Episode Transcript
[00:00:00] Speaker A: This is Constructive Voices. Constructive Voices, the podcast for the construction people with news, views, and expert interviews.
Hi, there. This is Jackie here from Constructive Voices. And today I have a guest from the States who is a lady with obviously an Irish family background. She's called Kathleen Egan from Ecomedes.
[00:00:26] Speaker B: Hi, Jackie. Good morning. Thank you so much for having me. I live in San Francisco, originally from the east coast, and I moved out here after getting an MBA at Harvard and started working on startups I've been at. This is my eighth startup now. Out of the first seven, we sold four to larger software companies and three went out of business. Most of them were in the retail tech space trying to help retire retailers. And I joined ecomedes in 2019.
[00:00:59] Speaker A: Fantastic. So you're an incredibly, obviously busy lady who's done some really interesting things. Now, your career, Kathleen, has spanned data, business intelligence, and sustainability. What was the turning point that led you to found Ecomedes?
[00:01:15] Speaker B: I'd say there were three turning points along the way. The first one was an oil spill. There was an oil spill here in San Francisco in 2007. Right. I live at the beach, so it was right at my front door. And seeing that environmental destruction really motivated me and our whole community. The second was I had a chance to build a panel with some really inspirational sustainability leaders like Hunter Lovins, Randy Hayes. Just an amazing group, and they inspired me to start looking in this area. But it was hard. It was hard to find something that was economically beneficial as well as sustainable. But then in 2016, when our President at the time just started to dismantle the epa, I knew I had to move faster. So that's what really put me over the line.
[00:02:08] Speaker A: Sure. And that really leads nicely into my next question. Kathleen, like, obviously, lots of entrepreneurs focus on profitability first, but you built a business that aligns revenue with sustainability impact. How do you manage to balance those priorities?
[00:02:26] Speaker B: It's tough. They can sometimes be at odds. We try to find areas where they are aligned. For example, manufacturers of building products, let's say, you know, drywall, flooring. Those are our key categories. The sales reps that work for them are not sustainability experts, but some of their clients, like Google, Salesforce, Meta, other big tech companies, have very precise sustainability needs. And so we help the reps to translate that information for the client so that they can sell more. So they're actually helping more sustainable products get into buildings, and they're helping grow their revenue and hit their numbers.
[00:03:11] Speaker A: Okay, cool. Now let's just quickly talk about what exactly ecomedes does.
[00:03:18] Speaker B: So ecomedes has pulled together data that is very hard to combine. And it all starts with building materials. We have about 30 categories of building materials from plumbing, ceilings, floors, even laptops. Anything that a B2B buyer purchases, that is a product. And those products have different needs from different buyers for transparency. And that transparency often comes in the form of third party certifications. So some products, like the Herman Miller Aeron Chair, it has about 14 different certifications and third party data points. Very transparent, but the data is very messy. So by bringing all that data together and making it easy to search and sort, we help all the stakeholders in the building material system, from the designers and specifiers to the building owners. Our clients are mostly the manufacturers who need to organize that data for an efficient go to market.
[00:04:26] Speaker A: Okay, excellent. Now, your recent Forbes interview highlighted how short term political shifts can derail corporate climate strategies. What is the biggest risk you see right now, Kathleen?
[00:04:40] Speaker B: There's a lot of them. But I think that it has taken corporations a while to develop the organization, the talent and the processes to work on sustainability. There have been a lot of false starts. Many companies got really into carbon offsets and then decided that carbon offsets weren't a legit way to get to net zero. So all those learnings and the teams that have been going through those iterations are being defunded and reduced. So I think it's just the knowledge that they've built up and the momentum that they had is going to suffer. And it didn't. It's not like it got funded very heavily all at once. It was really a slow growth led by a couple leaders in transparency. As they slide that back, they'll have to start over when the time comes. At the end of the day, we have limited resources, we have limited places. We could put the waste from solid waste to emissions waste to ocean pollution. Right. So everything is limited. There's no doubt that this issue isn't going to go away when they come back to it. I think that will be a challenge.
