Ep 6: Haleon and Watershed

[Music] Hello and welcome to the scope 3 podcast. I'm Oliver Hari. And I'm Tom Eidl. If you're trying to solve supply chain emissions reduction in your organization, this is the podcast for you. And if you're looking for honest, helpful and human stories, insights, tips, advice and ideas for getting to grips with scope 3, this is definitely the podcast for you. And if you need some help navigating all of those solutions, platforms, technologies, all claiming to solve the scope 3 challenge, this is absolutely the podcast for you. This is the scope 3 podcast. Thanks for joining us and great to have you on board. [Music] Hello and welcome to episode 6 of the scope 3 podcast. Ollie, how are you doing mate? I'm not too bad. Not too bad. I'm enjoying this. Lots of good feedback still coming in. A bit of a few events in recent weeks and lots of people coming up and saying that they're enjoying it, which I'm happy to hear. And we've got two awesome guests for our audience this time. Chris Lowe at Haley On You had a good chat with him, didn't you? Yeah, it was great. Chris was great. I think he's doing some really bold and ambitious stuff. So this is one of the more interesting conversations I think we'll ever have of someone who's doing something very bold and very ambitious. So that was great. Yeah, looking forward to hearing what and hopefully sharing what he said with others. Yeah, good stuff. And I had a good chat with Taylor Francis. One of the co-founders at Watershed, one of the solutions providers, we're going to delve into that business. And another interesting company that we're going to explore, but they're going to get some great traction and raising some serious money as well. So it's good to find out what they're up to. So yet before we get into the nitty-gritty of this episode, let's get some news. Yeah, and I think when you look at the last few weeks, and I think also building upon the conversation we have with Solitaire the other week was being honest about the challenge of scope three. And I think I couldn't avoid the news from Microsoft in this last week about how their scope three emissions have increased up to 31% in the last year. And that was in there, 2024 Environmental Sustainability Reports. They've been very upfront about it. They've launched a new strategy specifically to tackle those scope three emissions. But it just shows even those that are the leaders, transform to net zero collaboration, which is really for those best practices of the leaders on net zero including scope three. So even the supposed leaders are really struggling on this. But it's good to see them being very open about it. They highlighted four areas in which they were going to focus to drive ultimately stem the rise and ultimately reduce it. So improved measurement by harnessing the power of digital technology. What a surprise that Microsoft would say that, but can you imagine that's an important part of it. Increasing efficiency, particularly in their data center innovations. And it seems like it is the data centers and the many new data centers that are the real challenge. They talk about forging partnerships to accelerate technology breakthroughs through investments in AI capabilities. Especially for greener steel concrete and fuels. So those hard to abate sectors. But again, not a surprise that Microsoft are including AI in that. But again, good to see. Building markets by using Microsoft purchasing power. So obviously, particularly to accelerate demand for technologies and solutions. Renewable energy, I'm sure. So that's good to see. They've certainly got enough purchasing power. And in the final one was advocating for public policy changes. So again, you'd hope that that's just more of the same from the bit. So not a lot of detail in those five things. And a lot of continually what Microsoft are good at. But it's good that they're recognising the size of the challenge, I guess. And being honest about the fact that it's increased rather than reduce. Yeah, and time will tell whether the plan actually works. But I think what it is a good example of it. And it goes back to some of the stuff we were talking to Solitaire Townsend on the show as you mentioned a few episodes ago. But you know, it's a clear, clear example of, you know, be upfront, be transparent, be really clear in your messaging about the challenge ahead. And what you're going to do about it. So I think it was plenty to learn from the this week's news from Microsoft. Yeah, and no one likes target stopping met and no one likes numbers going in the wrong direction. But it's even worse if you've promised them that it wouldn't happen. So, you know, I think that's key. You've got to be open and honest that these numbers will fluctuate until you find, you know, ways to work with the rest of the world to try and ultimately improve the environment in which we try to work in. And that includes public policy, you know, ultimately leveraging market demand and things like that. So yeah, it's good to be honest. Yeah. And then more detail coming out from your scope three peer group. All the everyone I speak to about the peer group absolutely loves it and mentions your London event and what's coming up in Chicago. But yeah, plenty of news coming out of your group this week. There is. So as many of those listening know we've created a series of projects called the do projects. Very simple name because it's all about all about doing. And some of these projects as things that we've identified that others are doing that we're pouring our support behind. But some of them are things that the group really feels that we just need to get on and do because no one else is doing. And one of those, probably the most exciting one, I would say, involves our guest today, Chris at Halion. So we've been working together to really see if we could develop or code event for methodology for procurement to add carbon pricing into the commercial evaluation criteria for tenders and supply selection. So it's really about saying for procurement professionals when they make a decision between suppliers can they have that information in front of them so they can make a good decision on cost overall cost based on based on not just cost but carbon as well. So that's going to be really exciting. So nearly 150 different companies have been engaged in that. So it's going to be very exciting. It's going to take a lot of herding of cats get them to all to agree on something I kind of appreciate, but that's very exciting. The