Taylor Francis: 0:03

Once you know when people email me and say I can't meet for a month, in my mind that I can't meet for 1% of the remaining time we have to solve climate change. So anyone working in the space should think about the fact that every month is a percentage point every day is three basis points. And the only way you can be optimistic is if you act like that.

Tom Raftery: 0:26

Good morning, good afternoon, or good evening wherever you are in the world. This is the climate 21 podcast the number one podcast showcasing best practices and climate emissions reductions. And I'm your host, global Vice President for SAP. Tom Raftery. Climate 21 is the name of an initiative by SAP to allow our customers calculate, report and reduce their greenhouse gas emissions. In this climate 21 podcast, I will showcase best practices and thought leadership by SAP, by our customers, by our partners and by our competitors if their game in climate emissions reductions. Don't forget to subscribe to this podcast in your podcast app of choice to be sure you don't miss any episodes. Hi, everyone. Welcome to the climate 21 podcast. My name is Tom Raftery with SAP and with me on the show today I have my special guest, Taylor. Taylor, welcome to the show, would you like to introduce yourself?

Taylor Francis: 1:22

Um, it's a total pleasure to be here. I'm Taylor, I'm a co founder of watershed. And watershed is a software company that builds a platform to help companies get to net zero carbon fast. And so we're building tools that companies like square and Shopify and Airbnb and doordash are using to measure reduce and report their carbon emissions. And I'm excited to be on the podcast.

Tom Raftery: 1:46

Excellent, excellent, and why Taylor, why. Why is this important, both to you and to watershed and to watersheds, customers, you know, why?

Taylor Francis: 1:57

Yeah, I don't need to tell listeners of this podcast that we are in the midst of a climate emergency. And we have a really short period of time, you know, 10 years in which we need to cut global carbon emissions in half. And so this matters, because the only way we're going to solve this problem is if we bend that carbon graph, we're emitting 50 billion tons of co2 per year. Right now, we need to get that in half by 2030. And our view is that the core moment where that carbon graph bends is where companies make decisions, they make decisions about how to keep their buildings, how to move goods, how their employees will get to work, what suppliers to use, they make decisions about where to source agricultural products. And so our mission is to give companies the tools that they need to make different decisions so that that carbon graph bends. And, you know, I think it's just essential if we're actually going to get to zero if we're gonna fight this crisis, that there be better tools at the moment where the decisions that matter get made.

Tom Raftery: 3:05

Okay, and what, what was the genesis of this? How did you come up with this? Yeah, you know,

Taylor Francis: 3:14

I, my co founders, and I all worked at stripe, Christian Abbey, and I lead product engineering operations and business teams at stripe over the course of five or six years. I think for all three of us watershed emerged from a combination of personal passion on climate, and things that we saw and observed at stripe. So I'll speak for myself, I remember seeing the Inconvenient Truth movie when I was 13. And walking out of the movie theater, you know, reflecting on Al Gore's slideshow about this climate emergency, just feeling riled up, that this was going to be a problem that was going to really affect my future as a kid. And I went home that day and tried to guess Al Gore's email address, and wrote a note saying, Hey, I'm a 13 year old, I want to help. And someone wrote back from info at Al Gore calm and said, we're actually training volunteers to give their own version of the slideshow in their local communities. And so I spent High School going around talking at schools and libraries and community centers. So I've been really passionate about this since I was 13 years old, at the end of that, and you Gary, and I did get to meet aguar with the training was in Nashville, Tennessee, and I got to meet him. He's, I mean, I think all of us in this climate movement owe him a major debt of gratitude for putting this on the headlines 15 years ago, phenomenal. And so, at the end of that experience, you know, I felt a lot of passion about solving this problem. But I was also a little bit disappointed, anxious, that for all the time I spent talking about climate, I don't think I did anything to actually bend the carbon graph. I don't think there was any tons of co2 that didn't end up in the atmosphere as a result. To those PowerPoint presentations, and so, kind of I've always been searching for, what is the thing that I could work on, that actually moves the math, the unforgiving math of 50 billion tons of co2 belts into the atmosphere every year, kind of went to college went to work at stripe. And it was in 2019, that Abby Christian, and I kind of came back to that question, what is the thing we could do in this decisive decade on the climate fight that actually been the carbon graph. And Christian had helped start stripes climate program, which began as kind of a traditional carbon neutral, measure your missions, get a PDF from a consultant by some cheap carbon offsets plan, and emerged or transformed into this really transformative carbon removal commitment where stripe is kickstarting the carbon removal market by committing to spend millions of dollars every year on permanent carbon removal. And through that experience, he saw that companies can have big impact. The tools that exist today are woefully inadequate for the net zero future we're trying to build. And there was an opportunity for for watershed to basically build the tools companies need to do climate, the impactful way, and the way that actually bends the carbon graph. And so that's that's kind of the genesis of how we started working on this. Okay, so

