Isobel Wild [00:00:07]:
Hello, everybody. Welcome to state of sustainability. We're going to get into the wild west of product carbon footprints today, discussing why they're useful, what are the best practices, what are the watch outs when building and using them. But before we get to that, I'm going to throw in a curveball and put Saif on the spot with a bit of a quiz on some of our ingredients that we have in our emission factor database. And Chris Im, which ones are the lowest and which ones are the highest. So hold on to your seats, hold on to your hats. Saif. Hello.
Saif Hameed [00:00:42]:
Before we get into that, Izzy, I think two disclaimers. One is Izzy has not run these ingredients or quiz questions by me before, so there will be genuine surprise and I may get something's wrong. The second is we do, of course, reserve the right to post edit the recording before it goes live. So whatever you hear will be a genuine response, unscripted, unprepared. You may not get all the outtakes of stuff that we missed or got wrong. We'll decide once we've completed the recording. Izzy, does that sound fair?
Isobel Wild [00:01:16]:
That sounds fair. And for all of our listeners who aren't watching this, you can see a slight sweat on Saif's forehead out of fear and nerves of this quiz that is about to take place. But I will be kind. So, the premise of it is that I've taken a few emission factors from certain ingredients from our crop commodity database. This is actually a database that we've developed alongside academic institutions like Oxford University and Imperial to develop crop level emission factors. We've got about 12,000 across almost every single country in the world. So it is like an absolutely goldmine to dig into. And I'm just going to give a shout out to Piers, who is our LCA expert, who helped me navigate this to find some juicy comparisons to pull out here.
Isobel Wild [00:02:06]:
The database is basically emission factors with an overarching LCA framework, and we've used national level input data from, like, the FAO and allocated associated emissions of those inputs to specific crops using economic allocation. So that's how we've come to them. But I'm going to go into the quiz. So, Ceph, cheese. Out of these three cheese types, which do you think has the highest and maybe the lowest, it would be great if you could rank them one, two, three in terms of emissions. So we've got cow's cheese, goats cheese, and ewes cheese listeners. You can also note these down as well and put in your suggestions.
Saif Hameed [00:02:50]:
Oh, wow. I'm gonna go with cow's cheese. As the most emissions intensive. I'm then gonna go with you. And I'm then gonna go with goat.
Isobel Wild [00:02:59]:
Okay, what's your reasoning?
Saif Hameed [00:03:01]:
My reasoning is that I think that a lot of goat's cheese comes from. Actually, I have no reasoning whatsoever. I was gonna say something around the input intensity to get dairy milk versus goat's milk, but actually, like, I think there's a lot of variation depending on kind of how you're raising the cow, let's say, or how you're raising the. So you could have like a free range cow, I guess, or a free range goat. And I think that would radically alter this. So it depends. I guess that's the answer, is it sort of depends a little on context. Do you have more context for me?
Isobel Wild [00:03:34]:
I don't have more context, but I see where you're coming from. And I put my hands up and say, I've given you a tough call here, but I also thought it was the same order as you, but actually, in fact, it's the opposite. So cow's cheese is the lowest emitting, then it goes goat's cheese and then ewes cheese. So sheep's cheese, which is crazy, but apparently, according to peers, it's actually down to efficiencies. So there's a funny quirk of sheep versus cow, where actually leather and steak is worth more than wool or lamb's meat. So the emissions of the wider sheep production go to the milk, go to milk versus the cow, hence the spike in the sheep's milk. And there's another interesting point, which is less relevant here, but with cheese, it's all down to the allocation of the cheese. So it's allocated down to the dry matter content.
Isobel Wild [00:04:29]:
So a harder cheese will have a higher dry matter content, so there's more emissions allocated to it. So if you were comparing a parmesan to a brie or a camembert, because Parmesan has a higher dry matter content, it's more emissions intensive, and that represents the amount of processing that goes into it, the time that it takes to age. And if you did it, for instance, by just pure kilograms, it wouldn't actually be representing the amount of processing that goes into it. So that was a bombshell for me. Saif, do you have any kind of thoughts or feelings off the back of that?