second one is about net zero procurement strategies. So so many companies have not baked net zero into their procurement strategies and we've realized that. So again, over 100 companies are interested in working together on the thing that's called becoming called the scope free strategy collective, which is a fancy name for a group that will work as a cohort to see if they can co develop the best practice procurement strategy with net zero baked into it. So we definitely excited to see where that goes. So finally we've got other things like working with Schneider Electric to develop a supply chain renewables best practice program. We're looking at an AI tool to get quick and good answers on scope to questions, which I particularly excited about. I think one of the most exciting ones though is the opportunity to develop a scope free training program for procurement. So we've got again about over 100 companies keen to work together to say what does a really good training program for procurement look back on scope three in their language that they can understand. Yeah, then finally reference to Microsoft here, I suppose, but we wanted to see if we could get down to a specific category level of decarbonisation really look at some category of suppliers that is shared by many and that is often quite problem troublesome. So yeah, IT and tech. So we have a number of companies that are keen to work together to say can we engage our buyers, can we engage our suppliers collectively that suppliers IT and tech solutions because if we can crack that across a number of different industries that be really exciting. So lots happening plenty for people to do. And if anyone's interested, just go to scope freepeagrup.com send me a message and I'll point you in the right direction. No excuses not to get some doing done. This episode of the scope three podcast is supported by watershed watershed is the enterprise sustainability platform companies like Airbnb, Carlisle group FedEx, Visa and Dr. Martins, news watershed to manage climate and ESG data to produce audit ready metrics for reporting and to drive real decarbonisation. Watershed is the platform of choice for companies seeking to reduce emissions, meet customer investment regulatory requirements and to modernize their sustainability programs. Watershed customers also have exclusive access to a whole marketplace of pre-vetted high quality carbon projects and ground breaking virtual power purchase agreements. For more information visit watershed.com. It's no surprise that we have yet another farmer business on the show this time. And when it comes to joint working and sector wide sharing of knowledge, the pharmaceuticals industry seems to really get it. And people like Chris Lowe, I guess this time the head of packaging procurement and sustainability at Halion, which is a consumer healthcare company. He's really leading the charge in what's a fairly wide ranging conversation this time, Oli asked Chris about his background in procurement, how his team is set up within Halion and all the details about the company's recently introduced carbon pricing mechanism, which is a bold move that Chris is hopeful would drive some serious positive impacts when it comes to the firm scope three. Here's their conversation great to have Chris slow with us for this episode Chris delighted to have. Thanks for coming on. You're at Halion, obviously, a company that I have been mispronouncing, I think, for the last few months, if not longer. But I've been getting it right more recently, thanks to you. So I really appreciate that for putting me right on that, that a fascinating business and a fascinating role and a fascinating bit of work that you guys have been doing recently as well. So delighted. Thank you very much, Oli. It's very nice to be here and shout out to Celif for nominating me and it's greatly appreciated. Yeah, I haven't had anyone nominate someone that I didn't want on, which is, I wonder how long the whole last, but, no, it absolutely is wonderful to have you here. And I'm really excited to have you on. So, and not just because of who you are, Chris, but what the business is doing, but also what your cheaper current officer is doing and what the industry is doing. I think it's really exciting. So looking forward to the talk about that. So tell us a bit about your background, where you've come from, what you've been doing, and how you found yourself, where you are today. Certainly. So I was brought up on the out of white, so a bit of a country guy that I was reflecting on, what are the sort of things in my life that have really led me to be very passionate about sustainability. And right from the early days when I was a kid, I think that the environment that my parents brought me up in was very respectful of the environment. My dad was like a conservation officer for the natural history society. We used to do collections of waste paper around the village and things like that. So I think it might have been ingrained in me from a very early, early days. From a working career perspective, I've worked in a variety of different companies in different industries, mainly in procurement, and doing different categories of procurement throughout that time. And actually, I've seen a very different approach to sustainability across a number of those industries and businesses that I've worked with. And because sustainability is a priority for me, some of those haven't gelled with me very well. But the good thing about Haley and is that we are a purpose-led organization. We say we're looking to deliver better everyday health with humanity. And that links really strongly to sustainability. And that's something that is really important to me. In particular, as you think about how global warming impacts on people's health, and then in particular, thinking about the most vulnerable populations and marginalized groups and how they are affected the worst. So Haley and is really trying to do its bit to support those people and to make life better for them. So that's why Haley and Wurts really well for me personally. But then there's been a bit of a journey within Haley and as well, because obviously, previously, we were part of GSK. And we became a standalone organization nearly two years ago. And I was involved in sustainability whilst I didn't have a formal role in that. I used to manage packaging procurement and paper pack. And I was also the head of oral health procurement for a little while. And over the years, we've done a whole range of