Kevin Vranes: 0:03

One of the risks that we are surfacing to our brands as we speak that is maybe not well thought about and not well understood, is the impact of heat stress on labor and labor forces within the supply chain. What you're going to see inevitably is what we call presenteeism issues, right? So workers don't show up to work, can't show up to work. It's too hot.

Tom Raftery: 0:25

Good morning, good afternoon, or good evening, wherever you are in the world. Welcome to episode 95 of the Resilient Supply Chain Podcast. I'm your host, Tom Raftery. The toughest climate risks in supply chains rarely show up in boardrooms first. They show up on factory floors, in rising heat, falling productivity, and workers who simply can't work safely. And as supply chains stretch across regions like Bangladesh, Vietnam, China, Cambodia, these pressures are accelerating fast. At the same time, disclosure rules are tightening, NGOs are gearing up to enforce what regulators can't, and the gap between what brands believe is happening in their supply chain and what's actually happening is wider than ever. So here's the challenge. How do you build a resilient, low carbon supply chain when the biggest risks sit in tiers that you don't own, powered by data that you don't yet have? To unpack this, I'm joined by someone who sits right at the intersection of climate science, supply chain sustainability, and data intelligence. Kevin Vranes Chief Product Officer at Worldly, a platform working directly with tens of thousands of suppliers to surface real world environmental and social performance, flag emerging risks, and help brands turn sustainability into operational resilience. From heat stress to scope three, from supplier engagement to AI powered sustainability intelligence. This conversation gets into what's coming and what leaders need to act on now. Kevin, welcome to the podcast. Would you like to introduce yourself?

Kevin Vranes: 2:13

Thank you Tom. Great to be here. Yes. I'm Kevin Vranes. I am the Chief Product Officer of Worldly, which is a supply chain sustainability technology company.

Tom Raftery: 2:24

Okay. And Kevin, tell me a little bit about how you got to be Chief Product Officer at Worldly.

Kevin Vranes: 2:32

Well, that's a great question. I really found myself in corporate sustainability kind of in the mid two thousands, like 2006, 2007, and I've really been there ever since. So I've always been in corporate sustainability, well for the last 20 ish years been in corporate sustainability in one way or another. And really always touching technology as well. Why? I don't know. It's just that's the way it worked out. So I, I was a, a product manager early on. I got pulled into that at a company that I worked for and was kind of always been a technologist in this space. So, about 2019, mid 2019, I got the ability to start a product within Salesforce. I was working at Salesforce at the time, and I was lucky enough to get the opportunity to start a product that at the time we called Sustainability Cloud and eventually renamed to net Zero Cloud. Maybe some of our listeners and, and watchers actually use that product. And you know, ran that, built that out and ran that for four and a half years or so, five years. And then Worldly came knocking and I felt like, it was, appropriate time to move on to a different level of impact. So I had, felt like I had a lot of impact at, at Salesforce, building that product out. And I thought, okay, that product's gonna outlast me and gonna continue to go. It's on a good footing, and now I can shift my energies to another technology company, and try to double my impact. So that's, that's my quick story.

Tom Raftery: 3:46

Great. And what is it that Worldly do for whom? What problems are you fixing for whom?

Kevin Vranes: 3:52

There's a lot of different ways to talk about Worldly. My favorite way to talk about it is that we are an ecosystem. We're an ecosystem convener, or, or maybe at the hub of an ecosystem, and we're really kind of at the center of a two-sided network, and maybe you could even say a multi-sided network. So, we work primarily with retail and consumer goods and, apparel, footwear brands. And then we also work with their suppliers. And, and so we directly interact on a daily basis with both sides. The brands and the retailers really need to collect data about what's happening in their supply chains vis-a-vis sustainability topics. And that's both environmental and social and human rights and labor issues. And they're collecting data or requesting data to be collected from their supply chain partners. The supply chain, obviously, as you know, I don't have to tell you, is extremely complex. It's Not just one or two suppliers, right? We're talking about many thousands of interwoven suppliers. And so Worldly has reaches deep reaches into that supply chain network. We actually touch something on the order of 40 to 50,000 suppliers a year. We have well over a hundred thousand in our overall network. And so we, we bring the two together really. So we're collecting data on sometimes on a monthly basis, sometimes on an annual basis from the supply chain network and bubbling that up to the, to the brands and the retailers.