[00:05:55] Speaker A: Now, some companies unfortunately pause or scale back their sustainability efforts due to political uncertainty. Kathleen, in your opinion, why is this a mistake in the long run?
[00:06:08] Speaker B: I just don't think the issue is going to go away. And so it's short term gain perhaps, but at the expense of long term financial sustainability. So the durability of their company and the regulations that are evolving rapidly in the EU affect a great number of our companies who do business with the eu. I don't think that's permanent and I don't Think that's how most companies think, especially the ones that have a lot of revenue from Europe and Asia. So you know, we've got to, the big companies have to figure out how to play on the global stage. And the EU regulations certainly aren't pausing. It doesn't seem to be. And then we've also got state regulations. I live here in California. We're one of two states, California and New York, that seem to be keeping up, keeping moving forward in many different aspects of sustainability, from emissions tracking to energy tracking, toxins, all that stuff. So while the federal government may be pausing, I think it's a mistake to dismantle the programs and it really is going to come down to compliance. And you know, what's the cost of compliance and the cost of non compliance?
[00:07:29] Speaker A: Yeah, absolutely. How do you feel the businesses can future proof their climate strategies against these type of changing policies and administrations?
[00:07:40] Speaker B: Right. I mean it varies so much by industry and I'm not an expert in the insurance industry, but I've been so fascinated by what's happening with the insurance industry in this country at least. And you really can't, you need insurance as a company. And as insurance becomes more expensive and harder to get, I think it does start to present risk. And then within our little industry of building products, about a trillion dollar market in North America, the companies that want sustainability there will still be large, very attractive clients who buy a lot of chairs, a lot of drywall, a lot of flooring, who are going to vet products on some aspect of sustainability. We work with some partners who are building out a framework to be holistic using the American Institute of Architects 5 bucket system. And each bucket has factors, each factor has sub factor. It's fairly complex and maybe the companies will roll back from being holistic, but some of them will still care about water, some will still care about waste, some will still care about circularity, carbon, etc. The manufacturer has to still meet all those needs if they want to get business from those very attractive customers.
[00:09:02] Speaker A: Sure. Now your platform helps companies make data driven decisions about sustainable products and building materials. What's the biggest challenge businesses face when trying to turn sustainability goes into action?
[00:09:19] Speaker B: That is the big question. This might be something good that the current administration is exposing because a lot of the ways that they tried to turn sustainability intent into action were through voluntary pledges and joining different organizations that were voluntary. One that's getting a lot of press right now, I believe there's an Irish bank in it still called the Net Zero Banking Alliance. So in this country we had JP Morgan and Bank of America who own a lot of real estate and build a lot of buildings and they're all leaving this net zero banking alliance. And at first it was really upsetting because I thought, wow, they put all this work in to create it and make a framework and they're just going to abandon it. But you know, the question is, did it have any teeth? Was net zero even the right way to think about it? A lot of that net zero was achieved with offsets. The offset market has been shown to be unreliable at a minimum, you know, highly variable. Perhaps we kind of had to burn down version 1.0 to get to version 2.0. And you know, that's where I think we're at a really interesting time. Those voluntary ethos driven pledges just were waiting for one, you know, CEO change or you know, like Unilever. Right. They were the sustainability darling of the United States and for I think over a decade. But then a new CEO came in and rapidly changed. So it does make me think that the role of regulation. I'd like to think that capitalism can evolve to incent sustainability for its own self preservation, knowing of the limitations of resources and waste containment. But I don't know. I think now that capitalism is too short term focused and until we switch the time horizon that capitalism looks at, we're going to have to rely heavily on regulation. Like we're seeing, you know, with California and New York and we had been seeing at the federal government and the sec. Those of course now rolled back.