different things to try and initiate the sort of movement towards a more sustainable approach. So I was involved in setting up projects. For example, to set our toothpaste tubes to become recycled ready to take off all of the things that stopped our packaging being recyclable. And so that was even before there was a corporate sustainability function, which was set up in 2019. And so I've been on the periphery of it for quite a while. And now I took a core role in September last year where now I'm leading procurement sustainability. So that's kind of the journey that I've been on. - No, interesting. And it's not an unusual thing for companies to almost split out like GSK did with Haley and then it's happening with J&J and others around the world as well. But it's an interesting one, because it suddenly means that you're still a relatively young business, you've got a bit of a start-up mentality, but you're still a huge business. And you've almost got a chance to get sustainability right from the sort of early days, if not the start, haven't you? And how's that sort of been in terms of that transition from GSK to Haley on to actually, it's almost having to take the best of what you had before and add and freshen it up with new ideas? How's that experience been? - Well, so as Haley and set itself up at the very beginning, we launched with those corporate sustainability commitments. So for example, things like on Ask Goat 3, we have committed to a 42% reduction from source to sale on our carbon emissions. And so yeah, I think we did. We took the learnings from the GSK days and we thought, you know, but obviously as a consumer healthcare business, we're now compared against a different peer set. So we had to look at what our competitors are doing. And we've had the opportunity to be bold in the way in which we're doing that. And so that was the first thing that happened, the corporate targets. And then while procurement, we are the stewards of about 70% of the carbon footprint of the company. And so we then needed to come up with the procurement approach because it's such a critical part of the overall carbon emissions that we need to tackle. And that was where last year, the procurement and Richard Crayon as our two procurement officer decided to increase the importance of sustainability. And I was put into the position and we grew the team at the same time. - Yeah, you mentioned Richard. So I met Richard at a Wilkety Economic Forum event for CPO's last September, I think it was, just before climate week. And I've talked about this on the pod before. It was such a fantastic couple of days, actually, because we had a contrast of cheap procurement officers sat in a room actively, passionately wanting to do stuff versus what I found. Sometimes we're climate week. It's almost being a bit of a sustained diversity folk staring at each other and hoping stuff will happen. So I was impressed by Richard and Richard has got that ambition and the boldness which seems to fit with the freshness of the Hany and Brown and obviously so. So tell us more about what yourself and Richard have that has been evolving as ideas and really excited stuff now. Which I think could be a game changer for not just first scope three, but also for the role of procurement in scope three. - Yeah, so as you say, Richard is very passionate about sustainability and the environment. And he's one of his phrases is that it's one of the first challenges that he's faced, that he knows that can't be fixed by his activities within the complete works for. So it's about collaborating and sort of working with the industry and that's why we're part of a number of different industry bodies like the Farmers Supply Chain Initiative. We're also part of the consumer goods forum. Obviously the sustainable procurement pledge a whole range of different organizations that we're trying to sort of support and influence to help that. But the other thing that Richard really brought early on is that he understands that just asking people to do sustainability and carbon reduction doesn't tend to get the results. And it's been out there, people have been aware of this for years, but it does seem to be coming to a head at the moment. And Richard's very strong belief was that building an incentive into the core of the economic model is the way in which you really drive change. And so we brainstormed a whole range of different ideas and actually I had sort of talked about carbon pricing as an idea a couple of years back and I'd parked it that we didn't think we were ready at the time, but Richard was, we were really looking for what is the way to strongly incentivize the decarbonisation actions of our supply chain and at the same time to really also incentivize the creation of the data that we need in order to understand where we stand. So for example, product carbon footprints or carbon footprinting in our indirect suppliers, we believe this model is going to be incentivising that. So Richard's been super supportive and obviously it took quite a bit of discussion to understand how this would work, the challenges of the model and working with our central sustainability team. And then that has now been taken to the board for their approval and that's why we are now in a pilot phase testing out carbon pricing with our suppliers. It's very exciting. It feels like it's perhaps another step in the year of supplier engagement and collaboration. This is now getting into the area of well an opportunity for it to be competitive advantage, which is another sort of string to the bow of encouraging a value chain to evolve and change. So it feels very exciting and obviously I've been very happily working with you and so many companies interested in this Chris as well. And you must be very proud of how many people have been inspired by what you guys are thinking. and I think it's that inspiration which we need in this space. So take this a little bit more about what you're doing and what some of the results so far and perhaps what some of the challenges have been or some of the hurdles that you foresee in trying to make. - Let me just take a step back as well because it's not just about the carbon pricing. The carbon pricing is a kind of incentive, but I think the other part that I haven't described yet, which is important is around how are we working with our suppliers? What are we asking them to be doing? And then this is the incentive that sort of really cements and gels that program together. So we launched a, we're calling it the