Tom Raftery: 5:06

Okay. What kind of information are we talking about?

Kevin Vranes: 5:09

There's a standard in this industry, in the apparel industry that's been in place for quite a long time now for 12, 12 or so years, maybe 15 years, called the Higg Standard. And along with the Higg standard, there's something called the Higg Index, but really it's a set of environmental and social standards. It's really a set of of agreed upon ways to collect data and agreed upon metrics and common metrics in this space that all of the brands want to collect. And so we're talking about everything from the typical carbon and greenhouse gas basics, and how much energy do you use and how do we turn that into carbon emissions and carbon reporting. Waste, water, chemicals, waste water recycled materials, you know, everything on that you can think of on, on the environmental side, environmental exposures. And then on the social side, it's really, you know, social and labor and human rights issues, right? Everything from, not only kind of the basics that people might think of, do you have child labor in your supply chain or are you paying living wages or minimum wages, but also just are you focused on worker safety? Do you have the right number of fire extinguishers, and fire exits in your facility. And so, the facilities both self-report that data and there's a large verifier network. And so the verifiers go in and, and make sure that the answers are all correct and certify the answers, and then that data flows up into the brands through our platform and onto the brands.

Tom Raftery: 6:26

Okay. And for companies in supply chain today, what do you think is the biggest climate related risk that these companies are facing that maybe their leaders still are, are under underestimating?

Kevin Vranes: 6:43

Oh, I love that question. There's probably a few, we could probably take a few hours on this topic. Let's start with a, maybe a hidden one. One of the risks that we are surfacing to our brands as we speak that is maybe not well thought about and not well understood, is the impact of heat stress on labor and labor forces within the supply chain, specifically at the, at the facilities, right. And the factories. So if you can model out and predict into the future, which we, can, because of all the climate science work that's been going on for decades at this point, and you can understand where certain areas are likely to see much more increased heat stress, heat risk heat related water risk and water stressors. What you're going to see inevitably is what we call presenteeism issues, right? So workers don't show up to work, can't show up to work. It's too hot. And so how is that going to impact not only your specific supply chain and your ability to get goods to market? But how is it also going to affect your reputation? Right? So we deal a lot in reputation risk, right? I think reputation risk is actually kind of the underlying focus for a lot of this work, even if it's not discussed out loud. Reputation risk is really driving a lot of thinking in a lot of decision making in this space. So, you can imagine saying like, an NGO comes, comes out with a article that says, Hey, we're noticing that there's a lot of heat stress related illnesses and heat stroke and things like that in these facilities that are serving products to this company. And that ends up looking very bad for that company. And so those are the kinds of risks. It's not always only about reputation risk, okay? Of course companies want to do the right thing. So it's about like servicing those issues and those potential issues for the company. So that's an example of where kind of surprising effects where we marry our knowledge and our ability to get climate data, marry it with what's going on in the supply chain from the primary data that we're collecting in the supply chain. Put those together into predictive analysis.

Tom Raftery: 8:40

And if you are on the receiving end of this, Kevin, if you are one of your client companies and you receive a notification from Wordly saying your factory or your workers are at danger from heat stroke, what do you do?

Kevin Vranes: 8:58

That's a good question, and that's not exactly the way it works, but yeah, that's a good question. You know, so what what we are trying to do is we're trying to surface the risks, right? And there are a lot of different risks that can be surfaced, and they're not just environmental or social related, right? There's operational risks as well, of course. We're trying to surface all of those risks up, to our brand users so that they can take action, right? But, you know, at the end of the day, they need to see the patterns first. They need to understand where the risks are. You know, we're giving them analytics and getting, giving them views into the data that they can, you know, look for patterns and look for what we call sometimes in this industry are red flag issues. So we're giving them the ability to uncover those issues. We're not necessarily notifying, right? So one thing that we try not to do is we try not to be judgmental, right? So we, there's a fine line to walk there on making a judgment about a bad action or, or a big problem versus just giving the information. And so. At the end of the day, it's up for the brand or the retailer or the supplier or the manufacturer to make the changes, right? But we need, do, need to surface that information. At the same time what we can do, and we do, do, is give recommendations as well. So, we have a set of recommendations that the industry has developed, we have developed, lots of other players have developed, and we can pass those recommendations on. So our systems can say, okay, I see that this particular set of factories and this geography have these issues. Here's a set of recommendations. You can pass those to the factories, or our system can also pass those to the, the factories and facilities automatically as well. So we're playing all, all of those different sides there.

