How Watershed Simplifies Supply Chain Emissions Reporting

Navigating sustainability reporting is no longer optional—it’s a necessity in today’s regulatory and climate-conscious world.

With growing scrutiny on Scope 3 emissions—those tied to supply chains—businesses face mounting pressure to act decisively.

Enter Watershed, a pioneering climate platform enabling organisations to measure, manage and cut carbon emissions effectively.

Trusted by global leaders like DP World, FedEx and Schneider Electric, Watershed’s strength lies in its Comprehensive Emissions Data Archive (CEDA), a database of 60,000 emissions factors spanning 149 countries.

Here Ellen McCormack, Head of Europe, shares how Watershed is reshaping the way businesses tackle sustainability reporting challenges.

For those not already familiar with Watershed, what is it and how does it sit in the climate tech and sustainability space?

Watershed is a technology platform. We work primarily with large and scaling corporations to help them manage their sustainability data end-to-end. 

What that means is we'll work with companies like Spotify, Walmart or BBVA and help them understand where there are hotspots within their sustainability data and their emissions. We'll do that by taking in the data from their business, doing a full calculation of that data to understand their emissions — what does that look like for them and for their suppliers. 

From there, our customers are able to use our platform to do a lot of things — that could be forecasting, reporting against major regulations. 

The big one that's top of mind right now for many of our customers is CSRD. Our platform helps them prepare for the CSRD reporting end-to-end, pulling in the metrics related to the quantitative questions, answering the qualitative questions and building that report in Watershed. 

There are other areas of the platform that can help them forecast, set targets and engage suppliers if that's something that they want to do.

How is Watershed leveraging data and technology to help companies accurately measure and reduce their carbon footprint, particularly in complex supply chains?

You can't reduce what you can't measure. It really does start with good data.

The number one thing that we hear from companies when they start working with us is either ‘I don't have the data’, ‘it's very hard to get the data’, ‘I don’t know if the data is good enough’ or ‘I'm worried about how manual it is — it's prone to error, it's not in a state that makes it usable for me to go make decisions or help my teams’. That's where the software and the technology comes in. 

This is particularly true when it comes to Scope 3 emissions. For most companies, about 97% or more of their emissions is actually coming from Scope 3. 

That's also often where it can be most challenging from a data collection or even understanding data perspective. What Watershed does is really help facilitate that. 

We help teams which would typically be spending a huge portion of their time chasing down data, looking at data and breaking macros and spreadsheets to actually use that to start taking action .

The other thing that we have within the platform is a huge database of suppliers. What that means is it allows us to get to much more granular supplier specific emissions factors and supplier specific data that allows us to be much more accurate on how we're allocating certain emissions to certain suppliers or areas of a company's Scope 3— where they're spending money or by the vendors that they're using. 

Companies often come to us with some assumptions on where they need to be reducing or what actions they need to take, but once they actually have that data in a system that allows them to look across suppliers and organise. 

We’re able to categorise those suppliers based on data we already have in our platform. The other thing that we focus on from a Scope 3 perspective is making sure that we have emissions factors that most accurately represent the emissions in a certain category. 

We own a database of emissions factors that spans about 140 different countries, which is really important for a company that has a global supply chain because, as you can imagine, the electricity grid in the UK for example is very different from the electricity grid in Thailand, Brazil or Canada.

You want to make sure that any emissions factors you're applying are actually specific to the types of geos where those suppliers actually are. 

All of this facilitates better decision making on where to focus, where to engage suppliers, where to maybe procure clean power as an organisation.

With the implementation of CSRD and other ESG regulations, what are the biggest challenges companies face in compliance? How is Watershed addressing these issues?

CSRD is certainly top of mind for many of our customers, even those that have fairly mature programmes.

It's a whole new world when it comes to CSRD, in part because it is asking for more data to be published, more metrics both qualitative and quantitative than most companies have ever actually put out.

The big thing that people are worried about is just the breadth of data that they're going to have to collect. For most organisations we're speaking to, it's actually data they may never have collected or actually measured against before. 

One area that we are helping them is that gap filling as well. The important and exciting thing about the Watershed platform is that we have methodologies that allow our customers to have a variety of ways to measure against a particular metric. 