Tom Raftery: 6:25

since you brought it up, maybe talk a little bit about the tools. What are they? What are they do? How do they help me as a an organization, who wants to maybe find out what my carbon footprint is? Or what my suppliers are? or whatever else it is, what can you do for me,

Taylor Francis: 6:41

we've designed watershed entirely around this idea of enable companies to take the steps that matter. And so we've worked backwards from if a company if a square or stripe, or Shopify, or sweet green, is going to actually cut their carbon emissions, and achieve business goals that are tied up with having an effective climate program, what do they need to be effective. And as part of that, we've built a few pillars of the product, the first step is fast, accurate, actionable measurement of your carbon footprint, upload a bunch of raw data about your business, it can be as messy of format as possible. In fact, the Messier the better. watershed gives you an X ray view of the carbon of your entire supply chain. So that's the first piece kind of know where you are today. The second piece is a set of recommendations tailored to your business about how you can actually cut carbon, get rid of natural gas, and this one office switch suppliers for this one, carbon intensive PC or supply chain shift from air to ocean on how you're moving goods across the ocean. And so that's this kind of carbon reduction recommendations engine on helping companies decarbonize. The third piece is a marketplace, where companies can use watershed to buy clean power, fun carbon removal, find low carbon suppliers, in a way that actually is impactful. And then the fourth piece is we help companies report on this as as your audience will know, well, there's a whole new alphabet soup of tcfd and CDP and SAS B and sccr. And we help companies kind of with a few clicks, do investor grade reporting on their climate program. And so all of this is geared towards, you know, if there was an old world of sustainability that was measure your footprint, sorta once a year publish a PDF. By some offsets, watershed is the set of power tools that companies actually need for very different objective, which is get to true netzero. Fast.

Tom Raftery: 8:55

Nice. Now, some of the things you mentioned there for examples, switching suppliers, right, those kind of recommendations, that must be hard to scale globally, is that something that you can do for me here in Spain, or my sister company in Singapore Are you know, etc, etc?

Taylor Francis: 9:15

Absolutely. We've got customers in US, Canada, Europe, they have suppliers, on basically every continent of the globe. And it's a hard problem, no doubt about it. And that's what we've got our whole team working on is this alchemy of engineering, and science that enables us to guide companies scalable towards the steps that actually reduce carbon. But at the end of the day, you know, every company's carbon footprint reduces to those four or five big categories around energy transportation, heavy manufacturing, agriculture, and so, you know, watersheds job is to kind of boil down everything that like boil down is maybe not the best metaphor, but it's to distill everything that scientists and policymakers and innovators know about how to decarbonize those sectors into the decisions that these companies make every day. Okay, superb, can

Tom Raftery: 10:14

you speak maybe to some customer examples and outcomes?

Taylor Francis: 10:18

Yeah, you're one of our first customers was sweet green. And they're a fast growing restaurant chain. In the US, they set out when they started the company to try and define a model for food that is better for the planet and for communities, and delicious and affordable for customers. And so watershed and climate fit into that mission really naturally, sweet green has set a goal of getting to kind of true carbon neutral by 2027 20 years after they founded the company, the way they're doing that is by cutting emissions intensity from an already very low base, because they're a plant forward, you know, no beef on the menu restaurant in half over the next seven years. And then funding high impact carbon reductions for whatever emissions remain sweet greens, really designing carbon into every piece of their business. And so they are designing new menu items. Looking at the carbon footprint of the menu item at the same time, they look at costs and calories. They are sourcing suppliers and making procurement decisions about where to source different ingredients based on the agricultural practices and the sustainability and carbon practices of their suppliers. And it all kind of ladders up to this low carbon, or this this vision of a low carbon food system. And they're a good example of looking at climate as something to embed really deeply in every single part of the business. And what's true for them on goat cheese is true for square on low carbon hardware, and trying to find ways to decarbonize the blockchain of their Bitcoin business. It's true for Shopify, on how to ship goods to customers. And so I think it's a good example of what you see across all of these different sectors, which is the new mode of a climate program, you know, not just this bolt on thing at the end of the year, where we published a sustainability report, but built into the decisions about how to make the product, how to bring it to consumers and how to run the business. Okay, super.