Tom Raftery: 10:57

Okay. And if we look then at the kind of world of compliance, we're seeing disclosure requirements shift. The SEC seems to be softening their stance under the new administration, the EU is hardening its. How does this help or hurt long-term supply chain sustainability progress.

Kevin Vranes: 11:19

Yeah, that's a, that's a good question. This is where I've put on my, my Tom Raftery hat on to answer this question. So, yeah.

Tom Raftery: 11:25

Looking a lot better. Kevin. Looking a lot better.

Kevin Vranes: 11:27

Thank you. Thank you. I'm feeling good right now. I might, I'm gonna change the hat in a, in about five minutes though. I'm gonna, I'm gonna go even bigger in a minute here. Yeah, that's an interesting question too. I started in the regulation game. Okay, let me back up.

Tom Raftery: 11:42

Yep.

Kevin Vranes: 11:42

For the longest time in this industry, there was really one push in town, and that was the Carbon Disclosure Project Carbon Disclosure Project. CDP was really based on reporting carbon, primarily Scope one and Scope two, eventually Scope three using the Greenhouse Gas Protocol, which was developed, I don't know, maybe late nineties, early two thousands. And it was really all about voluntary disclosure, and it was really about what is the actual push to, to do it. If you're a company, why would you disclose voluntarily disclose to the CDP? Again, I'll go back to reputation risk. We talked about that a few minutes ago, right? Like it was really about reputation risk. You wanna say that I have green bonafides and I, you know, I do a good thing and my CDP score is an A or a A- or it's trending from a B to an A- or something like that. You wanna be able to say that. Not much has changed in this industry to this point, other than CSRD being on the books and then a bunch of threatened or proposed legislation. Right. But when the threatened or proposed legislation for disclosure started coming out in the, 20 teens companies started asking a lot more questions. So when I was at Net zero Cloud with Salesforce, that was frequently a topic of conversation is what are we gonna have to disclose? How are we gonna have to disclose it? How can you guys help us do that? That conversation is still there. But it has shifted a lot over the last five years, and honestly it hasn't shifted in one direction. It's really been a roller coaster. So you have, okay, you have the SEC proposed regulations. Well now they're pretty much off the table. You have CSRD, but then they've been kind of a little bit watered down in the sense of, okay, what's the umbrella of companies that are going to be pulled into the reporting requirements? Okay, well, that's not as big as it was, but at the same time, you have Californian's disclosure laws. Those are definitely there and those are coming. California has a new proposed ruling on responsible textiles that's gonna come and hit our customers pretty soon. And then you have a lot of different proposed regulations in different countries, in different US states and in Canada and places like that. What I've tried to do strategically for Worldly to say we need to give our customers information that they need regardless of the regulations. Okay, so what we're not trying to do is say this is exactly how you answer every single question on the regulator's form. You know, checkbox, checkbox, checkbox. Right here, right here. Here's your information. Okay, go. Now, we're done. That's not what we're trying to do. We don't wanna play in that game. We wanna give information that matters whether or not you have to disclose something to a government agency. Right. So that's where we go back to risk and supply chain risk. We're really trying to help you understand not only what your supply chain risks are, but how to improve them. How to improve your overall impact or lower your overall impact as a brand, right? How to lower your scope three impact as a brand, right? Or a retailer or a major manufacturer, right? So, that's really where we're trying to play in that. Again, I'll say on the regulation side, it's an interesting conversation'cause it does come and go. So I'll give you specifics from our industry. There are quite a few, both proposed and real regulations on explaining or disclosing the, not just the carbon impact, but the overall environmental and social impact of the clothing that you produce. So the apparel items or the footwear. For instance in France, they what's called the Eco-score. Recently being been renamed, but it's called the Eco-score. And it's a label that you put on the clothing that says, you know, this is the French Eco-score and it's based on a variety of metrics. So we, our products produce those French Eco-scores for our customers, but there's also product environmental footprinting, also called PEFs, which has been promised to come online in the EU, but it's not quite out yet. There is DPP, Digital Product Passport and there's a bunch of other frameworks that look like that. And so these are all emerging and proposed legislation or proposed rulings that haven't been fully finalized yet that are coming, that companies are preparing for. And the point that I'm getting to is yes, we need to help our customers with those things, but it's not the end goal. It's an emergent property of our system. You will be able to report on PEF or you will be able to report on DPP using our tools. But ultimately what we're trying to help you do is reduce your impact, right? So first, understand your impact and then we'll give you tools to help you reduce your impact.