Haley and Sustainable Supply Chain Program which has a climate pledge within this. We're asking our suppliers to sign up to five different elements and make a commitment to decarbonizing these five elements. So the first one is really around baselineing their carbon footprint and being transparent with us around that. The second is signing up to the Science Based Targets Initiative. Number three is around introducing renewable electricity as we believe that that's one of the lowest hanging fruits, you know, an opportunity that needs to be taken everywhere. So we're driving 50% renewable electricity this year and 100% next year, but in the first instance of the direct operations of our suppliers that supply to us rather than all the way down the supply chain. Number four is around building a roadmap to net zero. Now, again, a couple of comments on that because we're not just looking for the, oh yeah, the 2% next year, the 3% the year after. We're looking for, you know, how are we going to get to net zero? What are the entirety of your emissions? And how are we going to be addressing those over the next year? And whilst I mentioned the short-term target to 2030 and 42% source to sales go through reduction, we also have a net zero objective for 2040. And so those road maps are really looking for how are we going to get all the way to do that 2040 objective? And then the fifth element of the pledge is around cascading the approach to their suppliers. So, you know, much like I mentioned, that 70% of our carbon footprint is owned by our suppliers. We think most of our suppliers are in a similar situation. So there's no point in having a decarbonisation programme without thinking about how that cascades all the way through. And so it's really the elements of that that are now being cemented by the carbon pricing and the incentive that that gives, it really gives an advantage to any company in a competitive tender that has a lower carbon footprint than their competition. And so that's the crux of the mechanism. It's exciting. And I think ultimately this is going to be something that I think will take some evolving. You know, you guys are very open about the fact that this is a learning experience for yourselves, but we've got to get that out there and I think that it's a bold step, which is good, but it is the right one. It feels like there are a range of different perspectives on this. Some people are very excited about it and get it as a real driving incentive for suppliers. I feel like some are sort of saying, well, no one's ready for this. You know, it's not possible. We haven't got the data and, you know, that's the obvious kind of, let's say feedback that people can put to these sorts of these goals. But it is a bit of chicken and egg because unless you have it, people won't do it. So what are your thoughts on that kind of, on some of those challenges that people raise? Yeah, no, you're absolutely right. And it's not that we've got perfect data. So this is a bit of a tight-road walk as to how do you incentivize the start of the transition and the gathering of the data whilst also, you know, getting started with something? Because if we just wait for perfect data, we're going to have lost two years as it were. So, you know, that's why we are incentivizing if companies are unable to provide us with a carbon footprint or unable to give it to the right standard, then we will be using an industry average carbon footprint plus 50%. So, you know, and we're telling everybody this up front, right? So that they know that the next time they're going to be doing a tender, you know, at the moment, we're piloting this in packaging. So, you know, any packaging suppliers, they know that they need to be having PCFs ready if they want to do a bid with Halian. And if they don't, then they will have that penalty against them. Now, you know, that may increase as time goes on. And so there's always going to be more and more incentive to get ahead. It's a really good buzz. It's character, and you might say, maybe not stick. But a gentle nudge, I think it's only you two good combinations. What we need. And I've been. Exactly, exactly. But, you know, and the other point I would make about, you know, waiting for perfect data is that there's so many things that we know can be done. You know, so the renewable electricity I mentioned earlier on, we know that that's always going to be one of the first steps along the journey. And so, you know, that's why we're also jumping straight on to some of those initial actions. The efficiency, those pieces, whilst we're also then trying to gather data, and that's where the roadmap also helps us on getting the visibility of those more complex abatement levers. So in into, you know, the fossil fuel usage, the heat, and even the intrinsic carbon that's going to be within a lot of the products that we're using. Absolutely. And every time you speak about this, Chris, more and more people get inspired about the idea and want to find out more as well. So, yeah, for those that are listening and want to find out more about Chris, you can get through to us both at the Sustainable Pequion Player, Jan, the Scope Pepe Group, who are working together to ultimately look if we can build out a methodology or a set of principles for this. And again, it's very exciting and the level of interest so far has been fantastic. So thanks, Chris. It's been really, really proud, I think, to partner with you on this. I think it's going to be very exciting. So I think in terms of some of our usual questions that we ask our guests and we'll get to your nomination at the end. But the whole space is full of solution providers. And I should imagine with your commitments around carbon pricing and all of that and their need for data and everything else, you've probably got lots of people knocking on your door claiming to be able to help with this in various different ways. So for those that are out there building the solutions and the advice and the support out there and not just technology, but obviously that does dominate the conversation. What would be some of your advice for those that are developing those solutions and building those support networks? So as we've described in a product carbon footprints are a key part of our journey. And I think that that, for the direct material side of things is really the industry standard that we need everybody to be moving to. Now, we are working with the PACT and TFS structures and we think that those two methodologies are great. But