Saif Hameed [00:05:02]:
Actually, I think you've made me feel a lot better about myself, Izzy, because I think there is no way that my sort of random mental logic chain would have sussed out all of those aspects and details. I was already in my defense on top of the dry matter content aspect, because I remember looking at hard cheeses versus soft cheeses and emissions comparisons. But the actual allocation of how much emissions you'll allocate to leather versus milk, for example, this was beyond my can. So I actually do feel better about myself.
Isobel Wild [00:05:35]:
It's surprising because you think, okay, calm, it's a bigger animal, it's, you know, takes up more space, whatever, whatever. But no, apparently not.
Saif Hameed [00:05:44]:
Well, the other question is, how does ewe's cheese make it onto the same shelf alongside your cow's milk and goat's milk cheese? Like, I do not remember coming across ewes milk cheese.
Isobel Wild [00:05:54]:
So I'm going to try and pronounce the cheese, which is osso iratee cheese.
Saif Hameed [00:06:01]:
Okay, yeah, that's.
Isobel Wild [00:06:01]:
I'm so sorry for all the fromage lovers out there for butchering that pronunciation. But also Manchego, is that not a sheep's cheese? Yeah, we'll have to put that out to our cheese board lovers. But on to maybe an ingredient that I don't have as many issues pronouncing tomatoes. For this bit of the quiz, I'm actually going to test you on, like, geographical differences. So I've got two scenarios here. We've got a tomato from Kenya and a tomato from the United States. Obviously very different, like climates, different areas of the world. Which one do you think has the lower emissions associated with it?
Saif Hameed [00:06:45]:
It depends. You see, it depends on whether this is a salad tomato or a ketchup or pulp tomato, for example, because you have very different ways of growing both of them. You see here, you've wandered into an area that I actually do know reasonably.
Isobel Wild [00:07:00]:
Okay, well, I don't have the specification of type of tomato, but please tell.
Saif Hameed [00:07:06]:
Me, let me answer both variations. So if you are looking at a salad tomato or a tomato that you're basically likely to be growing for the quality of the individual tomato, the look and feel, the shape, etcetera. And you're also trying to grow it so it's available in all seasons. You might be growing it in a greenhouse. If you look at the overall emissions footprint of a tomato grown in a greenhouse in a location like Kenya, where you have a much longer tomato growing season and plentiful sunlight, versus, let's say, growing a tomato in the US or the Netherlands, or many other locations where you have more dynamic seasonality. In those instances, you're likely using a lot of natural gas to warm a greenhouse in the, let's say, Netherlands or the US, and the gas intensity of that tomato growing process versus the natural sunlight and kind of long seasonality that you get in Kenya means that growing it in Kenya would be lower emissions intensive versus growing it in the US or in the Netherlands. You then layer on the logistics element as well, because you need to get it to location. But actually, the logistics of transporting that tomato is usually less in emissions intensity than the sheer amount of gas that you're pumping into these greenhouses to grow them.
Saif Hameed [00:08:22]:
In a. A northern hemisphere market. That's on the salad tomato variety, on the sort of open field tomato growing, where you're growing this for pulp, you're probably therefore growing this in season at scale. And so you have, let's say, a comparable window, maybe in Kenya versus North America, maybe not, but I would actually expect that. So in North America, you have multiple other advantages in growing open field versus greenhouses. In greenhouses, you know, it's gas intensity just having a playoff versus sunlight in natural conditions, whereas in North America, on an open field basis, you have much larger acreage for the average farm. In a place like Kenya, it would be much more smallholder farming. You also have a lot more mechanization and you have a lot more advanced inputs, fertilizer, pesticide, etcetera, and also advanced practices for using those inputs.
Saif Hameed [00:09:12]:
So I would actually expect that on a per unit of output, an open field tomato farm in North America would be lower emissions significantly than the equivalent in Kenya. But I am open to you telling me I'm wrong on that, Izzy.
Isobel Wild [00:09:25]:
So I don't have, obviously, clarity on what kind of tomato that I'm talking about here, which for next time I will do that. But for this, what's really cool about the database is that you can go into the emission factor and actually see the exact breakdown of this emission factor. So you can look at the things that you've just spoken about. So the yield per hectare, you can look at the logistics, you can look at the fuel and the diesel use. But for this one, what was really interesting, and the main difference was actually the fertilizer use. And because of that, actually the US had the higher emitting tomato then Kenya by about four times. This is because there was about ten times more fertilizer applied in the US. But I think the correlation to make there was actually, there were three times more tons per hectare of tomatoes used in the like produced in the US.
