Transforming Supply Chains: How to Tackle Scope 3 Emissions

Welcome to another episode of the Sustainable Supply Chain Podcast! I'm Tom Raftery, and in today's show, I had the pleasure of speaking with Katie Martin from Avetta. Katie delves into the critical topic of managing scope 3 emissions, highlighting the complexities businesses face in this emerging area.

Katie explains how Avetta helps companies identify high-risk suppliers and streamline data collection, making it easier to transition from estimated to direct emissions data. We discuss the importance of proactive supplier engagement to drive both sustainability and efficiency, ultimately reducing costs and enhancing resilience.

We also explore the challenges SMBs face and how they can leverage technology to meet new demands without overwhelming their resources. Katie shares insights into future trends, including the potential for emissions caps and the increasing importance of managing methane emissions (yes, including cow farts!).

Join us for practical steps to navigate the evolving regulatory landscape, turn sustainability into a competitive advantage, and have a bit of fun while doing it. Don't miss the key takeaways on driving value through effective supply chain management and preparing for a more sustainable future.

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Transcript

Katie Martin: 0:03

The folks that we're seeing take this on are starting to lead the industry and their spaces. Folks that were already paying attention to sustainability principles had much more resilient supply chains and recovered much more quickly from the pandemic, even and were able to pivot to reopen, to reframe, and to restructure very nimbly.

Tom Raftery: 0:23

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Sustainable Supply Chain Podcast, the number one podcast focusing on sustainability and supply chains, and I'm your host, Tom Raftery. Hi everyone. And welcome to episode 21 of the sustainable supply chain podcast. My name is Tom Raftery, and I am excited to be here with you today, sharing the latest insights and trends in supply chain sustainability. In today's show, I'll be talking to Katie Martin from Avetta and in upcoming episodes, I'll be talking to Silicon Foundry, Settlemint, Ansell, Dexory, and AE Global to name just a few. So watch out for those upcoming episodes. But. Back to today's show. And as I said, my special guest on the show today is Katie. Getty or welcome to the podcast. Would you like to introduce yourself?

Katie Martin: 1:15

Thanks, Tom. Great to be here. I'm Katie Martin. I lead Sustainability and Innovation at Avetta, which is a supply chain risk management platform. My background is primarily in technology and sustainable technology. So building a lot of SaaS software that helps folks achieve their sustainability and climate goals. And since so many of those factors lie in the supply chain, I joined Avetta a few years ago and have been supporting our product development and our consulting practice there ever since.

Tom Raftery: 1:42

Okay. Tell me a little bit as context about Avetta, company size, regions, industries, that kind of thing.

Katie Martin: 1:51

Absolutely. So, Avetta is a global company. We support supplier due diligence and pre qualification so you can ensure that you're connected with safe and sustainable and secure suppliers. We started primarily in the health and safety space, but as our understanding as a global business practice of risk has expanded we have too. So we've had a sustainability and ESG practice area for about four years now, which includes both thought leadership and content development and support in an ever changing regulatory world, as well as our platform support and actually engaging with suppliers, connecting with them on the information and data required to ensure that they're meeting new ESG compliance components, and then of course working with them as well to increase their ESG maturity over time.

Tom Raftery: 2:37

Okay. And why is this a space that you got into?

Katie Martin: 2:41

For me, I think this is one of the largest levers in the business community to create the good and the change that we want to see in the world. This is kind of the next step in the business evolution and paradigm in terms of what good looks like. And it's helping us better understand the true cost of our products and services so we can better make informed decisions that are good for people, planet and profit simultaneously.

Tom Raftery: 3:04

Okay. And are the main challenges that your customers slash clients are coming up against in this space?

Katie Martin: 3:16

A lot of complexity right now, because this is an emerging topic area, and the variability of that is very geographical as well. There's still kind of an emerging consensus on what are the requirements in this space, and they can vary widely by geography and by industry. So, the first thing we do is help folks understand which are pertinent to them at a bare minimum to ensure compliance and then which could also be you know, business contributors and opportunity spaces to work with if they have internal goals or a culture kind of situated with going above and beyond in these spaces, especially when it comes to avoiding modern day slavery or climate preparedness and getting into net zero and carbon neutrality. The other piece really is a lot of this data and the sustainability space, as I mentioned, lies in the supply chain. So, depending on your industry, 70 to 90 percent of the components you have to report on are all housed with your supplier. So you don't have direct access or transparency into that data. And so you have to really formulate and communicate with suppliers to have that kind of extraction plan ensure that it has the least amount of friction for them so that you're making it as easy as possible for them to give you that information. But also start an educational piece, which is why are we now asking for this expanded information? How are we protecting your data? How could you utilize this data as well directly to better situate yourself for RFPs and to secure more business? As this is just becoming the standard for the way things are done.