[00:11:34] Speaker A: Sure, yeah. I mean we're living in such interesting and I say interesting within verticommas times. Greenwashing is a big concern to say the very least, especially with these kind of tightening or changing regulations. How does Ecomedis help companies to ensure real sustainability impact instead of just doing like a tick box exercise?
[00:11:59] Speaker B: Right. Well, for us it all comes down to the third parties. There is what we call first party data, which a manufacturer can say, this product's great, it's green, it's sustainable, the savvy buyer is going to ask for more data. And sometimes that data could be supplied by the manufacturer, such as recycled content. But more often than not, the architects, the leaders and architecture and design are looking for third party certifications. And this is where it gets messy because we aggregate over a hundred third party certifications and nobody wants to do all that work. But people do want valid third party data points. So it's sort of a necessary evil of avoiding greenwashing is having these third party certifications when we originally started Ecomedes, we only had 12 data sources. Now we're up to 100. So it has grown. But these third party certifiers, such as Cradle to Cradle, who certifies products around, you know, waste and circularity to government agencies like Energy Star and Watersense, who test actual products to see the energy consumption and the water consumption, those third parties are essential to avoid greenwashing, but they do add a bit of work. We're trying to minimize that work so that you can get the benefit of having third party certified data richly across these five buckets without it breaking the bank. There's usually some demon Excel spreadsheet where people are trying to track all this data before they find ecomedes.
[00:13:41] Speaker A: Right? Like listen, that leads so brilliantly into my next question. Kathleen, lots of corporate sustainability teams are exactly what you've described, struggling with this, like, horrifically fragmented data. How does technology like ecomedis help them integrate and use that data effectively?
[00:14:03] Speaker B: So we're for the manufacturers, right? We're part of their product development and their selling motion. So how do they design products that meet the criteria that buyers want and certify it with these third party certifications? So there's a product design function and then there's a selling and support function. Everything from a customer calling up customer support and asking, you know, how many lead credits do I get for this chair? Well, the question depends on what kind of building it's in and what's the zip code. And then it goes through math to figure out the lead credits. That would have taken weeks without ecomedes for the question to get its way into the org and finding someone who can do that work. EcoYes does it in seconds. So we're trying to collapse not just the net time, which of course time is money, but also the cycle time, which means that that customer support person can now handle more requests. And if it's a sales rep, then it's more deals and that helps grow revenue. So putting it in one place for the manufacturers go to market team to all access one version of the truth. Easy to find. When it comes to the buyers, they've got much, much more data to handle because they're trying to track different aspects of sustainability, from the meters in their buildings to their offset projects, if they're still doing that. And then they usually use a different class of software, something like Workiva or Watershed are two of the big ones over here. And they're, you know, these massive systems. Workiva is a public company. They have thousands of Clients, and they are more like you bring the data to them and they organize it well. But with us, we get the data for the manufacturers and help them organize it well.
[00:16:00] Speaker A: Excellent. Okay. So obviously there's a number of companies that are reacting to political uncertainty, which of course, we have a lot around, dotted around the globe, left, right, and center by pulling back on ESG investments. Kathleen, what's your response to leaders who are questioning the ROI of sustainability?