Tom Raftery: 12:37

Any other cross reference customers you want to talk about?

Taylor Francis: 12:41

You know, we're really proud to work with Shopify and stripe, in part because both of them are pioneering this new approach on carbon removal. And this is a big part of the the genesis of watershed. Here, the old approach to sustainability was companies would buy these avoided emissions offsets, you'd pay someone else not to pollute. There's a way to do that, right, by the way. And for the companies that want to do that, we try to find the not necessarily sexy, but actually prevents carbon from being emitted. Avoid admissions projects. But the real imperative is that we got to invent a way to take Giga tons of carbon out of the atmosphere every year by the middle of the century. And if you talk to folks in the space, there's a lot of good ideas, but we are so far from the scale, it's necessary and price it and from the scale and price. Absolutely. And you know, Shopify, stripe, Microsoft, a couple other companies had this notion that in the same way, you had Michael trel on the podcast in the same way that Google and Facebook and Apple have brought clean power down the cost curve by buying solar and wind before was affordable. We need companies to bring next generation carbon removal down the cost curve, too. And so, you know, we are really proud to be partners with stripe and Shopify, we are admirers of the work that they've done to basically take this carbon removal for Corporation space from zero and put it on the map. And we're excited to be helping watershed customers who may not have the resources or the scale, also direct their carbon budgets towards permanent high potential carbon removal technologies that need early adopters today, if they're going to get to scale and $50 a tonne by 2050. Sweet,

Tom Raftery: 14:30

sweet. Net Zero. That's the latest kind of terminology. It used to be carbon neutral and no people are talking about net zero. For anyone who is not kind of familiar. Do you want to talk a little bit about how you define that?

Taylor Francis: 14:46

Yeah, it's such a good question. Net Zero started out as a policy and science idea. And the policy and science idea behind that zero. Is that for us to stay verbalize our climate, we need to get to a place where humans are on net, not adding carbon to the atmosphere, we need to get there by 2050 or sooner. And the way the planet is going to get there is by deeply, deeply deeply decarbonizing every sector of the economy cutting carbon absolutely to the bone. You can't offset your way out of the climate problem. But there are a few sectors that are pretty stubborn to decarbonize. And so the notion behind the net and net zero is that for those sectors that are stubborn to decarbonize, we're gonna need at scale, permanent, durable carbon removal on a scale of five to 10 Giga tons per year by the middle of the century. So that's the policy and science idea behind that zero. And I think that's pretty clear. In the last couple years, it is kind of made the jump from the land of science and policy to the land of corporate commitments. And that's where it gets pretty murky. Our view? Well, and I think just to state the obvious, there's a lot of companies out there that are claiming net zero, and it's kind of a new coat of paint on old, not terribly effective carbon neutrality commitments. Our view is that if a company wants to truly get to net zero, that is, what they're signing up for, is an imperative to accomplish in their own sphere of influence, what the entire world must accomplish to be climate change. And that's kind of the litmus test at the entire planet did what your company is doing? Would we have stabilized the climate or not? And I think that litmus test kind of answers a lot of questions and argue that the kind of pillars of a true net zero commitment for a company are number one, you are considering your entire footprint, you are looking at the carbon that comes from your own buildings and your own facilities and your own vehicles. But you're also looking at the carbon that comes from your suppliers. It's part of why I'm excited to be on the podcast with you is, you know, the the deep commitment around supply chains, that's huge to net zero. And you're also looking at the carbon of your customers. So that's I think step one is like any net zero commitment needs to encompass every tonne of carbon connected to a company both up and down the value chain. Step two is that companies need to first deeply decarbonize that entire sphere of influence. And that means that they are going to cut emissions, wherever emissions can be cut. We think the science based targets initiative does a really good job of setting some rules, guidelines, standards sector by sector for what emissions reductions are enough. But again, if you come back to the litmus test, it's basically if the whole planet cuts emissions, this much will we be in good shape or not. And I think the third pillar of net zero is permanent carbon removal for whatever emissions remained by your target year, and ideally, kind of funding technologies in a way that bring those technologies down the cost curve for everybody. So if every company that kind of is claiming that zero, we're following those three steps, look at the whole picture, deep decarbonisation true removal for whatever remains, it would put us well on the pathway to getting to net zero for the entire planet. But we got to dig like that, that really is the minimum bar. And we got to be careful about companies that are recycling old, cheap offset pledges into kind of the new marketing term to Sure.