Tom Raftery: 4:48

Okay, the, just as a kind of a 101 for people listening, essentially, this is, you're talking about scope three emissions there. So for most organizations, they've got your scope. Well, for all organizations, you've got your scope one, two, and three, one and two are internal and three is from your supplier base, essentially just simplifying it as much as possible for people. So, your scope three is your, your supplier's scopes one and two, essentially. So you can work directly on your one and two and hope they're working on their one and two to get your scope three down.

Katie Martin: 5:27

Exactly. And this is really why it's becoming kind of a critical business indicator and a competitive advantage for suppliers as well as as folks are retooling their matrices in the procurement space to really think about risk. Typically that included, you know, cost and quality, quality, efficiency there was a certain degree of risk across the environment and social aspects. But now it's becoming kind of a critical piece. So to stay competitive and to even be attracted to a greater and broader amount of the business community having your scope one and two understood as a business and as a supplier and defined, and managed could be something that is a real benefits. And there are even groups now that I've started to spring up specifically in this space that are advertising themselves as, you know, having the least amount of emissions in this space. So that if you bring them into their supply chain, you're not increasing your scope 3 as a result and negatively influencing your data from there.

Tom Raftery: 6:23

Okay. It's obviously a very, as you alluded to immature space right now. So there's, there's a lot of different reporting standards, a lot of different reporting requirements as well for now in most places. scope three is not required. It's not mandated to be reported. The SEC said last year they were going to make it mandatory, but they've rowed back on that. But do you see that changing over time?

Katie Martin: 6:55

Yeah, in a sense to use a popular colloquialism, the horse is out of the barn in a lot of ways especially as I'm based in North America, and we're a less mature sustainability market, when we compare ourselves to those based in Europe, but even APAC there have been significant strides in making scope 3 transparency a regulatory requirement. Or at least now an expectation from internal and external stakeholders, even if it's not regulatory enabled. Here in the states and in California, where I'm based, we recently had a couple of Senate bills that are requiring supply chain transparency for anyone basically connected to a California supply chain. So, as you think about the largest sector of business that's conducted in California and the agriculture space. And then as we also think about California being like the eighth largest GDP in the world, depending on the year, it's kind of effectively de facto making supply chain transparency in North America requirement as well. So there was a little bit of reticence around releasing scope three requirements from the SEC. A lot of folks are concerned about some of the things we just spoke about, which is the complexity of engaging with suppliers and getting that data and having it be reliable and trusted data. So, we're starting kind of slowly here, but at least with a focus on scope, one and two companies are able to start to really understand their personal footprint. And as a result, at least be a better player in the supply chains that they occupy as well.

Tom Raftery: 8:21

And hopefully if they're working on their one and two, they're getting your scope three down. But it is obviously quite. complicated. As I mentioned at the start, it's, it's relatively straightforward to work on your own scope one and two and get them down, but it's a lot more complex, a lot more nuanced, obviously, when you're talking to suppliers and asking them to supply you with data so that you can report on your scope three, how best to tackle that with your supply base?