the standardization of the approaches and the tools that are out there I think is key. We've had some pushback from suppliers saying there's still too many even though we're trying to work with the partners that are peers are working with. There are still too many different things and they don't see the value add of working with these partners. So that's the other thing that I think is key for them. It mustn't just be about reporting. It must add value to the suppliers in the service that the providers are offering. I think there's also the kind of data transfer. Now, PACT has got an official data transfer. It's quite complicated. Is there a way to make that simple that you can, that standard data structures can then go across different platforms so that we coalesce to one standard way of talking about carbon footprints. And I guess the final point would be that we need to make sure that these are fit for external reporting and that sort of obviously the bar is raising at the moment. We need to be able to meet the reasonable assurance standards. So the carbon footprint tools that we're using need to be able to be sort of crawled all over by our auditors to make sure that they are accurately representing the carbon footprints of our suppliers. I think AI also brings a fascinating lens and an opportunity to this whole space. And we're working with some suppliers that or some service providers that are using AI to sort of substitute where there isn't real data or primary data. So I think the opportunity there looks really exciting. And once you've got the foundation of good data, I think that the AI functionalities can start to automate most of the reporting requirements. I've seen tools that can do the CSRD reporting automatically. Once you've got the right data fields in place. So I think there's lots more excitement and development going to come in that space. But those are a few of the things that we're looking at. of the sort of guardrail that I would raise. - Yeah, that's great. And if you think about the decades of ours that sustainable professional has spent on reporting over the years, the idea that AI could hopefully one day make that so much easier, it's refreshing. I think for any sustainability professionalist in the end, but I think the other one point you raised that is important, and again, is why we, on the pod, try to get the philosophies of the founders of these solutions across is, you know, it isn't just about collecting data more easily or more effectively, it's about making sure the suppliers get valued that they want to use it, that they will use it, that they actually drives decarbonisation, not just a little bit better measurement, which of course ultimately gets us nowhere. Great thoughts, Chris. So your nomination, who has impressed you as a peer to you, who has inspired you from NSW perspective, do you think would be great to come on the pod next time? So I'm going to nominate Bridget Ferrari from Sikida. And so I saw Bridget at the scope three peer group meeting in London, and she presented with amazing passion and knowledge, and she's also doing a lot of different things, she works in the Pharma Supply Chain Initiative, and in the SPP, so there's a whole range of different things that she's doing to try and thrive the knowledge and get a wider collaboration. So she's impressed me, and I think it'd be really interesting to hear more from her. - Yeah, I cannot help think that sometimes the sort of the network of good friends in this space that I've created, has created this scenario where all my friends get to come on the pod, but until she shows Bridget, she's wonderful. And yeah, no, it's great to hear Chris, and I'm delighted, and you've been such a good supporter of everything that's going on, and I think again, Q-DOS to you, not just to Haley on as well, Tullus to you if they're really driving that forward. So great to have you on Chris, really enjoyed our chat, and keep up all great work. - Great, really appreciate it, Oli, thanks a lot. (upbeat music) - Jumping into the interview chair, this time is Taylor Francis. He's one of the co-founders at Watershed, which is one of the most talked about scope three solutions providers out there. With the likes of Airbnb, FedEx, and Visa among its roster of clients, it's a company on a mission to accelerate the climate economy. The firm's keen to make a real impact on reducing carbon emissions, some 500 million tons of carbon reduction a year by 2030. That is the goal. From the company's base in London, I caught up with Taylor and his out-share, have a listen. - I've been really intrigued by what you're doing at Watershed, looking on from afar up until this point, but it's really good to spend some time with you. You've grown incredibly rapidly since you started. Only 2019 you kicked off. 300 staff, offices on both sides of the pond. I saw recently you guys named as one of the leaders in the Forrest Wave review of sustainability, management software. You've raised some serious cash as well. So you're clearly doing some really good stuff and doing something right. But as we often say on the podcast, and we're hearing among the scope three practitioners, it's a really complex market. It's really crowded. So what is it that makes Watershed genuinely different? Why do we need Watershed in the world? Let's start with that one. - We. I mean, my general sense on this market is that this is a category where there are a lot of things that are easy to say and very hard to do. And our philosophy of Watershed is to do the hard work that enables real outcomes for customers and for companies. We got started five years ago on this mission to accelerate the climate economy to put a big dent in solving climate change, and we actually put a number against that. And that number is that by 2030, we want to be driving 500 megatons, 500 million tons of CO2 reduced to removed per year. And so for us, this is all about driving to real decarbonization that shows up in terms of carbon not in the atmosphere. We are not in this just to be a reporting layer. We're not in this just to power exchanging surveys and spreadsheets back and forth across the ocean. We are in this to actually make a really enduring impact on how much carbon goes into the atmosphere. And from day one of the company, solving scope three has been our core thesis on how we get there. And we can get into more depth on how we've approached that. But we've just seen firsthand when we work with some of the largest companies in the world. Today, 