Isobel Wild [00:10:20]:
And this higher yield usually correlates, as you said, to like, higher emissions because there are more fertilizers put onto GMO and whatnot, to be able to, like, create that yield. The other really interesting bit was the nitrous oxide that was released. So n two o is, according to Piers, 298 times more potent than CO2. And for the example that we use here, Kenya versus the US, there was five times more, no, two release. And this usually happens in wetter climates because when you apply nitrogen fertilizer, it releases nitrous oxide bacteria in the microbes, and this makes the nitrogen available to plants through nitrification. But if the NTO is released when the soil is saturated with water, that basically means that the NTO is released into the atmosphere and instead of converting into nitrates, yeah, it's released. So there's a really tricky balance if you're in a wetter climate, to actually balance the use of fertilizer levels. So when to apply more, when to apply less by what is bio available.
Isobel Wild [00:11:34]:
So that was a big skew. That meant that the us tomato was a higher emitter one.
Saif Hameed [00:11:40]:
Oh, interesting. So you're actually contradicting me then, Izzy, because I was saying that I would expect open field tomato growing in the US to be lower emissions than Kenya because of mechanization and more sophisticated approaches to fertilizer and pesticide. What I was actually thinking, anecdotally, is that I believe most farmers in Kenya and most farmers also in Pakistan and India and regions I'm familiar with, tend to sort of over fertilize when they fertilize, because they are very risk averse and encouraged by the intermediary to apply more fertilizer to ensure that there's a yield. So that was kind of one factor that I expected to actually play out against the kenyan tomato production.
Isobel Wild [00:12:23]:
That's interesting, because I think what I got from this was that actually because fertilizer and pesticides are so expensive that actually the usage is much lower in developing markets because of the higher costs associated with it. So it's interesting.
Saif Hameed [00:12:39]:
Interesting.
Isobel Wild [00:12:40]:
I feel like we could.
Saif Hameed [00:12:41]:
Yeah, we could go on with this. There's another factor that I don't know if you looked at. So I once built a model to look at tomato prices across Pakistan. I was briefly considering trying to have an arbitrage play in the tomato market. This is probably more detail than you'd anticipated going into on tomatoes, but what I found was one of your other lives. One of my other lives. What I found was that you had lots of price spikes. You have basically two major price spikes at a national level in the tomato market in Pakistan.
Saif Hameed [00:13:12]:
And I think this is true in many other markets. One was around the summer. So, like a July spike when basically, it's too hot to grow the stuff and too hot to kind of harvest. And so you just get a price spike. The other was around a winter spike, which was smaller, but still a spike. And then the other interesting thing I found was that you had lots of regional spikes as well, because you had an imperfect distribution of tomatoes to match market demand. And so you had lots of little regional price variations on any given day or month. And the other thing I kind of found as a result of this analysis was that in peak demand for production in tomato growing locations, and there's a part of Pakistan that is a really good growing location for tomatoes.
Saif Hameed [00:13:53]:
And I think it's similar in a part of Spain. And I think there are a few of these hubs where the conditions in a certain time of year are really ideal. The production was so high, price was so low, that it was not actually worth the shipping cost of getting the tomato to market. So it just made sense to let the tomato rot, basically, because there was no value to be had in getting the tomato to market. And I believe that would also be a very emissions intensive activity. I don't know what this festival is. I think it was in Spain, where you kind of have people running through the streets with tomatoes, but you can see where the logic comes from. Where there's so plentiful supply, it doesn't make sense to actually even try and sell it, because the economic cost of trying to sell it is not worth what you'd get for it.
Isobel Wild [00:14:37]:
I think that's an interesting point, and also to develop on that as saying that these emission factors, they don't sit still. So we were talking to Alan from Meadow, who was saying that it's been a really wet winter, which means that they have actually not been able to produce enough, or they've had to feed their cattle straw and hay and grains, which basically has kind of spiked up the price. And according to that spike, it also has meant the emission factors have gone up as more money has gone in and more produce and inputs have gone into feeding these cows, versus what it would be in, like, a kind of less wet winter, where they could have gone out and be pasture fed earlier on, but because of the rains, they had to be kept inside for another month or so. And so having to try and account for those, like, differences over time, like year on year, is also another big challenge to kind of get your head around. But on another note, Saif, have you been watching Jeremy Clarkson's farm?