Katie Martin: 8:58

Great question. And I think the the thing I always say is don't let the perfection be the enemy of the good. And we kind of have to start with a scaled approach here because, I mean, for a lot of suppliers, as we think about those in our supply chain, a significant amount are going to be SMBs, you know, GHG may just be an acronym they're slowly starting to understand. For those of us in the sustainability space, It's still something that's ever changing. So, the thing we usually say from a tactical and strategic approach, and this may not be fully owned by your supply chain leadership you may have a sustainability, you know, vertical at your organization doing this as well. But supply chain leaders play such a critical piece of this, which is doing what we call a scope three inventory. So there is a body called the GHG protocol that has basically systematized the methodology be utilized to understand what is scope three, which aspects of scope three are applicable and material to your business, and then how can we start charting the level of data that we have for those components. So not to further overwhelm folks in this space, but there's 15 kind of subcategories under scope three that include things like purchase goods and services. It includes business travel. It includes upstream leased assets. So the first thing you want to do is go through and decide which ones are applicable to your business. If you don't have leased assets, if you don't have investments, et cetera, you know, that's an easy thing to strike a line through. But the GHG protocol has a really nice matrix that captures all of those for you. And you can basically say, we have direct data on this currently. We have estimated data on this. We have no view on this. And how are we going to scale that over time? And you can start to see which aspects are most critical for your business. Obviously, since so much of it lies in the supply chain, that's where we tend to push folks to focus. And the 1st piece should be establishing the relationships and communication channels with those suppliers, you know, to be your riskiest emitters. That could be done in house with a materiality study. That could be done through groups like Avetta that do a rapid supply chain risk analysis. And based on what we know from global data can say, here's your very high, high, medium and low risk emitters in your supply chain. Here's how you need to engage with them and get due diligence. And then we can start to build decarbonization plans together over time.

Tom Raftery: 11:14

Okay. And for organizations that might have very large supply chains with thousands of suppliers, how to handle that kind of scale, because reaching out to thousands of them and asking them all to come back with their emissions, it's going to be challenging. And frankly, you need a massive team to try and do it. And would they succeed anyway?

Katie Martin: 11:39

I think that's 1 of the interesting things of being in the technology side of things now is the scalability of that can be taken off of the human element, and put into the technology. So typically folks already have a general sense of the risk parameters. You know, we typically look at those that are, you know, in the high spend categories, do on site work or are otherwise engaged in, you know, labelers within that particular business vertical that we know to be high risk. But there's a little bit of nuance when it comes to sustainability, where folks that you wouldn't typically view as high risk actually do pose a significant risk for you from an emissions standpoint. You know, if you have any type of, especially in the food industry, like folks that are using refrigerated vehicles to transport food, those refrigerated vehicles have a very high emissions point, and that may be a very small piece of your business, but a very high impact on the mission side. So, what we recommend is engaging with folks like Avetta or others that are able to kind of take that list and synthesize it really quickly. We typically are able to do this in less than 24 hours because of the risk modeling that we've built at a proprietary fashion based on the 130,000 suppliers that we have at our database and the global watchdog groups and data groups that we have that are able to help us isolate where risk is lying now, especially post pandemic. So this helps you with the scalability. A lot of folks also are trying to manage this component in house. They have a very, you know, detailed view on what they want to ask their suppliers and they have it in Excel sheets and they're trying to manage it via emails. We are able to kind of take that process and put it into a replicable framework that can go out in one blast with your suppliers. It comes with a lot of educational support, and that is the biggest piece is really setting the stage for suppliers to understand why this is being asked. What's going to be asked of them and likely the data sources they're going to need to have ready and open to complete this type of questionnaire and response. We typically see at our work that we've gotten even the 1st round of that response for suppliers down to under 60 minutes. And we get about an 80 percent response rate in the first six months from the supply chain. So it's really about, let's use the technology around us to take the friction out of this for everyone, both you in house as the supply chain leader or sustainability professional, and especially for our suppliers who are typically just trying to keep the lights on and make payroll. And make sure that we're, you know, driving that value and making it as easy as possible.

Tom Raftery: 14:06

Okay, and if I am a supplier, if I'm at the other end and I'm receiving these surveys, and I say surveys in plural, because different organizations are going to be using different companies like Avetta, for example, to find out, or maybe someone who's doing it directly to their supplier based on not using someone like Avetta, you know, so if I'm a supplier and I'm getting from my customers all these different questionnaires about how to, you know, it's, it's, it's going to start getting a bit fatiguing after a while, getting all these things to fill out no?