Tom Raftery: 15:50

We talked already about the fact that we're talking about not just carbon footprint emissions, but social as well. But we just talked about regulations. Is it all about compliance? Is it about competitiveness? Is it depends from company to company? You know, where are we on that kind of spectrum?

Kevin Vranes: 16:09

Yeah, I think the, the last answer is the right answer. It depends company to to company. I do think that there are companies out there that will think only in compliance terms and that's fine. You know, we have to disclose to the regulators just the bare minimum that we have to disclose to the regulators and we move on. We don't care about any of the other issues. Okay. You definitely, that's okay to take that stance. There are other companies that are much more proactive and that are seen as industry leaders in sustainability. And they have been, some of them are emerging leaders in sustainability and some of them have been leaders, noted leaders for 20 years or, or more. And so they have different attitudes in different approaches to this, right. So, what are their main goals or their main pain points? Partially compliance and partially public disclosure, partially risk management. And risk management is reputational risk, it's operational risk, it's regulatory risk, it's legal action risk, right? All four of those things and more risks, right? And some of them legitimately just wanna make sure they're doing the right thing, right? So they wanna be able to tell a real legitimate story in which you know, they can give reasonable assurance to the community that they're not greenwashing, that the actions that they're taking are legitimate and, and can, can be backed up and proved right. So, all of those different dynamics are going on in the industry. And again, it depends on, you know, the profile of the company and what, leadership of the company really wants to do. And I'll say another thing on top of that, it's interesting to watch. You know, when I say what leadership in a company wants to do, often that's coming from the bottom up in the company, right? So a company has, every company has their own culture, and often a company's culture demands all the individuals that work at the company demands of their leadership that they have, take strong stances on sustainability and actually do something about sustainability. You know, it's not in every company, but it is frequently a, a dynamic at play here.

Tom Raftery: 17:56

Interesting. I'm curious as well, because I've heard very little conversation around this, and maybe you have, maybe you haven't. I'm just curious to know. The ICJ climate ruling of a number of weeks back. Are any companies starting to look at this and assess it as maybe now their risk of legal problems based on their emissions might have increased?

Kevin Vranes: 18:31

Not that I've heard yet. I would expect a bit of a delay in that, and I would expect a bit of a few months for that to really start getting back to me from customer conversations. The main reason being they're already having to think about a lot of things, both on the regulation side, the mandatory disclosure side from all sorts of different countries, right? And also, again, on the reputational risks side, they're already balancing so many disclosures and, and so many, you know, like voluntary ways of talking about their sustainability stances that like this is kind of yet another one. That, that'll just kinda get added to the top of the, of the paper pile there. So not as yet. But you know, who's gonna be doing the, doing the enforcing. It is not actually going to be the European Union regulators. It's probably going to be the environmental NGOs who are reading the reports and then looking for patterns and then looking for areas where they can hold feet to the fire, right? Where they can take companies and say, look, you said you were gonna do this, and you've told the regulators you're actually doing this. We're gonna make fun of you. We're gonna, we're gonna put you in the news. We're gonna splash you all over the newspaper, or we're gonna sue you. We're gonna bring you to court. You know, we're gonna bring you to Brussels, or we're gonna bring you to, you know, file action in the United States or, or Canada or Australia. You know, like, I think those are the real pressures here that companies need to be thinking about.