1% of the world's emissions come from companies that use Watershed to measure track, reduce those emissions. We've actually seen that I think scope three decarbonization is a lot more tractable than people think. And making that possible is what Watershed's all about. - Excellent, some positivity, I like that. What was the original thinking behind setting up this business? And I know you were working with our goal, the climate reality projects before all of this. And very much in that sort of public policy space. But what about your fellow co-founders? Did you share the same vision about what you wanted to create with Watershed? - Yeah, I think the original thesis for Watershed is that building great enterprise software to help companies make their carbon and sustainability numbers both accurate and actionable could be a really big lever in solving climate change. And few things that led to that, as you mentioned, I'd spent a lot of time when I was in high school, actually as part of Alborist Climate Reality Project, given a version of the incoming truth slide Joe to schools and communities. And so I was really fired up about climate as a generational call to arms. I, my co-founder Christian, had led Stripes Climate Program. So all three of us worked at Stripe, payment technology company that now in climate is the founder of Frontier, this nearly billion dollar commitment to purchase carbon removal. And Christian led the precursor to that as kind of a volunteer project at Stripe, setting up Stripe's initial climate program. And the thing we saw from that was that the standard approach to operationalizing sustainability companies was really broken. You know, we got a spreadsheet that was, no, I guess we got an 80 page PDF that was stale on the day it was delivered to us, that was wrong on the day it was delivered to us, and then had no sense of how the 99% of our companies emissions that were in scope, three, no sense of what we can actually do about that. It was just a complete black box. And that was really upsetting to Christian in terms of, hey, this is the big problem of our time. If this is the big business opportunity of our time, this is a completely inadequate status quo in terms of how companies are actually, the options companies have to set out to operationalize sustainability. So we basically set out to build the software that we wish we could have had access to. And in part because of our early customer base, work with tech companies like Stripe, worked with food businesses like Sweet Green and now General Mills Walmart, worked with electronics businesses, worked with companies and manufacturing. Scope three was kind of the problem on our mind from the very beginning. Right, interesting. And then fast forward to today, you've got this amazing advisory board who's looking on your website that it reads like a sort of who's who of climate leaders over the last decade, Cristiana Feaghiaris, Mark Carney, Lorde de Turner, really impressive roster of people. What does that group of people really bring to the party for you guys? They help us understand where the world is going on climate. As you pointed out, sustainability programs, climate work for companies, these are multi-decade endeavors. Companies are setting 2050 goals that need to be matched to year-by-year execution initiatives. And so we want to be building watershed for where the puck is going in this space. And it's been amazing to get perspective, yeah, from folks like Mark Carney, on where is the financial sector going on climate? That is so much the motive force for corporate climate action is trying to respond to and lead the demands of capital. And so we've got amazing perspective from him, from Curtis Rabenel from Marys Shapiro, a lot of the people behind G-Fans and T-C-A-D, on where is the financial sector going? And we try to build, I think that we can talk a little bit more about how watershed solutions work, but behind the scenes, we really try to embed science, data, and policy know how into the product. And our belief is that the only way you can deliver auditable numbers and real decarbonization, is if you've got the science, the data, and the policy lining up. And as an example, last year acquired, commit code biometrics, sang one su, one of the creators of the G-Sheet Protocol, long time, pioneer in the field of LCA and different approaches to standalone accounting, they developed the comprehensive environmental data, archivir cd, which is, the only commercial grade Multi-region input output scope 3 model and we can unpack what that means But the upshot of it is that it makes scope 3 actionable for companies and We thought that if we were going to solve the scope 3 problem we needed to do it with great science and data Underlying watersheds approach you see that in the advisor board and then you see that in the science team Vital metrics Cedar all kind of underlying The approach that we're taking yeah Let's dig into the nitty-gritty then and how you're sort of mainly helping companies So you touched on you know some examples of customers that are using watershed What is your typical customer look like you know particularly from a scope 3 perspective? What does that customer really look like what are the pain points they have that you're helping to You know to unlock So watershed powers sustainability for some of the largest most complex most ambitious companies on earth that Has been our core market and we think that that's the way we can build the world's best product is by working with companies that have been at the cutting edge scope 3 Decarbonization for a long time we want to solve the problems at the cutting edge to help the entire space move forward I see three problems in Kind of the approach to scope 3 that watersheds really been designed to solve part one It's enormously complicated time-consuming mind-numbing Data collection problem and there's just a lot of hours burned on Survey suppliers serve some suppliers answering slightly different versions of the same surveys over and over again. So there's this Hasill an operational problem Number two is that companies don't have accurate numbers on their scope 3 emissions and I think everyone has felt for pain of Applying an industry entered and everyone has felt the plane Everyone has felt the pain of applying a industry standard spend-based emissions factor from an EPA database Nearly a decade ago to Their supply chain and knowing that that does not at all reflect the reality on the ground for them So the kind of