Dive Brief:
- ESG Flo, an artificial intelligence ESG data infrastructure tool backed by Bain & Company, announced Tuesday it received $5.25 million in its seed round of funding, led by investor Rho Ignition and enterprise software investment firm Tola Capital. Bain and Contour Venture Partners also participated.
- The company’s platform targets the industrial, manufacturing and infrastructure sectors. and said it is using the new funding to offer readiness solutions for Europe’s Corporate Sustainability Reporting Directive and the Securities and Exchange Commission’s final climate disclosure rule.
- ESG Flo said its platform will help companies collect ESG data spread across the business, cutting down on manual collection and leveraging AI to help collect, analyze and conform ESG data to reporting requirements.
Dive Insight:
The platform, which launched in April, is the first venture to be born out of Bain’s Founder’s Studio, an entrepreneurial leg that focuses on building “disruptive” products. Instead of centering on data presentation, the new tool focuses on mapping, collecting and transforming data into a version ready for third-party verification, which Rho Ignition Managing Partner Habib Kairouz called “step zero” of the ESG data process in a press release.
ESG Flo said its research showed companies’ sustainability teams were spending 70% of their time collecting data, often leading to errors. The data infrastructure platform believes it can give companies a “robust, auditable” ESG data infrastructure by using deep learning and automation artificial intelligence technologies.
“We envision a business world where ESG conversations are as important as financial ones,” ESG Flo Founder and CEO Patrick Obeid said in Tuesday’s release. “We're on a mission to equip businesses with precise ESG data for integrated reporting and responsible decision making.”
Kairouz — along with Tola Capital venture partner Karolin Beck, Bain partner and director Ron Kermisch and compliance expert Patrick Quinlan — joined ESG Flo’s board as part of the funding round.
ESG Flo said evolving international ESG disclosure regulations helped drive demand for the tool’s expansion. The EU’s recently passed CSRD goes into effect in January for some companies and in 2026 for non-EU companies who do business in the bloc that meet certain requirements. More than 3,000 U.S. companies will have to comply, according to a Deloitte estimate.
SEC Chair Gary Gensler has yet to finalize a rule requiring public companies to disclose their greenhouse gas emissions in the U.S. Last week, Gensler said the agency is still reviewing things like how to satisfy investor demand for scope 3 emissions disclosures, which show a business’ supply chain emissions, while being careful not to overreach its authority.
“[T]here is an urgent demand for a robust data infrastructure that aligns with ESG regulatory mandates,” Beck said. “Companies with strong ESG strategies gain a competitive advantage, and ESG Flo facilitates seamless integration of environmental, social, and governance factors into decision-making.”
The funding will also be used to hire more engineers to work on the platform’s AI engine, as well as scale the growth and marketing teams to support additional customers.
ESG Flo’s funding announcement comes the week after Bloomberg and Riskthinking.AI, a data and technology climate tech firm, launched an AI tool for companies to predict financial exposure due to climate risks, tapping into growing demand for AI-generated ESG data solutions. Bloomberg and Riskthinking.AI’s tool will align its data to the CSRD, as well as recommendations from the Task Force for Climate-related Financial Disclosures and the International Sustainability Standards Board’s inaugural standards.