Tom Raftery: 18:49

So 10 are part of what you guys do as you're building a marketplace to help people with this. You want to talk a bit about that.

Taylor Francis: 18:56

Yeah, you know, it all comes back to the the mission for the company for us, which is not just to help companies observe their carbon graph. But to help companies better their carbon graph. This is not a bean counting exercise. This is an action exercise. And it starts with data. It starts with knowing where you stand, it starts with x raying your supply chain and knowing where all the carbon lives. But you know, this stuff is only going to matter if companies change, where they are pointing their dollars and point their dollars towards low carbon solutions. And a big piece of that is connecting companies with low carbon innovators who need customers. So I'll give you a couple examples. And so the watershed marketplace is an attempt to do that we help companies buy the stuff that is actually going to decarbonize their own footprint, and decarbonize the broader world. I'll give you a couple examples. Right. Clean Power. This is the Original success story of companies acting on climate. The kind of recent podcast with Michael trail at Google invented this. Google has a massive team of clean power experts who are experts in local regulations and partnering with developers and getting regulated themselves and power markets all over the world. There's lots of companies that want to buy clean power in an effective way, but can't do it with Google's might. And so, you know, watershed is democratizing, kind of high impact high additionality, clean power projects for companies. That's one example of where we think we can bring a lot of trust verification, efficiency to decarbonisation purchases, other great examples, carbon removal, you know, again, it's Shopify stripe, Microsoft, who have kind of pioneered this view of, hey, let's let's buy expensive next generation carbon removal technologies that, by the way, aren't certified by offset registries, because they kind of don't play by the old offset rules. And that's critical work, it's not something that a company can do on their own. And so we've been really excited to help a lot of our customers kind of with a click of a button in the dashboard, by next generation cutting edge, you know, fresh off fresh out of the lab, carbon removal purchases from companies like charm and others, that that's, you know, really accelerating the whole carbon removal space. And I'll say that's just kind of that beginning. You know, so much of decarbonisation is about changing purchases for businesses. Yeah. And so, you know, sweet green, it's all about goat cheese, and chicken and kale, for square and other electronics supply manufacturers. It's about semiconductors and aluminum and plastic. And so, yeah, part of the watershed mission is to kind of level the playing field, create this layer of trust and verification, so that companies can point their dollars towards the low carbon solutions that need them.

Tom Raftery: 22:17

Super, no, I mean, that's, that's a critical information for companies, because, you know, very often people are scratching their heads going, I need to buy, you know, like a number 20 new office chairs, or like, but I have no idea. You know, which of these office chair suppliers, has low carbon office chairs, if that's even a thing, you know? So something like this is obviously incredibly important information. As you look down your supply chain, you need to be able to make decisions based not just on the financial implications of what it is you're purchasing, but also on the climate implications. And today, that's almost impossible for most people. It's almost impossible.