Saif Hameed [00:15:32]:
I have not. To be honest, I don't know what to make of Jeremy Clarkson in general. I was actually a big fan of Top Gear in the early days. And then, like older Jeremy Clarkson seems to be very gravity and generally unpleasant. But I've heard rave reviews about the wild farmed episode. And what's interesting is I also just saw lots of ads start popping up now marketing wild farmed products. So I'm definitely looking into watching at least that episode.
Isobel Wild [00:16:01]:
I mean, you should watch it. It is very funny, but I think it specific. What specifically sparked my thought on this was what you were saying about the different price changes and in that they're choosing different seeds to plant and different crop types to plant, and the market just fluctuates so much. Like we've seen even geopolitical issues with the conflict in Ukraine, like what that does to hike up the prices and being able to navigate those prices as well. And the effect that has on the emissions, I guess, is something we haven't really considered. But it's definitely interesting and it really gives you a good viewpoint on what it's like to actually be having to navigate these market shifts. And you can get more of an opinion on Jeremy Clarkson.
Saif Hameed [00:16:44]:
Well, you know, I think there is something interesting also in just how agriculture responds to sustainability across the political spectrum and divide. And so if you think of agriculture, as in many markets, a right leaning part of the political spectrum, and it has often been that way, I think, in the UK and also in the US. But what I'm hearing from industry is that many of the farms that they engage with are very open to regenerative agriculture, for example, as a practice. And the only thing they say is, look, we've no idea what the term means, but from what you're describing, it sounds like what we've been doing for a while now. And I think that there's something just interesting in actually, do we come full circle politically and actually start playing into an agricultural narrative that has always been somewhat rooted, I guess, in practice versus other parts of the sustainability transition, like on the investment side, where actually there's a massive political backlash to ESG frameworks used in investment practices.
Isobel Wild [00:17:49]:
Yeah. And to our listeners for another plug is actually, we did a really great podcast on regenerative agriculture and how that all looks with Audrey from McCain foods. So definitely give that a lesson to dig more into the kind of regenerative farming ecosystem. But for now, let's have a quick break. Cool. Okay, so now that you can have a bit of a breather, the quiz is over. So sit back and relax, Saif. It's all good.
Isobel Wild [00:18:22]:
We are going to go on to product carbon footprints. So I'll just set the scene a little bit. For those who don't know what a product carbon footprint is, it is the total amount of CO2 associated with a product throughout its life cycle. It's usually one functional unit. So this could be a meal, a t shirt, a kilogram of a product produced. And you can actually have different types of product carbon footprints. You can have partial ones or complete. This is dependent on the scope of boundaries.
Isobel Wild [00:18:54]:
So whether it be cradle to grave or cradle to gate or gate to gate, I'll just caveat that a product carbon footprint is not an LCA. A product carbon footprint is part of an LCA, but it focuses on a single impact category, which is global warming potential. That's just measuring the potential ghgs released over a product lifecycle. An LCA measures the overall environmental performance of a product, including impacts such as eutrophication, acidification, ecotoxicity, et cetera, et cetera, as well as global warming potential. I've listed out a few key challenges and stuff. I'd then love to get your take on these challenges, but I think top of mind for me is that the product carbon footprint world is like super, super chaotic. There's an inconsistency in methods and standards used for calculating, so you can't really compare apples to apples. There's no standardized data exchange across technology solutions.
Isobel Wild [00:19:55]:
And there's also a growing number of initiatives seeking to solve this issue. But they're actually just cluttering it even more and making it harder for sustainability to professionals to actually navigate it. Steph, what are your takes on these challenges? And from your experience, have you seen any trends emerging around these?