Tom Raftery: 19:48

Yeah. And seeing how the climate is going. How have extreme weather and resource constraints reshaped supply chain risk management in the last five years? Or have they.

Kevin Vranes: 20:02

Well, let me change my hat to, to answer. Put on this, we'll put on the Texas hat. This is the Texas, actually, I bought this hat in Wyoming, which is in the northern part of the US which can be quite a bit cooler than Texas, but also can be quite hot in the summer. I, I think the, the effects so far are subtle, but I think they're going to ramp up considerably. I think the effects are both, if you are vertically integrated supply chain or if you buy from a very diffuse third party network, the effects are probably roughly similar. You need to understand where you're facing risk, because I think most rational people are starting to see really big accelerations in change, in planetary change. Personal example here, I live in northern Michigan. It's kind of right in the center of the Great lakes up here. Before five years ago the air was absolutely pristine, but over the last five years, what we're starting to see in this area is smoke from Canadian wildfires. Right? So the, the Boreal Forest in Northern Canada, Manitoba, Saskatchewan, Alberta, starting to burn almost every year now because of severe dryness, heat, heat, stress. This year we've had to close up our house for days and days at a time because of the smoke impacts of this area. We're a thousand miles right from those fires, but high pressure systems bringing that smoke down into our area. We have air quality in the one fifties to two hundreds on a daily basis for two weeks at a time. So that's a real impact on me, but that kind of impact is just written all over the world. I think most people are seeing that. So when you think about, okay, on the apparel sector, the footwear sector, where's most production being done? You know, Southeast Asia, generally not, not exclusively, but Bangladesh, Vietnam, China, India, Cambodia, a lot of those kinds of countries, Thailand. Those are areas very vulnerable to climate change. Right. And changes in climate. Right. Particularly Bangladesh with water, particularly Cambodia and Vietnam with heat. So you are going to see shifts in supply chains for sure. There's also a lot of production in the apparel sector in Morocco, in Jordan, places like that already. Areas of of high heat stress. Those areas are gonna see even higher heat stress. So, look for shifts to come. Now how do companies plan for it? That's a whole nother question.

Tom Raftery: 22:11

Yeah. Yeah, because only about a quarter of companies diversify their supplier base for climate resilience. Why? Why is that adoption so low? Is it just too early or have they not thought about it? Other priorities?

Kevin Vranes: 22:25

I think there's a mix. I think some companies, some leading companies in terms of sustainability thinking are definitely thinking about it. There are varying pressures and operational pressures amongst the bigger brands and retailers and even the bigger, bigger manufacturers about what drives their business decision making. Generally it's still going to be operational questions, logistics questions, and cost questions. But they are starting to pull the sustainability questions into those calculations, and that's really what we're helping them with, right. So, we just launched a product in beta right now with a supply chain intelligence product that we call Worldly Axion. Worldly Axion is an AI based product that is pulling together all of the primary data that we're collecting from the supply chain with a lot of external data sets on climate, climate risk, weather risk, and other, other issues like clean energy legislation, clean energy incentives in various countries, you know, knowledge about what's already on the books and what's proposed to be on the books in, in various countries. Putting that all together in one place to say, these are what the trends are making supply chain predictions based on those trends. So the leading companies are looking at that and thinking about, okay, how do I start pulling in the sustainability angles into my operational decision making on my supply chain? I think the, the lagging companies right It's gonna be a few years, maybe more than a few years, right? There's always gonna be a group of companies that are way out ahead and there's gonna be a group of companies that are way behind and a and a fat middle there. So, we're serving both the companies that are way out ahead and the fat middle. The companies that are way behind, they'll catch up eventually when they start seeing the reality.

Tom Raftery: 23:57

And I mean, we mentioned AI just there. Where you see it making a meaningful difference in terms of sustainability data and conversely, where is it just hype?