accuracy problem is problem number two and then third It's really hard to get to action on scope 3 both because you're spending so much time and data collection mode and because the way you do the data actually doesn't help you understand What are the different ways to reduce emissions and finally because it's a collective action problem on? Getting a whole bunch of different actors to collaborate to actually Reduce emissions. So those are the three problems that we've seen and we've tried to build watershed solutions To really attack each of those and so the approach to measurement and our supply chain product gets the pain and the hassle Out of the process of calculating your scope 3 Immediately you can x-ray your supply chain with a lot of granularity and then our supply chain product actually automates the engagement with suppliers Thinking emissions were accurate actually accurate and actionable that's all about the Carbon data engine the global carbon database that's behind the scenes things like CEDA that mean we can tell you Hey, based on the location based on the specific supplier based on their practices Here the actual emissions are your suppliers. Here's what you can actually do about it and then on the action side We can tell under this in a bit more detail I'm really jazzed about how we're starting to enable companies to buy clean power With their suppliers supplier VPPAs that are like really getting to the source of the carbon We are about to announce Customer that did that alongside five suppliers across the Asia Pacific region that is really really exciting stuff on turning scope 3 from a spreadsheet training exercise to a actually get solar and wind in the ground So that there's carbon not in the atmosphere exercise. Yeah Excited stuff. What do your customers think of you quite a difficult question to answer? I appreciate but you know What's it like working with watershed? We I the proof is in the pudding so I encourage folks to talk to them My hope is that they would you watershed it as a real partner, you know this space Is evolving this technology is getting better by the day We want to be in the trenches with our customers building the product roadmap around their needs getting better every month every quarter and Ultimately, we don't view success as just kind of delivering a software product We've used success as our our customers successful and getting to zero carbon And we kind of won't rest until we've been a part of Helping them get to zero carbon. Yeah What's in the name? What why why are you called watershed? Where did that come from? So there's two ecological definitions of a watershed One is a kind of connected ecosystem that all empties into the same river valley So you think about them or said watershed or the Columbia River watershed And then the second is actually around the ridge line that separates two river basins And that's you know kind of the point where a drop of water could fall on either side of that ridge line and it's either going to the Atlantic or the Pacific And that's where you get the kind of common parlance of the watershed moment right shifting across the ridge line And then having things go from being upheld to downhill That was part of the definition for us was part of the aspiration for us was Being a part of this watershed moment as I think the world really is getting its act together into carbon as they should we want to be a force and a Nebler and accelerate of that But then we also really like this ecosystem definition because Well, it's the whole you know rationale of this group um The way we solve climate change is to a whole bunch of connected companies Whether that's suppliers that are connected in a scope-through value chain Whether it's portfolio companies and investors who are connected in the context of finance emissions Meaning to come together and so we wanted it there in the founding Word that watershed is about catalyzing that type of kind of collective networked Action yeah, love it love it and and go back to you very you know yourself Taylor. I mean what what's it like you know leading a company Like this. It's it's not often easy working in sustainability and solving some of these challenges I've been writing about this stuff for 20 years or so And it's not always easy is it but how do you stay motivated? What makes you get out of bed in the morning? What's your key sort of motivation? Personally, would you say? I find that working all day on something that is building towards The climate economy building towards solving climate change is a huge gift um when I Before starting watershed I had this kind of Nine cents of gosh, there's this huge societal problem and I'm not in the game And it doesn't seem like it's going all that well And it was just really difficult to reconcile feeling like this problem was huge wasn't going well And yet I was spending You know my eight hours at work every day working on something else um You know all you can do is spend your energy working on the problem and whether or not we succeed There's a lot that you know needs to go into that but on a personal level I think just knowing that you were applying your energy to this problem is an enormous gift And so I find it hugely motivating um To know that You know, and I think everyone to watershed everyone better customers people listening to this podcast Everyone working on trying to get scope through mission zero We made the most important first choice which is to point our energy at the problem Um, and if enough people do that You know good things are going to happen Yeah, and as you said early, you know, you're five years in um and you've got your 500 million ton target by 2030 I wonder then what the next five years looks like for watershed You're going to have your technology road maps no doubt you're going to listen to your customers but You know, will your business look particularly different in five years? Would you say or is it kind of you know doing more of the same but just doing it better more efficiently quicker What what what's what's the next five years looking like? The next five years are all about making Carbon actionable across companies right we can't have five years of disclosure in reporting And have that be the only thing that's happens that people have gotten their inventory a little bit more accurate Little bit more audited. This needs to be You know from now to 2030 is that is the time for um Suppliers to deploy clean power. It's the time to move from tier one to tier two and