Saif Hameed [00:20:12]:
Yes, I mean, maybe, Izzy, let's start with trends. And so in the beginning, or rather, let's say a year ago, companies were looking to engage their suppliers in gathering greenhouse gas inventories from the suppliers and they were thinking about getting this sort of data from all their suppliers. So let's say you're a big business, like a McDonald's or Coca Cola or a Mars. You might be going out and kind of trying to get from 10,000, 20,000, 30,000 suppliers some element of overall corporate activity representation, like an emissions baseline. Similar. And you're probably thinking about this as part of your responsible procurement practices. This is maybe like two years ago, three years ago, and we started to see a transition in the last year or so. I think that what came out of that was a couple of things.
Saif Hameed [00:20:58]:
One is that companies started to realize that actually most of their suppliers are irrelevant for moving the needle on their environmental programs. And so I was just on a call with one of the world's largest beverage companies. They're a household name pretty much in every kind of restaurant, for example. And for them, they have about 24,000 suppliers. And they found that there are about 70 suppliers, 70 that are meaningful for their environmental program out of those 24,000. So that's kind of one big learning, is actually a lot of these, frankly, doesn't really matter what the data tells you or doesn't tell you, because the contribution collectively is so low. The second piece is that companies, as they start to receive these greenhouse gas inventories or carbon baselines, start to realize that actually there was no relationship that they could infer from this corporate baseline of a supplier to a scope three of the business requesting the data, let alone to the product carbon footprint of a business requesting the data. So if I am asking, let's say, 70 or 100 or 10,000 suppliers for their corporate baseline, I need to find some way to convert that into the part that is entering my ecosystem.
Saif Hameed [00:22:07]:
And the way that companies were historically doing that was an economic intensity. They were saying, okay, you're a business doing a billion dollars of revenue. I'm buying a million dollars worth of product. Therefore I divide your overall emissions by 1000, and I get the million dollars worth of emissions that is in my scope three. But most large companies are migrating away from a spend based scope three anyway to await an activity centric scope three, whether it's because of flag or other standards, which means that the old ways of matching this on economic intensity no longer makes sense. So now that greenhouse gas inventory you're getting from your supplier is pretty useless. And so these are the sort of trends that have catalyzed progression towards asking for product carbon footprints. These are probably the big ones.
Saif Hameed [00:22:56]:
I think there are a couple of accelerators. One is that if you're a b two c company, you're starting to either move into eco design of your products and thinking about how do you re engineer the product, which means you want to have better primary data from your suppliers to represent the materials of theirs that you're using in your product and or you're trying to get ahead of product labeling requirements, because you expect that that's sometime coming in the future and you want to be advanced, prepared and know how to react to that. If you're b two b, it's some of the same story around eco design. And it's also this bit around you want to be able to use sustainability in your pitch to your customers and you want to include it in tenders and you want to actually work with your customers to redesign products to be more sustainable. And so product carbon footprint is a good way for you to market the impact that you're able to deliver to your customer. So these are the trends that have kind of given rise to the. Frankly, now it's becoming a bit of an avalanche, oddly enough, of requests for product carbon footprints.
Isobel Wild [00:23:55]:
And can I jump in there, steph, and just ask? You've spoken about this a little bit on your LinkedIn, but for the B two C side, I think there's a bit of a fear around green hushing, especially around externalizing your product carbon footprints, when you don't have complete faith in what the numbers are and when those numbers are changing and evolving rapidly. What's your advice for navigating or toeing the line between green shouting and green hushing?
Saif Hameed [00:24:24]:
Yeah, so not everyone agrees with me when I say this, but an emissions number on a consumer product is more or less useless for almost every company. And the reason for this is the average consumer makes a purchase decision for an average product in about 9 seconds. Somewhere between six and I think 12 seconds is the data I've seen in 9 seconds. The average consumer is not going to do the math problem. They are not going to say, okay, this is 0.62 kilos of emissions. What does that mean to me? Most consumers are not going to think that way. There are some situations where some referential data is helpful. And what I mean by referential data is this is 30% lower than the alternative or some form of marketing around that can be helpful.
Saif Hameed [00:25:13]:
That is usually helpful with a challenger play. So let's say you are an oatly trying to displace a dairy milk product, for example. And then you kind of want to have the billboard and you want to say, look, here's our numbers. Where are the numbers for dairy? And you're implicitly saying, all of our products are better than all of these other products that we're challenging. You can see upfield with some great plant based products in their portfolio. They're trying to leverage the same challenger playbook for butter alternatives and spread alternatives to butter. And they're going out with like, here's what our numbers are like. We're significantly lower than the comparables.