Katie Martin: 14:38

Oh, yes. You know, the fatigue and the weariness we definitely empathize with. You know, I'm on the receiving end of this as well as I manage not only Avetta's external sustainability practice, but I also am the recipient of all of these that I have to complete as well as we're a vendor. So, The one thing I think we've talked about is the kind of complexity of the regulatory marketplace. There's a lot of different frameworks, a lot of different standards, different stakeholders asking for different information. The way we've tried to ease that burden is my team and I have basically looked at all of those global frameworks, over 10 of them, as well as the kind of emerging regulatory consensus and have synthesized that down into a repeatable question set. And what that means is, one, when suppliers answer that on our network, they've answered it one time, and it goes out to all of the relevant clients that they need from a community model, but also that they can take their answers and copy paste them into incoming RFPs that are likely asking them the exact same thing, maybe worded slightly differently. But there are about 10 to 15 data points that every single standard body and regulatory component is asking for from suppliers. And that's easy to make a repeatable process. So at least you're not having to regenerate this information multiple times, whether or not it's coming from within our platform or from other RFPs and systems that they're working with, too. So that's the 1 thing we try to make it is the suppliers own this information and data, and they can easily transfer it out and insert it into other business seeking documentation or regulatory requirement responses as needed.

Tom Raftery: 16:13

Okay. And in terms of the data, then. Some of it is, I'm going to, I'm going to guess a lot of it, if not, the majority of it is estimated data versus actual direct data. How are we seeing the shift from estimated to direct data? Because obviously estimated data is just that it's an estimate and could be well wrong. Whereas what you really ideally want is to have that actual verifiable direct data.

Katie Martin: 16:45

Yes, and. I think this is where to the kind of maturity differentiation of the marketplaces comes to play because here in Noram, we're probably about a decade behind a lot of folks in, like, the European areas that have already kind of traversed this type of estimations and calculations that have moved more into that direct data capture. And the reason this is important is because for a lot of the stakeholders. Both those in the business market and, NGO and government kind of sector and also on the consumer space are a little fatigued by estimated data because it's been unfortunately utilized improperly or for too long of a time. And now we're moving into greenwashing kind of challenges. And what I mean by that was the estimations were always meant to be a temporary situation. It was meant to give folks a shot in the dark to understand where the hot spots in their supply chain were so that they could start to make the operational changes necessary to burn that down and also do the due diligence with suppliers to slowly bring down estimated data and increase direct data over time. And unfortunately, what we've seen is folks have just stayed with estimated data, and instead of both transitioning and thinking about operational changes are buying carbon offsets so that they could be carbon neutral, which means we're not really actually addressing the challenge in the problem. And that's where you get the greenwashing claims. So, a lot of the time, what we're trying to do is kind of like, light year ourselves here in a less mature market and catch up as well with. Building those inroads with our suppliers so that we're not using estimated data because a lot of it would be, you know, we have our, our spend with our suppliers. We have some configuration and some equations that we could utilize to get guesstimates and then now we have a number. But the challenge was that you can't affect that number without only reducing spend with those suppliers, because it's always spend based. So, what we're trying to do is get into who are those high risk and high meeting suppliers that we can then pull back the lens in a sense and say, all right, here's the scope 1 and 2 components that you can focus on to bring down your emissions overall. And that helps me from a scope 3 perspective. It helps you you know, garner additional business and quite frankly, a lot of decarbonization components and strategies are simply operational efficiencies that save cost over time. We're talking about lighter packaging, different fuel mix and fleet mixes and things that actually are just cost savers. So, I like to say, you know, sustainability is a feature, not a bug, because we're really allowing our suppliers and ourselves to do is be more efficient with the resources that we have and reduce the true cost and impact of the goods and services we're delivering over time as well. It's truly one of those win, win, win situations that we rarely encounter in a business situation, but that's why direct data is so important because you have to really have that true transparency to get a real baseline and be able to set actual attainable goals.

Tom Raftery: 20:21

Yeah, I mean, something I've said on the podcast before is very often when you are making your organization more sustainable, you're actually making it more efficient and thereby reducing costs. So therefore, sustainable goods should be cheaper longer term than their non sustainable equivalents. I know that's not often the case, but I think long term, I think that's a matter of maturity of the marketplace. I think long term that will become the case because to your point, you are just making your systems more efficient.