tier three suppliers deploying sustainable practices on their fields for example and agricultural textile supply chains This is the time for advanced progress on Materials and manufacturing industry. So the next five years for us are entirely about How do we get more real decarbonization action to happen? We're going to measure our progress in terms of How many supplier clean power programs have we helped customers watch right That's in some ways the most tangible concrete than you can do to decarbonize your scope-free is to make it so that someone else's scope-1 and 2 has gone away, and you can work with your suppliers to actually deploy clean power together. That's going to be a huge focus for us. How many companies are redesigning their products and integrating carbon trade-offs into the product design process and the way that companies like Apple have done with so much success? That's our big focus for the next five years. Then what about the market itself? We've talked before on the podcast that there's no silver bullet necessarily. We know that practitioners are going to need to use a series of different tools and technologies. With that in mind, will we see more collaboration and joint working among you guys in the solutions market? Absolutely. We work with customers all the time that are trying to pull together an ecosystem of partners to help them deliver on their goals. I think there's a real need for solutions that do two things and bring those two things together. The two things are CFO grade, audit grade disclosure reporting. This is the year in Europe, California, where carbon reporting is going from voluntary to regulated. That's a seismic shift. Everyone across the market is trying to figure out, hey, how do we get our sustainability report, our sustainability data infrastructure to be CFO grade? The other goal is around real decarbonization. It's getting to be time for those graphs to start turning down. Those targets are not as far away as they used to be. The low hanging fruit is starting to be harvested. Some people frame those as different goals and use some providers positioning themselves as, hey, we're all about compliance. Some providers positioning themselves solve about decarbonization. I think you need to solve them together. Our bait to thesis at watershed is building a platform that connects the dots where you are reporting in a way that reflects your actual emissions. The big scope for problem that so many companies out there that are reporting numbers that they know do not reflect the reality of their supply chain. Solve that problem. Report in a way that reflects your actual emissions. Report in a way that can actually capture your decarbonization progress. Then decarbonize in a way that you get the feedback loop. You get the operational feedback loop of real-time live data that tells you if you're working on the right thing. I see those as the two impulses, the two motive forces in the market and our health thesis at Watershed is to build a platform that connects the dots on both of them. Often on the podcast, when Oli speaks to our guests working in businesses grappling with scope three, we often ask them what they want to see from solutions providers. We always like to flip it. What can they do to help you as a solutions company to live it even more and just get better at what you do? We love customers who are demanding. We love customers who come to our weekly conversations with a very long list of things that they're dissatisfied with, come with a very long list of things that they want to be better, come with a very long list of outcomes they want to achieve. They don't know how to get there and then we work together to try to unpack how we pull that off. That's where two of the biggest investments we've been were integrating with CEDA, Biometrics and putting that multi-region data at the heart of our approach to scope three. That came from talking to a lot of customers who are really dissatisfied by EEO and wanted a more granular, decomposable approach to understanding where did that supplier's emissions come from? Then on supplier clean power, we just talked to so many different companies that said, "Hey, I know that this scope three problem is easier than I make yet." It's actually just that a lot of my suppliers need to do one concrete thing, which is deploy clean power. Instead of helping them do that, I am asking them to set an SPT and go through a five-year process that is going to only after five years get them to a place where they're doing something concrete and tangible. That's where we started to dream up the supplier PPA with customers. We love working with the man and customers that set ambitious goals and then we have to figure out together how to make that possible. How to get there? Yeah, absolutely. Taylor, it's been a real pleasure spending time with you. Thank you for coming on the show and we wish you all the best with whatever comes next for Watershed. Thank you. Todd, likewise, I think the scope three problem is only going to be solved by a lot of companies working together and I'm really jazzed about what this group is doing to move the dialogue forward on that. That's it for another episode of the scope three podcast. Thank you for tuning in. You might have stumbled across the show on one of the many podcast platforms out there. If you've done so, then do subscribe and you won't miss an episode without every two weeks. Also, leave us a review if you're so inclined and that'd be great. Oli, how was it for you, mate? It was really good. My kids are loving the fact that we have to ask people to subscribe and sign up. We sound like YouTubers now, Tom. My kids are very impressed. Not that they know. I have any idea what we're talking about yet. I don't think but neither do most people, I guess. I've heard it was a great episode. I think Chris was excellent and I think Chris and Halion are really now starting to sort of show not just what good ambition looks like in words but what good ambition looks like in action. Again, I reference the project that we're working on with them to look at developing this methodology from bedding carbon and the cost of carbon into procurement decisions. But fantastic leadership from Chris and his CPO Richard Crane. More of that, please, from others. Yeah, good stuff. And as ever, all the show notes and references to anything we've mentioned in this episode will be available at the scope 3p group website. Until next time, wish you'll see you soon. See you soon, Tom.