Saif Hameed [00:25:49]:
That works as a challenge or play because the incumbent is better known and more prevalent and is more likely a part of the grocery basket. It doesn't work if you're the incumbent, because actually you have no one there to compete with, like you are the incumbent. You might be fractionally better than other incumbents, but that's a much harder narrative to sell to a consumer in 9 seconds.
Isobel Wild [00:26:12]:
Yeah, I think that makes sense. And I think we were at an event last week and there were some conversations around that point about actually it doesn't matter necessarily what you do put on the pack. It's just having something on the pack can be a good indication that you are a good company or you are a good product.
Saif Hameed [00:26:30]:
Well, let's lean into this, Izzy. Right. I think that in the consumer world, there are two plays here with sustainability data. I think one is the challenger play, which is where you're trying to capture a niche, a customer niche. And usually that customer niche is making decisions on the basis of identity. They want to actually try and they want to buy plant based products and that's an identity based choice that they've made. And they took more than 9 seconds to arrive at that. They may actually have spent months getting to this place where they now actually want this to be a filter on every consumer choice that they're making.
Saif Hameed [00:27:06]:
And as a result, they can make the choice in 9 seconds because they've excluded a bunch of things. Kendall from our team, famously in our company is vegan and will avoid any non vegan products. But that's because she's made the decision to be vegan and now actually there's a very quick filter she can apply on any products that she wants to consume, which means she can still make a nine second decision from a smaller palette of choices. And so the challenger play works well for an audience that is using some identity filter before going into market. There's another play, I think, which is what I'm calling the guilt free purchase play, which is most of the rest of the consumer market that will factor sustainability into their decision making. Just wants to know that they're not a bad person by virtue of buying this product. And they want some simple heuristic through which they can still make a nine second decision. And so the simple heuristic might be plastic packaging is bad.
Saif Hameed [00:28:01]:
And so I'm just going to try and look for the product that seems to have less packaging. I might think glass is a more sustainable option. So if I see a glass beverage bottle and a plastic beverage bottle, I might go for the glass one. Whether or not that's accurate or inaccurate, I've applied a simple heuristic, a simple proxy to still be able to make that decision in 9 seconds. Labels for most of the market function in that way. Labels act as an indicator that this product is guilt free. You can feel better about yourself or less bad about yourself for picking this product. However, unsurprisingly, what you'd expect then is that in 9 seconds or so, the nature of the label doesn't matter much because actually all labels are approximating the same thing.
Saif Hameed [00:28:43]:
All labels are saying, hey, as a product, I feel good enough about myself to brag about myself and you should feel comfortable buying me as a product. And that's something that you can convey in 9 seconds, but it's not enough time for you to convey differentiation between labels. And so if you look at like the Nielsen IQ survey that came out last year or so, you know, what it tells us is that actually most labels amount to the same thing when it comes to consumer preferences.
Isobel Wild [00:29:07]:
Yeah. And I think another interesting play is that at the moment when you are as sustainability professional and you have maybe millions of or hundreds of thousands or thousands of different product lines, focusing on which ones make the most sense to have associated like label or like sustainability LCA or product carbon footprint associated with it. So choosing a product line that makes the most sense, because if you're going to try and put a product carbon footprint on beef or other really emissions intensive food, I'm not sure the market who will actually be looking for your like, sustainability criteria will necessarily be looking for that label in itself. So being choosy at the moment about which products you want to prioritize to actually put through this process is also maybe another lens to add on to your considerations.
Saif Hameed [00:29:56]:
Yeah, I think that micro segmentation is important when you think about how to market sustainability. And so what a lot of retailers are now thinking about is what is the sustainability branding that they can weave into their premium ranges, let's say. So if you have the upper end ranges of different retailers offerings, can you weave in a regenerative component or a sort of sustainable practice component into the marketing and branding around that? And the implicit assumption is the market for this premium range is likely to be applying some of those filters where they want to buy products that look a certain way. They've already pre programmed themselves to look for certain types of sustainability indicators. And so you are more likely to grab market share versus the other premium products on the range, many of which might be challengers, because many challengers do try and come in, in the consumer segment to tap in premium segment sub segments and then kind of expand from there.