Kevin Vranes: 24:08

I, I can tend to be a skeptic on AI and I and any sort of hype, I'm fully bought in on AI changing, very drastically changing and very quickly changing the dynamics around analysis. And so for this industry, what's important is how do you analyze the data that you're seeing? How do you find the patterns and how, how do you make sense of them? And then what do you do next? I've already seen what I would consider miracles in this space. So what we've just done is we've taken all the proprietary data that we collect, all from a massive surface area of suppliers, you know, 40 roughly, let's say 40,000 or more suppliers, and married that with all these external data sets. And then put a, trained LLM, a large language model on top of all that. And what we did with the large language model is we actually built a bunch of different AI agents, right? You can think of ChatGPT as one overarching agent, but it's actually an orchestration agent that has a lot of different agents behind it. So that's the system, the kind of system that we built. So we have an orchestration layer. We have agents that look at the data. We have agents that look at public policy. We have agents that just look at the web, right? And all these different agents do different things. When you ask it a question, it interprets the question, it figures out, okay, in order to answer this, I have to call this agent in order to answer this part of the question, I have to call this agent. So you can ask it very complex questions that are multi-layered. It will call multiple agents. It will put all that together into a single answer. And I gotta be honest, Tom, like the stuff that I've seen just in the last two weeks just blew me away I thought. people, practitioners in the space have been trying to answer these questions for years and have been answering, but it'll take them weeks, literally weeks of spreadsheet work to answer questions like this. And they're getting the answers in 30 seconds. I mean, and that's just the tip of the iceberg, right? We're, we're not even using ChatGPT five yet. Right? I don't think it's hype to be honest. I think there's gonna be a real transformation in this space about what you can see. The next question on top of that though is, okay, does AI make it way easier to do something about it, to actually go in and work with facilities and actually get them to reduce their climate footprint or change their behaviors in other ways, incentivise more clean behaviors and that kind of thing? That's a different question, and I don't know that AI is the, immediate answer or the shining answer on that question that remains to be seen. I think that still takes that answer, still takes a lot of human work, you know, shoe leather work to get in, work with the facilities, partner with 'em, say Okay, you're using this coal-fired burner onsite at your facility. That's not gonna work. Like, let's get you some, some financial incentives to replace that coal-fired burner with some renewable energy technology. Right? So that's more human based work.

Tom Raftery: 26:41

Okay. Okay. And have you got any real world examples where brands have meaningfully reduced their supply chain emissions and, you know, what was it that made those efforts successful?

Kevin Vranes: 26:53

Absolutely. I mean, that's been it. It is happening. It's been happening for years. Particularly the leading companies that I've been talking about. So the leading companies for years have been working directly. You know, they have employees all over Southeast Asia that are specifically working with, the suppliers on renewable energy installations, on power purchase agreements, you know, PPAs or VPPAs, right? All these different mechanisms. And not only that, working with local governments, right? So you could say, the country of Vietnam has a really progressive renewable energy portfolio standard now, not portfolio standard, but a renewable energy incentive standard now, that some of the countries right around Vietnam, you know, bordering on on Vietnam, do not have. And we see a big difference then in how renewable energy is coming into play in transforming the grid in Vietnam versus other countries, other neighboring countries. The reason that's happening in Vietnam is because a lot of Western manufacturers having conversations with the Vietnamese government. And the Vietnam government wanting to listen and wanting to partner with them. Right? So that's a good like public private partnership for change. Like moving, for change. So those are a couple of examples. You know, there's certainly companies that are both just giving direct cash incentives giving financing mechanisms and incentives to, to the suppliers to kind of take a financial stake in renewable energy installations. You know, for instance, solar pv, companies might say look, I'm willing to pay up 20% of your solar PV installation costs, or I'll pay 50%. Or there's other financing mechanisms that they can get involved in. All, all the way to just suggesting, right, just, you know, I'm gonna go visit you. You're a key supplier for me. We've been doing business together for years. What do you think about removing your coalfire boiler and replacing it with this piece of equipment? And the suppliers, yes, I wanna keep doing business with you, so sure, I'm willing to do that, right? So yes, there's, there's all sorts of examples there. The harder thing to do for a brand, for a retailer is to show concrete reductions in scope three carbon emissions. To say like two years ago we were at these numbers. Now we're at these numbers. And the reason is is because we've done these, you know, these big programs where we've reduced carbon in these specific facilities. The reason that's a little bit harder to show is that there, the constant production changes, right? Production volume changes. Right. Or you know, we used to make a. 10,000 shirts of this specific material here. Now we're making 9,000 here. Like accounting for that and correcting for that is actually quite tricky. So you might not always see the, come out in the numbers, but the fact that the companies are pushing hard to, to sort of green up the facility of their facility partners is, is it's definitely a pattern there.