Katie Martin: 20:57

Absolutely. I think the challenge we see right now is we have some early adopters moving into this market and using sustainability to drive product innovation and unfortunately, because there's a little bit of a switching cost at the onset of that, and because the entire market isn't moving in that simultaneously, you do start to see a bit of a premium placed on those goods. 1 of the things we don't speak about often in sustainability too, since it's more environmentally focused of a term is the cost of human capital and where those goods are sourced and the ethical treatment and the remuneration of those folks can also then play a role into the cost of those goods. But from a purely environmental perspective, what this is allowing us to do is, you know, as we think about, you know, moving into electrification and we think about that is from even a consumer side of the house, being a sustainable driver, a lot of that has to do with, you know, sourcing of copper and wiring that's going to be necessary for those goods and services. And typically, you know, there are fixed locations where we can source that copper and it has to bounce around the world a couple of times to be smelted and refined and built into components. And that is what we're doing purely just a cost assessment. When we start to factor in the sustainability assessment now, what that does from people who are making purchasing decisions is factoring the cost of that travel into your carbon footprint. And now that you have to report the cost of the piece and the cost of its carbon, it may start to adjust your methodology and choosing where you're sourcing these materials, which vendors you're sourcing with. Maybe you stick with your original vendors and they are able to adjust their scope 1 and 2 accordingly and get to a place of compliance that aligns with your scope 3 goals. Or maybe you start to look for more sustainable vendors, more local vendors, things that require less transportation and lower your GHG over time. So it's really kind of adjusting the mentality that we utilize to think about what good looks like for our goods and again, getting to what we call that true cost component. When now you have to report out the impact of your products and services movement around the world, as well as, the sourcing costs that were originally kind of the primary driver.

Tom Raftery: 23:08

And I know it's early yet, but are you seeing the outcomes of this? And what I mean by that is for companies who are starting to look at the emissions from their suppliers, are you starting to see them going "Actually, maybe I should move my sourcing over to here, to this company", or, you know, are you starting to see them making decisions based on the carbon footprint of their supply base as well? I mean, traditionally it's been cost and reliability, but now this is a new vector that's coming in to be considered.

Katie Martin: 23:41

Absolutely, for a couple of reasons. And I'll say it to your point, it is still early yet I think for much larger companies like our Fortune 1000s, this is becoming the way business is done because they've gotten ahead of it a little earlier than other folks. But reliability is now becoming intrinsically linked to sustainability. With climate change is coming the risk of stranded assets. The resilience of our supply chains are under review. The availability of human capital in certain regions is shifting as well, because one thing that happens with environmental change is human migration. As people move to areas that are able to sustain life, quite literally, and, and from an economic standpoint. So we, we start to see sustainability is just a sign of resilience. And also starting to think about what the kind of reputational impact is too. We've seen, you know, in the last 30 years alone, that kind of change in consideration when it comes to where we're sourcing our labor but the costs for the environmental aspect of our products is starting to be more regulated. I think in the UK and a couple of other locations like Australia, they have what they call the extended producer responsibility. Which is if your products are not packaged in a certain way that aligns with the recyclable avenues of that region, you're going to be fined because it's essentially contributing to the waste and of that community and having a carbon impact. So you have to adjust your packaging to align with that. And so you have to find producers and suppliers that can do that. Naturally, there is a time horizon. So what we're starting to see is for those companies that are taking this into consideration, they're setting three year, five year benchmarks with their suppliers, which is, we have this baseline, we have this goal, we'd like to reverse engineer you into that goal along with us. Here is how you can start to do that from an operational perspective. If at year 3 or year 5, we're not seeing this level of progress, it could be now a stop contract factor and we start to source vendors and suppliers that are well positioned in this space. So you can see how suppliers who are proactively, taking this into consideration are supporting their longevity and their financial sustainability. And even becoming more competitive and maybe able to secure contracts they weren't able to in the past simply because they bring this value to the company at the onset.

Tom Raftery: 26:04

And you mentioned the fortune 1000 companies are usually pretty far ahead on this. What about the SMBs? Because, you know. there's enough things that they have to contend with already, how do they deal with this new one extra thing that they're going to have to report on?

