A new start-up run by former employees of the payment processor Stripe Inc. will help companies analyze the full range of their carbon emissions and figure out the best way to reduce and offset them.
Watershed Technology Inc., which said Wednesday it has raised funding from Sequoia Capital, Kleiner Perkins and Laurene Powell Jobs, has built a software tool that lets customers such as mobile payment firm Square Inc., e-commerce platform Shopify Inc., and salad chain Sweetgreen Inc. make sense of their own and their suppliers’ emissions. It also shows companies which decisions they could make to most drastically change their carbon footprint.
Watershed and its customers are part of a growing movement of companies realizing that fighting climate change needs to be a fundamental part of their long-term business plan. BlackRock Inc., the world’s largest shareholder, warned last week that it could vote against directors who don’t present strong plans to lessen their environmental impact.
Christian Anderson, Watershed’s chief executive officer, said that “old-world” companies often have climate programs that are “bolted on to the business rather than being core to the operation—so we’re going to do exactly what we were going to do anyway and buy offsets.” But the market is going through “an inflection moment,” he said. “You’ve got this generation of fast-growing companies that are coming to climate for the first time as a corporate imperative and want to do something very ambitious on it.”
Watershed helps companies assess more than just their Scope 1 and Scope 2 emissions—direct emissions from a company and emissions from the energy a company buys, like electricity to power its offices. It also helps companies understand their sprawling Scope 3 emissions, which includes the impact of their supply chain and customers’ use of their products and can often make up the majority of a carbon footprint.
“You have to collect all this data,” said Taylor Francis, Watershed’s president and another co-founder. “Sweetgreen’s carbon footprint is in their supply chain.” Restaurants know which lettuce farms have better quality and prices. But it’s much harder to know which ones are low carbon. “The climate solution is locked in all this complexity,” Francis said. “We’re trying to give them the keys and the tools to work through that.”
Watershed’s tool has three goals: Let companies measure their impact, make plans to reduce it, and make reports on progress. Shopify used it last year to assess how its workforce, suddenly all working from home, would change its emissions. And they also were able to analyze choices beyond their own, such as different shipping methods used by stores on their platform. At Square, analyzing Scope 3 emissions meant looking at the carbon intensity of its suppliers—in this case, Bitcoin miners. Square doesn’t mine the cryptocurrency itself, but it buys lots of it from miners, and pledged $10 million last year to support cleaner energy initiatives for Bitcoin alongside a goal to hit net zero carbon by 2030.
Sweetgreen already uses its menu to feature unusual but environmentally restorative ingredients such as kelp, clover and sorghum. But they wanted better data to make their menus even lower carbon, so Sweetgreen’s suppliers filled out forms to tell Watershed more details about their farms. Watershed’s co-founders get particularly excited talking about the far-flung web of emissions numbers behind a single salad. “A typical cheese supplier doesn’t know what their carbon footprint is,” said Francis. “But they do know if they have a methane digester, what type of feed do they use, how do they get it from their suppliers.” (Anderson added: “There is so much data in that salad!”)