Taylor Francis: 23:02

Yeah. And I mean, that's at the end of the day, that's our mission, put those carbon numbers where the decisions get made. Thank you. You're so right, Tom. And this is one of the great secrets of decarbonisation is you can deliver the same product, the same good the same service and way that the consumer doesn't even notice the difference with drastically different carbon applications. And we've gotten really deep on food, working with companies like sweet green and imperfect produce. And there's a lot of great research that shows two or 3x variation in the carbon footprint of the exact same food product, where you know, someone on the other end, doing a taste test is not going to notice the difference. But depending on what's done on the field, depending on you know, the source of feed or the approach to fertilizer, or, you know, on cheese that turns a lot on, what do you do with the manure? Is manure being fed through a methane digester? Or is it out in an open pit just belching methane for a whole year, these decisions way upstream, that oftentimes don't cost extra can have two or 3x carbon differentials in a way where the consumer is not gonna even notice the difference. And if they are, maybe it's a positive difference, like that is this incredible secret of decarbonisation? This is not something where we are going to need to force widescale austerity on the planet in order to get to zero. It's actually just about policymakers, suppliers, companies making different decisions with technology technologies that oftentimes already exist, that have cascading decarbonization impact down the supply chain.

Tom Raftery: 24:55

So that brings me to the question of how do you verify this data? I mean, you're not sending people out to goat farms to check on these, and what's being done with the manure? Or maybe you are?

Taylor Francis: 25:11

I've been to I've been to my share of Creameries. Tom. You know, it's it's a good question at the end of the day, you know, I will say one of the things we've often thought about is I think we're not too far away from the day when watershed employees will wear hard hats. And we are going to do whatever it takes to bring this piece of infrastructure, have understood, verified actionable carbon data into the world. And we are not constrained by people's kind of traditional perspectives of what is and is not a software company. So yeah, there may indeed be some some goat farm visits and watersheds future more seriously. I think, you know, this is part of what is powerful about doing this as a platform, any individual company, it's just not reasonable for them to contact on their own 1000 plus suppliers, and collect PDFs and spreadsheets on 1000 plus suppliers. That's the way they are innovators in the space have done it. You know, apple, and Google and Facebook have been trading spreadsheets across the Pacific Ocean with their suppliers for years. And it's awesome, they've done it, but not every company can. And so I think this is part of the power of taking a kind of stripe style software based platform approach where we can act on behalf on behalf of all of our customers, and build this carbon data graph all across different supply chains that then, you know, lots of new companies can can benefit from and lower the friction of getting that kind of verified trusted carbon data to the decision makers.

Tom Raftery: 27:02

So given all that we've talked about Taylor, are you optimistic for our future? No, I

Taylor Francis: 27:13

am. I think it's important first to say that we need to have anyone who's an optimist on this topic needs to be a pretty sober optimist on this topic. And, you know, it's it's impossible not to look at the heat waves in the Pacific Northwest. heat waves are coming back to the west coast this coming week, like this is the new normal people are shocked by the wildfires and the heat waves, you know, newsflash, this is going to be 2021 is probably the year with the least climate disasters of the rest of our lifetimes. And 2022 will be the year with the least climate disasters, the rest of our lifetimes like there is some planetary scale impact that is just something we're going to live with. So I think it's important to be sober about that fact. On the flip side, you know, people talk about the feedback loops of the climate system. And those feedback loops are the ones that are accelerating the impact of warming in such a devastating way. But one thing we've got going for us is that there's feedback loops on the other side, too. There is a policy innovation feedback loop that I think can accelerate decarbonisation faster than anyone thinks is possible. There was an amazing article in The Atlantic a few weeks ago about the green vortex I really recommend folks read it was by Robinson Meyer. And he really breaks apart the different components of this kind of policy, innovation feedback loop, where more money towards low carbon solutions lowers the price increases the scale means there's more money towards low carbon solutions. That source of demand and supply can come both from policymakers and from companies. It's already played out on clean power. It's in the midst of playing out on some of these other sectors as well. And the green vortex can accelerate faster than naysayers might expect. So you asked if I'm optimistic I am I believe in the power of the kind of feedback loops that can save us. But I'll tell you, I don't think people realize just how urgent The situation is. You know, everyone talks about 2030 as this big landmark and it is and a decade can seem like a long time, but it is not. You know between January 1 2021 And today, we are now more than 7% of the way through the decade we had on January 1 to cut carbon emissions in half every month is one percent of our remaining time every day is almost three basis points of our remaining time. And so, I mean, if you let that sink in that insane urgency of this crisis, it's kind of impossible to think about anything differently when I went, you know, when people email me and say, I can't meet for a month, and my mind that I can't meet for 1% of the remaining time, we have to solve climate change. So anyone working in a space should think about the fact that every month is a percentage point every day is three basis points. And the only way you can be optimistic is if you act like that. Yeah.