Isobel Wild [00:30:54]:
Saif, you've kind of answered my next question for you, which is why product carbon footprints useful? I think we've spoken quite well on the, like, the marketing and the claims front, but I'd love to dig into the R and D product design aspect of it. What are they looking for? Like, what are those teams looking for in terms of impact measurements? And what is the most helpful cheat sheet or data points that you can give to them to enable them to get on board and consider it as a worthy aspect?
Saif Hameed [00:31:22]:
Yeah, I think that the place to land is actually the same both in a B two C company, a consumer company, and a B, two B company. And I think that is that you want to use product carbon footprints for reformulation and redesign of the product. And in the B two C environment, the reason you're doing that is because you cannot achieve your sustainability targets without actually redesigning the product. Whether it's about using different types of materials in your supply chain, having a different structure of the product, whether it's like lightweighting, packaging, swapping out, let's say, sugar for sweeteners, different variations. You need product level data and you need ingredient level data as an input into that product level data to be able to play around with these variations. So that use case is the central use case, I think on the B two C side, I think the B two B use case is actually the same. I think that the place we're in right now, where most B two B companies are looking to be able to generate this data, primarily to share it as is, I think that's a transient use case. I think the more exciting use case is once I have a product carbon footprint for my ingredient that I'm selling to a b two C company, can I actually pitch counterfactuals to them? And can I say, this is what it is right now, I'm actually excited about creating this other variation, which I think will be better for you as my customer for achieving your goals.
Saif Hameed [00:32:50]:
Let us now collaborate on a long term R and D led, innovation led contract to create something new that has a demonstrably lower product carbon footprint. And I think that kind of R and D to R and D collaboration is what's quite exciting in the sustainability space. And if I were a b, two B player, that is exactly, entirely what I would focus on. I would see sustainability as a commercial, a massive commercial lever for me to expand longevity of contracts, expand share of wallet, expand margin, and create lots of exciting new ip.
Isobel Wild [00:33:27]:
And to get to that point, what preliminary work do you have to do to create evidence, the fact that this can be a low carbon option.
Saif Hameed [00:33:37]:
Yeah, I think that there's probably, let's say, three components of this. Just to say, I think someone was telling me that every podcast of ours has three things in some shape or form, but there's three components. I think here, one is, I think, the data side and the data and tooling infrastructure. And obviously, that's where we play in as altruistic. But it's like, how do I get the data from my existing systems and places? How do I tag and classify it appropriately? How do I process calculations and publish? How do I cut that in a way that's usable? That's like the bread and butter we do. But that's one part, three parts. I think the second part is you have to have the actual potential to deliver something new. So you have to be in some ways, an R and D centric, or an R and D led organization, or you have to have the ability to build that in.
Saif Hameed [00:34:24]:
So if you look at, let's say, big ingredient suppliers like Adm. Archer, Daniel midlands, the redesign of ingredients is the bread and butter of their business. No pun intended. Right. They are in the business of creating new formulations and new materials. We mentioned Meadow. Meadow also has been going in that direction for a while. I think if all you're doing is buying stuff and slicing it and selling it on, the potential is a little more limited still there, but a little more limited.
Saif Hameed [00:34:51]:
So you have to have the real ability to actually generate something new through R and D. That's the second piece. And I think the third piece is the capabilities commercially, to engage a customer in a collaborative discussion around a long term journey. Which means your commercial team is moving from a world where they are selling a product on the basis of price, quality, timing, volume, towards selling a product on the basis of some sustainability credentials as well, many of which might be two or three years down the road in terms of delivery. And so there's the ability to sell innovation. And sustainability led innovation, I think, is a muscle that companies have to lean in on.
Isobel Wild [00:35:32]:
And just to lean in on the tooling piece. I think a common pain point is the price. The price of doing an LCA for each experiment, or changing minutiae parts of your product, and then having a whole new LCA at great expense isn't a scalable option if you're trying to do this across, like, a huge product range. So having a tool which you can do this at low cost with relative ease, I think is really important.