Tom Raftery: 29:25

And I mean, you've mentioned scope three there. It's still the kind of Everest of carbon accounting. What's, what's working, what isn't? In helping brands to tackle that?

Kevin Vranes: 29:35

All right, I'm gonna change my hat again. Here we go. Okay. This is the Indiana Jones hat. I'm gonna go back to the, I'm gonna go back to the Panama in a bit though. You know, Scope three has 15 categories, right? So, it's been a challenge in this world for a long time. There's been discussion in the carbon accounting world for decades now about making it simpler, making it more streamlined and straightforward. It's hard to account for all 15. The first thing you need to do is figure out materiality, right? So you have to take a what's actually kind of a hard process to say like, okay, probably not all 15 categories of Scope three are material to our business and our operations. Let's figure out the eight or the 10 that are maybe the seven that are, let's go through that process first. Okay? Then let's figure out how we're going to measure what our impact is across those seven to 10 material categories. Okay, now let's come out with a plan to reduce. That's, that's hard work, right? So, there are, you know, major leading apparel brands that have 10 people working on just that question, maybe five, let's say, but five people and consultants working on those questions. They've got sustainability staffs of 30 to 40 people sometimes working on the entire picture. So companies are trying. Generally what happens is the, biggest category of scope, three for an apparel company is the making of their products. But it's not in the, what we call the tier one facility, which is the final cut and sew facility. Right. So this shirt, or the shirt that you're wearing was stitched together and the buttons were put on by a tier one facility, but upstream of that tier one facility are the tier two, tier three and tier four facilities, right? The, the companies that are making the buttons, making the cotton, polyester dying, it, weaving it, and all those. The highest amount of carbon emissions and energy use tends to be in, in tier two and tier three. Not at tier one and tier four. Now it's le let's say it's like roughly 20 to 30% in tier one, but it's, you know, somewhere between 50 to 70, 80% between tier two and tier three. The problem for the apparel industry is it's much harder to get to tier two and tier three than it is to tier one, right? You have your direct relationship with your tier one suppliers, right? And I'm not telling you anything you don't know or your, your listeners don't know already, but that's the challenge in scope three. How do we get our tier one suppliers to go to their tier twos and tier threes to get their information? It's really, really hard to do. If somebody can come along and help us solve that problem, we're all ears. Come, come call me please.

Tom Raftery: 32:00

Okay. Are there emerging risks or opportunities that you think most executives aren't talking about yet, but should be?

Kevin Vranes: 32:09

Yeah, I mean, I think the intersection of some of the climate risks that we were talking about earlier, the longer term, more emergent climate risks on, on heat stress, on water stress and things like that, combined with logistical challenges. I think that's really the intersection of where execs need to start thinking. Those kinds of data sets are not being merged and we're starting to pull those together and we're starting to come out with a sustainability intelligence to pull those kinds of data sets together. But up to this point, very few companies to maybe no companies were really doing that. Really pulling in that the kind of primary supply chain production data and material flow data with the logistics data, with the climate data and really putting it together in one coherent, intelligent picture that's still a bit of a holy grail in this industry. And we'll get there. We're getting there now. We're building out our systems right now for that. So I would see that as like kind of the next challenge in the next frontier.

Tom Raftery: 33:04

Left field question for you, if you could have any person or character, alive or dead, real or fictional, as a champion for supply chain sustainability, who would it be and why?