Katie Martin: 26:25

Yeah, it's, you know, it's again, like I said, the new cost of doing business. I think the thing to be is proactive. We have a lot of you know, weariness in this space from folks who see you know compliance as more of a buffer between them and business um and I think with sustainability, it's allowing us to really repivot that mentality and think about it also as the positive business driver it can be. As I mentioned, like, when you go through this process, what you're eventually going to get to is just cost efficiency. So you're able to reduce your costs there, increase your competitive advantage and really start to understand how you can better pivot yourself in this marketplace. It's hard to take on. I think the biggest piece of friction we see is just the availability of human capital with expertise in this space and then also the budgets that you are required to secure that. So a lot of times companies are trying to shift into this and they're saying, you know, EHS, ESG, those letters are kind of the same. This is your responsibility now, and while, there's a lot of overlap. And I like to say, you know, like, EHS professionals were doing ESG before it was cool. There is a lot of expanded components on those kind of letters and differentiators that it requires, like, specific training or knowledge. So this is why being able to kind of off board a lot of that to companies like Avetta or others that could support you, take a lot of that burden off. We understand the risk matricy and how to, you know, present this to you and your stakeholders in a way that allows you to get to insights and action, instead of kind of spinning your wheels on where to get started and how to even collect this data and then how to sift through it. We like to kind of speed through that process for you in the platform so that you can get to the business that only you can do, which is use that data and insights to start to drive value and drive change. So I think a lot of it is starting to build the business case as needed to get investments either in the tools or the people to bring this to fruition. And there's a lot of good literature out there already that showcases how this increases valuations, it decreases risks, it drives brand value, reputational value it helps retain employees and also attract those in a very competitive market. Especially as we think about, you know, rising generations, like millennials and Gen Z moving into positions. This is absolutely critical to them in their workplaces. So, you know, being ahead of it and being able to address your company's sustainability story and the work that you're doing is really kind of, one of those things that drives the financial and reputational value of a company.

Tom Raftery: 29:01

Yeah, No doubt. Do you have any success stories that you can speak to any customers who have, you reduced their emissions from 1 million to zero or.

Katie Martin: 29:16

I think one of our greatest success stories I'll kind of anonymize here, but it's a very large company that you probably deal with on a daily, if not a weekly basis, if you are like myself was really looking at the shipping and environmental footprint from a transportation perspective there and getting a handle on that. You mentioned, you know, sometimes there are so many vendors and you have your contractors and your subs and your sub subs and especially at a regional level. It can be really challenging to pinpoint into that. And they had some very big external commitments. They had some Net Zero that they were trying to reach by 2030 and then additional ones by 2050 and they were kind of stuck in the the equation game, as I like to call it, which is every year, we're a little overwhelmed. We can't even figure out which suppliers to start with to get direct data. And we have to report on these things. So, we'll take our supply chain spend and we'll pop it into the emissions calculator and continue working from there. And then when we get that delta in terms of what our, you know, our emissions are, we'll buy carbon offsets and then that's how we'll hit neutrality. And that was working for some time, but as I mentioned consumers are getting extremely savvy in this space, and they are leaving no quarter for any types of claims that aren't supported and substantiated with data. And so to avoid some of those greenwashing risks they engaged with us to start to do a bit more of a, a focus on even identifying who are our high risk emitters. We had a stab at the dark that they, when they handed us, their largest spend list and we were able to expand it out from there and say, from a regional perspective and from a supplier classification perspective, here's what we really need to be engaging with. Here are our hotspots. And here are the controls we can start to put in place so that not only your T1 suppliers are operating in this transparent way and working with you, but we're making sure that they're monitoring their subs, so your Tier 2 and your Tier 3s. And that was only enabled from being able to put it in a platform experience and having it be something that was like replicable and manageable, and that allows like a single person to manage thousands, if not hundreds of thousands of suppliers in a single space and instantly be able to see where the spikes are, the type of emission risks that are spiking and the insights that we can drive into. Here's how you can make recommendations. We call it our supplier playbooks. But it basically says based on a supplier maturity, here's how they can bring down their scope 1 and 2 and move into the next like maturity level. So it's, it's really, I think, just figuring out how to get started and that's with identifying what components are applicable to your business on the scope 3 spectrum. And then how to get the data from your high risk suppliers and identify who those folks are at the onset.

Tom Raftery: 32:07

Okay, cool. And where is this all going next? I mean. We've said that probably scope three will be mandated in most regions in the next five years, maybe out to 2030. What, what, what comes after that?

