Watershed’s AI tool transforms Scope 3 emissions measurement with rapid, precise supply chain insights

Watershed launches an AI-driven product footprint tool that drastically accelerates and refines the measurement of upstream Scope 3 emissions, promising to redefine corporate climate action and supplier engagement.

Watershed has unveiled an AI-driven product footprint tool designed to tackle one of the most elusive challenges in corporate climate action: accurately measuring and reducing Scope 3 emissions embedded in purchased goods and services. These emissions, origin...

ating from upstream supply chains, often represent between 60 to 80 percent of a corporation’s overall carbon footprint, yet remain difficult to quantify with precision.

Traditional life-cycle assessments (LCAs) to evaluate these emissions typically take extensive time—up to a year—and rely heavily on suppliers submitting vast and detailed datasets. This cumbersome process has often resulted in companies relying on broad, spend-based estimates that obscure the true environmental impacts of procurement decisions. Watershed’s solution, labelled Product Footprints, leverages artificial intelligence to break down each purchased item into its constituent materials and production processes, rapidly generating detailed emissions profiles within minutes. This advancement promises not only to accelerate measurement timelines but also to enhance accuracy by incorporating regional and supplier-specific emissions factors alongside a confidence scoring system to maintain transparency.

Christian Anderson, co-founder of Watershed, explained that procurement has long suffered from “incomplete or inaccurate emissions data” because existing methods do not scale well. By embedding climate intelligence into AI, the platform equips businesses with actionable insights to evaluate the carbon footprint implications of different purchasing options before contracts are finalised. This new capacity supports procurement teams in moving beyond basing decisions solely on cost and reliability to also account for climate impact, potentially transforming risk management and brand value considerations within supply chains.

Early adopters from diverse sectors, including manufacturing, automotive, chemicals, and life sciences, have reported tangible benefits. For instance, an automotive manufacturer utilising Product Footprints recognised emissions savings from selecting low-carbon steel for the first time, overturning blind spots inherent in traditional approaches. Similarly, a global life sciences firm with over 50,000 suppliers managed to consolidate data spread across more than 70 internal databases, enabling prioritised supplier engagement and accelerating previously stalled decarbonisation initiatives. Natalie Watson, Group Director of Sustainability at The Vita Group, a flexible foam manufacturer, highlighted how the tool unveiled subtle supplier nuances and patterns across thousands of suppliers that were previously invisible, describing the speed and clarity of insight as “game-changing.”

The launch of this AI solution aligns with tightening regulatory demands globally. The European Union’s Corporate Sustainability Reporting Directive (CSRD) and proposed U.S. Securities and Exchange Commission (SEC) climate disclosure rules increasingly require verifiable Scope 3 emissions reporting, elevating pressure on corporations to provide robust, auditable data on their carbon impact. Investors are also scrutinising supply chain emissions more rigorously, assessing portfolio companies’ climate risks and resilience.

Industry data underscores the urgency. A 2023 report by CDP and Boston Consulting Group showed that corporate supply chain Scope 3 emissions averaged 26 times greater than direct operational emissions, yet only 15 percent of companies had set targets to reduce these upstream impacts. Similarly, analyses from S&P Global emphasise how better accounting of Scope 3 emissions often leads to higher reported values, revealing the challenge of supply chain transparency and measurement. The chemical industry, a sector noted for complex procurement footprints, similarly recognises that over half of its Scope 3 emissions are tied to purchased goods and services, reinforcing the critical role of supplier engagement and accurate data collection.

In this broader context, Watershed’s AI-powered Product Footprints represents part of a growing trend towards leveraging specialised technologies to address corporate climate bottlenecks. Other initiatives, such as the Voluntary Carbon Markets Integrity Initiative’s (VCMI) Scope 3 Action Code of Practice, complement technological advancements by offering guidance on credible mitigation strategies and the strategic use of carbon credits to close emissions gaps.

While challenges remain—such as ensuring supplier participation and the scalability of AI-enhanced footprinting—early industry experience suggests significant potential for these tools to reshape how companies manage climate-related risks in their value chains. For corporations facing mounting scrutiny over Scope 3 emissions, which are often the largest and most opaque element of their carbon footprints, the capacity to generate fast, precise, and transparent emissions data could prove decisive in aligning procurement with urgent decarbonisation goals and regulatory compliance.

As sustainable sourcing increasingly moves to the forefront of corporate climate strategies, Watershed’s Product Footprints may well mark a pivotal step forward in converting complex supply chain data into actionable, climate-smart purchasing decisions.

Source: Noah Wire Services