Kevin Vranes: 33:18

Oh boy. What? That is a left field question, Tom. That's really good.. I'm gonna go back, like, way back to my childhood and say, how about Mr. Freeze? Like, we do need to cool things down. We do need to cool things off. So, we need Mr. Freeze to come in, blow some strategic ice maybe on the polar caps, cool down the Arctic Ocean. I'll give you a little aside. My PhD was in oceanography, Took a couple different research cruises in my, time when I was getting my PhD. And one of them was in the Arctic. We left out of Barrow, Alaska, which is the northernmost city in Alaska. So it's at, I think 72 north maybe is the latitude. And we needed to take an icebreaker a US Coast Guard, 400 foot long, US Coast Guard icebreaker, steamed up, all of all over the Arctic Ocean. And I remember the time that, I think this was 2002. I think it was 2002, so it was 20 some, 23 years ago. The chief scientist at the time, on the, on the cruise was just lamenting. And he, you know, he was, at the end of his career, you know, he was probably in his seventies. So he had been all over the world doing oceanography research arctic oceanography research for decades. And he is, he was the lamenting that I've never seen the sea ice this thin before. I've never seen so much open water in the Arctic Ocean. That was 23 years ago. Imagine him now sailing at the same time. It's obviously order an order of magnitude worse at this point, and we are facing, truly facing an open water, ice-free arctic ocean in our lifetimes, which is, is just mind blowing to me. So let's get Mr. Freeze back and maybe. Maybe we can like freeze refreeze the Arctic ocean. We need to refreeze the Antarctic ocean, the, the area around Antarctica as well. Maybe one of our last hopes

Tom Raftery: 35:03

Okay.

Kevin Vranes: 35:04

not to be too dour. I don't wanna be too Debbie Downer here, but I don't know. You asked.

Tom Raftery: 35:09

All right. No worries. No worries. Kevin, we're coming towards the end of the podcast. Is there any question that I didn't ask that you wish I did or any aspect this we haven't touched on that you think it's important for people to be aware of?

Kevin Vranes: 35:22

I mean just from my day to day life, we, I've talked a lot about the apparel industry. We are very close and tight in the apparel and the footwear industry. But you know, it's obviously not just the apparel and footwear industry. Before I started working for Worldly, I was working more horizontally across all industries, right? Carbon, carbon accounting and carbon measurement solutions across all industries. I've come over to a company that focuses on consumer goods and, and apparel, but these issues are, are true across the landscape. Right. It's interesting to see, you know, it was interesting to see for me how far ahead the apparel industry and the footwear industry is compared to a lot of other industries and measuring and tracking and doing something about, about Scope three emissions. There's so many other industries that are just haven't really come forward in the same way as, as an industry, right? You know, hundreds and thousands of companies in each vertical that you could name. And so, you know, we're trying to solve that problem too. We're trying to say that this isn't just an apparel industry problem or a footwear industry. The, the solutions that we've come up with work just as well for consumer electronics, for food and agriculture, and for probably metals and everything you can think of. That's what I think about a lot is how do we roll this out to a, to a broader set of stakeholders and, and get everybody kinda working in the same direction.

Tom Raftery: 36:33

Very good. Kevin, 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?

Kevin Vranes: 36:43

Probably LinkedIn and the Worldly website. So for, for me personally I'm probably more active on LinkedIn than anything. I tend to stay away from some of the other social media platforms other than Strava. So if anybody is a, is a big runner or a cyclist out there, find me on Strava. I, I ride a lot. LinkedIn is probably the best place for me personally and I'm happy to converse with anybody there. And then yeah, the Worldly website. Obviously, or the Cascade Scale website, right? Our, our industry convener cascade Scale also is, is a good resource for the industry.

Tom Raftery: 37:12

Great. Kevin, that's been fascinating, thanks a million for coming on the podcast today.

Kevin Vranes: 37:16

I really enjoyed it. Tom, thank you for the invite.

Tom Raftery: 37:19

Okay. Thanks everyone for listening to this episode of the Resilient Supply Chain Podcast with me, Tom Raftery. Every week, thousands of senior supply chain and sustainability leaders tune in to learn what's next in resilience, innovation, and transformation. If your organisation wants to reach this influential global audience, the people shaping the future of supply chains, consider partnering with the show. Sponsorship isn't just brand visibility, it's thought leadership, credibility, and direct engagement with the decision makers driving change. To explore how we can spotlight your story or your solutions, connect with me on LinkedIn or drop me an email at Tom at tom Raftery dot com. Let's collaborate to build smarter, more resilient, more sustainable supply chains together. Thanks for tuning in, and I'll catch you all in the next episode.