Katie Martin: 32:27

After that, what we're probably going to see is government's setting emissions caps and targets. So what we're really trying to understand is baselines and what good could look like. And then be able to say, for a business of your size doing this type of work in this region, if you were operating at best practice efficiency, your emissions would be this. If it's higher, you're going to get fined. If it's lower, you may start to see credits, or you may be able to sell that delta to someone else in the carbon marketplace. What we're going to start to see is similar to how we now have environmental standards and expectations. We have health and safety ones. We are going to have that when it comes to carbon emissions and likely methane as well right after that. Methane is the little least talked about gas, but it's 1 that's low in volume in terms of production on the planet, but high at impact in terms of harm. So that's quickly becoming kind of the secondary piece, which is understanding methane and that's primarily coming from refrigerations and cooling. And also from waste, so almost all of the methane that we're seeing is generated by landfills and waste where products are just essentially decomposing. To the best of their ability and unfortunately releasing these gases. So I think we're going to start to see expectations in carbon management and G. H. G. management overall. I think this is going to lead and drive a lot of product innovation. We've seen that recently with Lego, where they were looking at ways to replace the core components of their, their product, which are unfortunately right now, petroleum derivatives. And start to think about, okay, how can we start to reduce our carbon impact with different types of product intervention and they're continuing to innovate in that space and have ramped up also a very large recycle program so that they can at least reuse you know, consumers that are looking to dispose of their products, generate new products and reduce what's going in the waste from there.

Tom Raftery: 34:24

Okay, cool, cool. I, I noticed you very carefully avoided talking about cow farts when you were talking about methane, but...

Katie Martin: 34:33

Yeah, I think cow farts always an interesting one. I think the, the, the impact we're starting to see too, of course, in like agriculture as well, and shifting away from that is a big piece too. But it's really a challenging one to speak about on a global landscape as well, just with the cultural implications around food demands and the linkages that is, that are associated with economies too, but yeah, so we want to keep our eyes on the, on the cow farts too.

Tom Raftery: 35:00

Katie, we're coming towards the podcast now. Is there any question I didn't ask that you wish I had or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Katie Martin: 35:13

I think the biggest thing I always like to impart with folks is moving from the kind of space of being overwhelmed, or even dare I say, annoyed by, you know, yet another piece of data that is required of you or, additional work that's required of you and start to think about positioning it into a value driver, because again, the folks that we're seeing take this on are starting to lead the industry and their spaces. Folks that were already paying attention to sustainability principles had much more resilient supply chains and recovered much more quickly from the pandemic, even and were able to pivot to reopen to reframe and to restructure very nimbly. nimbly And this is quite frankly, becoming a business standard, but it's also a business necessity because climate change is affecting the availability of assets. It's affecting the availability of human capital, and it's affecting the availability of raw materials. So, anyone who has some of those components involved in their supply chain, which I would hazard a guess to say is pretty much everyone needs to take this on is kind of the new nexus of risk. And we're seeing that play through in the insurance market. We're seeing folks have less access to capital if they don't have an understanding or control of their sustainability and scope 1, 2, and 3 emmissions, because folks are now thinking of this as a risk lens when it comes to lending when it comes to investing. So, I think as much as you're able to get a hold of this or you know, interact with, with vendors or third parties that can help support you on this and get you jumpstarted really coming in with a proactive mindset has been really helpful for folks. Recognizing that it is an, an ever kind of tumbling regulatory environment, but there are resources and assets here to help you kind of focus and laser on the pieces that are most critical to you. So you make sure you're prioritizing your work appropriately and getting the most ROI you possibly can out of that time and capital investment.

Tom Raftery: 37:09

Yeah, and don't leave it too late. Cool.

Katie Martin: 37:12

Yes,

Tom Raftery: 37:13

All right, Katie, that's been fantastic. If people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Katie Martin: 37:23

of course there is our website, Avetta, A V E T T a. com. And I can also leave some resources that you can insert in our summation here for folks to reach out both on LinkedIn and just some of our resources pages that can help you with jumpstarting your own programs.

Tom Raftery: 37:40

Fantastic. Shoot me across those links. I'll put them in the show notes. Great. Katie, that's been fascinating. Thanks a million for coming on the podcast today.

Katie Martin: 37:47

Thanks for having me, Tom.

Tom Raftery: 37:50

Okay. Thank you all for tuning into this episode of the Sustainable Supply Chain Podcast with me, Tom Raftery. Each week, thousands of supply chain professionals listen to this show. If you or your organization want to connect with this dedicated audience, consider becoming a sponsor. You can opt for exclusive episode branding where you choose the guests or a personalized 30 second ad roll. It's a unique opportunity to reach industry experts and influencers. For more details, hit me up on Twitter or LinkedIn, or drop me an email to tomraftery at outlook. com. Together, let's shape the future of sustainable supply chains. Thanks. Catch you all next time.