[00:16:21] Speaker B: I think that for a company, ROI is important, and we see every day ROI being generated. So it is possible to generate, but there is a lot of work that has to be done on sustainability that doesn't have roi. When companies are trying to do that work that doesn't yield roi, it's not going to work. That's why we need nonprofits and governments to do that part of the work. And as the regulations and the fines grow. Right. The ROI will grow. So for us, it's about selling. How can I sell more drywall to a customer like Google who has a lot of questions about their drywall? The ROI is getting an order from Google. You know, how am I going to dispose of some water or some air and put it back into the environment? And it has harmful chemicals like pfas or, you know, carbon in it. If there's not regulation, it probably is cheaper just to dump it. And so that's when you say, well, there's no ROI to me cleaning up my PFAs. And it depends on your scope. If you're just looking at the company's balance sheet, there might not be. But if you kind of expand to the idea of stakeholder capitalism, which I was so enthusiastic about in this country, and then it kind of flopped. If you include all those stakeholders, then the ROI is of course, saving lives because of the toxins, you know, that are going into the water until it's better regulated and the lawsuits can keep the companies honest. I do think that it's hard for a company if there isn't ROI and an action and there isn't regulation. I don't think we should expect those companies to do the right thing. We're trying to find the spots where there is roi. You know, for the building owner, there's power savings, right? You have to buy. Buy less power if your appliances and electronics use less energy. Water savings. We've worked with hotel chains looking at lower water flow fixtures, right? So the water bills are lower. So there is plenty of roi. But there are some decisions that, that don't have immediate roi. So I think we got to be honest about it. And then when there isn't ROI and you know you're doing the wrong thing, I guess you have to think about who are my investors, do they care about this, who are my stakeholders and what regulation is coming. And, and then, you know, assuming the fines and the regulation are real, then that would become the roi.
[00:18:56] Speaker A: Sure. And also who are their customers? You know, that's also important. With SEC climate disclosures and EU regulations tightening, do you think companies will be forced to rethink their approach to ESG, you know, this year in 2025 and beyond?
[00:19:13] Speaker B: Yeah, well, the SEC unfortunately is rolling back those climate disclosures, but the EU regulations, our real California still has quite a lot of climate policy that affects any company doing business in California, just like the eu, any company doing business in the eu. So yeah, I do think they have to rethink their approach. It's funny how ESG has gone in favor, out of favor. So I don't know what they're going to call it, but they, you know, I think the good companies think long term and I think when Unilever did what they did for the past decade was thinking long term and then they got a CEO who now is thinking shorter term. So it's really a matter of time horizon and as soon as they start looking longer term, then they will have to think this through. One of my dreams is the whole shareholder activism movement here tends to be very short term focus, like why weren't your earnings better this quarter and what are your earnings next quarter? And if you don't hit it, I'm going to try to get rid of the CEO. I'd love to see that. Shareholder activism with a long term view, of course, short term goals. But that would help people rethink it even faster.
[00:20:30] Speaker A: Absolutely. The time horizon has never been more important.
[00:20:33] Speaker B: Agree.
[00:20:35] Speaker A: So going back to policy and regulatory changes that we can't get away from, are there any that you are watching closely that you're thinking, okay, if this happens, that's going to have a really important impact on green building and corporate sustainability.
[00:20:50] Speaker B: I mean, I was really watching the SEC closely. I think everybody likes their stock price to be high. And so I thought the SEC was such a wonderful way to do it. They had put Scope one and Scope two on the table. They backpedaled on Scope three, but they said they would revisit that. So I was watching when they might bring Scope three back and you know, now they've it all back. So with that, with the absence of that, I'm really trying to watch the eu, the taxonomy and different standards that are taking hold across multiple countries that could affect our country. So I'd say the EU and California has something called Title 24, which has to do with building product, the permitting and code for buildings in California. And they have to now, as of July 1st, they have to show the embodied carbon for certain CSI divisions, which are certain categories of products. So how that is going to be enforced is another definitely one to watch.
[00:21:52] Speaker A: Now you've seen firsthand obviously how data and AI can accelerate sustainability progress. What's the next big frontier for climate tech and business?