Using pollution as an example, you may not know the exact quantity of pollutants that you emit on a yearly basis. Maybe you're a trucking company and pollution is something you've never measured before. But maybe you do know the types of cars, trucks and the miles driven. We can estimate the pollution metrics based on that type of data as a bridge to get you to something more granular.

It's that type of functionality that many of our customers who are embarking on CSRD for the first time are finding hugely powerful.

Why are Scope 3 emissions often the most difficult for companies to track and reduce? How does Watershed's platform help tackle this problem?

Scope 3 emissions can feel very abstract and big and hairy as a problem. Sometimes, it's easier to talk about it in specific examples. 

There's a big spectrum of companies when it comes to Scope 3 reporting. Some have never measured Scope 3 before and are just starting to think about it to those who do a lifecycle assessment for every single material within a business. Most companies are somewhere along that spectrum. 

When companies start to work with Watershed, our narrative is based on how we get you from the lightest end to something that's going to get you much more granular data. 

Granularity equals action. It gives you places you can actually start to tweak and change to start to reduce emissions.

Let’s say I'm a food producer and one of my areas of emissions is tomatoes. I know how much I spend on tomatoes, so we can get an emissions calculation based on that.

There are emissions factors for kinds of tomatoes, multiply that against how much you're spending on tomatoes and that gives you a rough estimate of how much you are emitting based on your tomato usage. 

But that's tricky, right? You may want to take action by buying fewer tomatoes, but people like tomatoes — maybe you're making pasta sauce — and you can't reduce your tomato usage. 

So what do you do? You need to go down that spectrum to break that down further.

This is where we work with companies across Scope 3, finding where we source those tomatoes, what variety of tomatoes they are. ‘Did I get those tomatoes here based on aeroplane? Were they trucked? Did they come on trains?’ Questions like that.

We go further down the spectrum into these hotspots with companies to start to break down what's underneath that initial spend category. That's important because it allows companies to make different decisions. 

Once we begin that data analysis, once we get the data in the platform, it empowers them as teams to start to have those conversations internally with product teams, with facilities teams, with finance teams, with the board.

You really need good data to be able to have those conversations.

What strategies do you recommend for companies to effectively engage their suppliers in sustainability efforts and drive meaningful reductions in supply chain emissions?

Tactically, the things that we've seen are true of supply chain programmes that have done a lot of great work in this space.

Often we’re speaking with the sustainability team who is seeing this as a place of high emissions that needs to be tackled in an organisation. But ultimately the best programmes are also heavily engaging finance and procurement, because those are typically the teams within the organisation that are actually directly negotiating with building the contracts, holding the purse strings with suppliers themselves. So the first thing I'd say is you don't want to be acting alone. 

You want to be working with the teams that have those relationships downstream because they're more likely to be able to have more engaging conversations, get more meaningful dialogue and engagement on these types of topics. 

The second is not to boil the ocean and really to focus on where you can have the most impact. 

Then it’s about knowing that this is a journey, it doesn't happen overnight. Getting these things right is an incremental process and it really does start with good data to be able to have those conversations and make them really effective. 

Finally, I'd say if it is a supplier where you are spending substantial amounts of money, they will listen to you. You have the ability to engage and open up those conversations.

As companies strive to achieve net zero targets, how can they ensure their efforts are genuine and avoid accusations of greenwashing? What role does transparent reporting play in this process?

Transparent reporting is really important and of course we're getting a little bit more harmonised in that with the likes of the CSRD. 

The challenge historically has been that it's been very apples to oranges as you look across sustainability reports — even in the same industry, even with an organisation that looks very similar to their peers, it can be very difficult sometimes to discern what good looks like or make comparisons. 

There is a beauty here in the granularity of data. It’s helpful when you're talking about broad-based estimates across huge swaths of your business, especially where there's high concentration of emissions. That’s where things can get a little bit muddied. 

Being transparent where it's activity-based data and being transparent where you're using spend-based estimates as an example, I think just allows people to anchor in the foundations of how you're ultimately getting to the claims that you're putting out there. And that again, is where I think just having that level of understanding in an organisation, having that level of granularity across key areas is going to be really important for that. 

That helps with the reporting ultimately when and if a company has to do it.

Explore the latest edition of Supply Chain Digital Magazine and be part of the conversation at our global conference series, Procurement & Supply Chain LIVE.

Discover all our upcoming events and secure your tickets today. 

Supply Chain Digital is a BizClik brand.