer on the shoulder asking them for their information so they can improve their accuracy,” she said.
“We want to see everyone having access to reliable, trustworthy accounting support.”
Ms Richmond would not reveal Sumday’s total user numbers but said another 20 firms were currently being upskilled to join the partner directory.
The start-up would also be looking to double its current workforce in the next 12 months to become the “global go-to platform for advisers who are supporting their clients” in the carbon accounting space.
“We want to be making sure that people are educated inside their businesses as this space evolves, as things change, as they need support, no matter what country you're in and no matter whether you're a two-person practice in rural New Zealand or you're KPMG.”