Saif Hameed [00:36:02]:
Yeah, I mean, Izzy, I think the thing is, we're moving from old world to new world here, really, where two years ago, if you were going to get an LCA done, you'd basically be going to an academic, or an academic institution or a research outfit or a consultancy that functions like an academic research outfit. And there would be a cost for that research, which would typically take months to develop and produce. And that cost would. It's not like anyone was making huge amounts of money on that, but it's a high cost. If you look at the new world, where companies like us are able to do this at scale, I would say in the case of altruistic, we can probably do this 10%, 5% of the price point of an LCA at scale, or less. Frankly, fractions of a percentage point at a certain scale. But that's just by virtue of setting up as a software company where you can actually ingest data at bulk and process data in bulk as well. I think that that's the direction of travel in this space.
Isobel Wild [00:37:00]:
And also make sure that your product carbon footprints match your corporate footprints, because having a bit of a discrepancy there can also cause issues. I know we're at time, but I just want to quickly ask you one more thing, and this is on standardization. I think there's quite a few. As we mentioned at the start, it's super chaotic. There are lots of standards, there are lots that you can align to, lots of different ways of streamlining your data, lots of way of putting your product carbon footprints. Have you seen any interesting solutions out there that you think, like? That's your big bet that you think can help kind of cut through this noise?
Saif Hameed [00:37:39]:
Yeah, I mean, so, for us, we are a research intensive organization, and so we're always looking for what's out there. At the same time, we're a very customer led organization, so we tend to follow what our customers like and look for. And so we've talked about the WBCSD pact coalition a few times before. That's the standard that we think makes the most sense. It governs how pcfs are generated within an organization and how PCs are shared across organizational boundaries. There are lots of add ons onto that frameworks to make it specific and usable for different industries as well. So, like, the TFS framework for chemicals and similar sectors as well, adapts pact to be used in those areas. So that's the standard that we think makes the most sense.
Saif Hameed [00:38:26]:
But the reason that we think so is also because it's the standard adopted by Unilever, PNG, AB, and Bev, many others. And so we're just following the customer trajectory on that. I do think that if you're sitting in a consumer value chain, and that means that either you're a brand or you're supplying a consumer brand, then I would say it doesn't make sense to reinvent the wheel, and I would just kind of look to align with the same standard. I think that where you'll probably get to is that most software players that scale in this space, and of course, we see ourselves as is one of them, will probably be conformant with multiple approaches, but I think there are only so many approaches that you can be conformant with. And so we definitely see the pact framework as the one that we're most excited about.
Isobel Wild [00:39:12]:
Thanks, Saif. That's really interesting. Any other bits that you want to, or any insights that you want to share before we wrap up?
Saif Hameed [00:39:19]:
I think that there's still a lot of companies that are looking to solve for data requests that are coming in on a case by case basis. And I think that companies need to be able to take a step back and appreciate that the load year is only going to get bigger. For example, I see we were speaking with a restaurant chain the other day that is asking their suppliers to share product carbon footprints. When we speak with some of the suppliers, what we find is that the suppliers are looking at solving this on a request by request basis. So they're thinking, okay, this restaurant group has asked me for PCs for these products that I'm selling them. Let me try and find some solution that can solve for this. Right now. No one else is asking me for this, so let me kind of wait till the next request comes my way and then I'll solve for that.
Saif Hameed [00:40:05]:
And I think that that ends up probably becoming much more expensive and much less strategically valuable for the company to kind of do it that way. I would probably just take a step back. I wouldn't take a ten year horizon, but even take a three year horizon and say, what am I likely to need from a data perspective based on some use cases? One use case is, can I just chuck the numbers back over the fence because a customer is asking me for it. Another use case is actually, if I have to get the numbers to chuck over the fence, what could I do with those numbers in my own business? And I think that enables you to actually get more value out of this rather than just playing defense.
Isobel Wild [00:40:43]:
Yeah, definitely. I like those two to use cases. We are going to be running a webinar on this topic because lots of people have been talking about it and ask us questions, so keep a beady eye out for that. Thank you so much, Saif. As always, that was fun. And maybe next time we can dig into the other ingredients of a classic sandwich to see where those emissions factors lie. Awesome. Goodbye.
Saif Hameed [00:41:08]:
Thanks, Izzy.