[00:22:02] Speaker B: Well, you know, there's a whole amazing future around the companies that are doing product innovation. So you know, we aggregate data, we're a software company, but the companies we aggregate the data from are all doing really amazing innovations within their own category. Using different kinds of mycelium regenerative materials, reducing toxicity and paint, using bio based materials, finding strong materials that don't require the same treatment as steel, such as timber. So I think that each, you know, we're trying to accelerate those by helping them get more business faster. Unfortunately, we do have some small companies, but a lot of the companies on our platform are larger because they've had the wherewithal and the need to get the certifications. We are trying to find those innovation areas of our categories is roofing. And our two biggest roofing customers, GAF and CertainTeed, both have really amazing circular shingle systems where the extra shingles and the damaged shingles and the replace shingles can be ground back into new shingles. So it's pretty much still the same material, but the process of processing of it is different. Each little category we're in, even adhesives categories that might seem kind of boring to the average person, have incredible innovation. And so we're trying to help be a pathway for that innovation to find large markets.
[00:23:33] Speaker A: Okay, fantastic. So if a company wants to build a long term sustainability strategy, where should they start today?
[00:23:41] Speaker B: A long term strategy? I guess it depends on the kind of company.
[00:23:44] Speaker A: Let's talk built environment because obviously that's what Constructive Voices is all about.
[00:23:49] Speaker B: Yeah. So somebody who owns a bunch of properties, getting data, finding out where you are. We love a company in our space called Measurable that helps gather all the energy data from the meter so you could see what are your buildings using. I think that's a great place to start because the meter data is unrefutable. Then what we're trying to do is become a similar transparency to your products. Buildings are about half the carbon is from the construction and all the materials that go into constructing it, and then about half from the operations of the building. So knowing that they've got to work on both sides of that, looking at the energy the building is consuming on a given day, and then the energy that it took and the carbon that it took to make the building, I would kind of start there. I know a lot of folks will start with recycling bins and employee education programs. There's a lot of, I don't know, call them maybe token programs that are good for PR and good for visibility, but I don't think they really move the needle. But, you know, if it got you in the game, great. But it's really time to get off that on ramp and get onto the highway. The highway is going to either be operational impact or embodied impact. And so I'd start gathering data on both of those. Find the areas where you have the lowest hanging fruit and the ones that will bring the most financial benefit, and then go deep in those areas.
[00:25:14] Speaker A: Okay, excellent answer. So, looking ahead, what's next for ecomedes and the future of sustainability?
[00:25:23] Speaker B: Gosh. Well, we could be a piece of the future of sustainability within the built environment. We have about 50,000 users per month. It has grown a lot in the last year. About a year ago at this time, we only had about 28,000 users per month, so almost doubled in the last year. And we'd like to keep doing that, right? We'd like to keep doubling and growing. Our customers that pay us are mostly manufacturers, but we have stakeholders, GCs, designers, specifiers. And so we're looking at how do we help those folks that are making the decisions even more. Right? We bring them data, we make it easy. But we're rapidly deploying AI both within our own internal data aggregation and looking at ways we could bring AI to the specifiers and decision makers so they don't even have to navigate ecomedes. They could just, you know, talk to an agent who could help them earlier in the project is one of the industry's goals as well as ours, is to start, you know, doing this work earlier in the project, not at the end. And I think AI can be a big, a big unlock there. We're already seeing on some of our internal processes, 6x time savings. The first AI engines we deployed last year. So we're going to keep doing more of that and I think AI will help. And there's certainly a valid debate to be had about the energy that AI uses, but I do believe in Moore's law of technology, which is that the, you know, the transistor, double the capacity and halved and cost. I think we'll see a similar law. Maybe it's the deep SEQ law of AI, but I think we will see those costs come down. And for a whole industry that does not have PhDs in sustainability, but is responsible for 40% of emissions, we need to make that information accessible to the average installer, GC project manager and designer. And that's where we're headed.
[00:27:25] Speaker A: That sounds really amazing. So. Well, I want to just say thank you so much because it's really been fascinating. A real brilliant conversation in half an hour or so that has so much information packed into it. Kathleen, thank you, really, for spending the time today.
[00:27:43] Speaker B: Thank you for having me. And thanks for having this great podcast for the construction industry.
[00:27:48] Speaker A: This is Constructive Voices.