Tom Raftery: 30:39

Yeah. Yeah. And the other. The way I often frame it is I say, here in the EU, we have now legally mandated on all 27 states of the EU, that they have to cut their carbon emissions 55% against the 1990 baseline by 2030. The US has set a target, not legally binding of 52% by 2030, against the 2005 baseline. And China has said net zero by 2016, by the latest. And also they've said that they want every region within China to be sourcing 40% of their energy from renewables by 2030. So those three large economic bloc's have set hugely, hugely ambitious goals, which will be really hard to beat. But, you know, and that's why they call the 2020s, the decade of action. But that 55%, which in the EU, we will have to meet, because it's legally binding will be the low hanging fruit. Which means the 2030s, if the 2020s were the decade of action, the 2030s are going to be the decade of a whole lot more action. And the 2040s are going to be the decade of Holy crap. That's a lot of actually. So this is not going away anytime soon. This is getting more and more urgent with every to your point day and a month goes by it's such a good point.

Taylor Francis: 32:14

And the US, Europe and China goals aren't enough. No, you know, I think the climate action tracker is one of the great services to this whole space and they publish. Every time a country updates their climate target, they update. The climate action tracker publishes this excellent visual of emissions with business as usual. emissions with committed policies and missions with committed pledges and the emissions, the scientists tell us we need to and you know, thankfully, with the Biden ministration, the committed policies line has been coming down a bit, but it's still not where it needs to be. I mean, we were so inspired by this visual that it's actually the homepage of the watershed website. But yeah, you're totally right. It's easy to get caught up in the enthusiasm about new commitments. And there's something every day that's happening. And I think that is the beginning of the green vortex is the beginning of the feedback loop that will save us. But man, you got to keep in mind how much every day matters. And you got to keep in mind that climate action tracker graph, and the fact that even achieving the goals we've already set is woefully inadequate for the future we need. And we've got,

Tom Raftery: 33:26

you know, at least the next 28 years of this to go and then that gets us to 2050. And then we've got even more to do. So this is this is a this is this is going to be going for quite a while yet. So we've got a lot more podcast episodes in your future top 10 we're coming to the end of the podcast now. Is there any question I have not asked that you wish I had or any topics we've not broached that you think it's important for people to be aware of? You know, I think

Taylor Francis: 33:57

I hope a lot of folks who were listening to this who work at companies that may be thinking about climate may not be thinking about climate, realize the power they have as potential change agents within corporations and organizations. You know, if you take seriously that global carbon graph, and you take seriously the task of bending it, companies have a really big role to play and it's not in empty pronouncements and buying cheap offsets. It's an really rethinking, redesigning their businesses rethinking redesigning their supply chains. And I think there's going to be a new role at companies of climate lead, climate change agent, climate designer. That is one of the most impactful roles of the next decade. careers are going to be minted out of it. And by The effectiveness of that function is going to have a big impact on the effectiveness of us spending the global carbon graph. And so, yeah, you know, I think there's just a lot of power for the people who know how their businesses work, and want to help their companies re engineer, every piece of their operations. We work for those companies every day, it's, and with those people every day, it's a total privilege, and a joy. And anyway, I hope some of your listeners think about maybe raising their hands to be that person at their company. Because there's a lot of potential impact. And it's, it's, it's going to be good for those companies as well.

Tom Raftery: 35:45

Super, super tender. If people want to know more about yourself, or about watershed or any of the topics we discussed today, where would you have me direct them?

Taylor Francis: 35:56

Why should climate calm? We've got a blog where we publish some fairly nerdy stuff about, you know, what are the things that actually drive carbon reductions? What is the version of net zero that's actually impactful. I would love folks to follow along. They're

Tom Raftery: 36:14

tremendous, tremendous data. That's been awesome. Thanks a million for coming on the podcast today. Thank you, Tom. Okay, we've come to the end of the show. Thanks, everyone, for listening. If you'd like to know more about climate 21, feel free to drop me an email to Tom raftery@sap.com or connect with me on LinkedIn or Twitter. If you liked the show, please don't forget to subscribe to it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.