Shuchi Nijhawan of Eka Software Solutions: carbon accounting to reach net zero

A net zero strategy starts with understanding, measuring, and monitoring carbon emissions. This process, now being called carbon accounting, is complex and challenging for organizations. When we consider multinational, multi-tier supply chains and the myriad of disclosure standards, the task of understanding carbon emissions and footprint of an organization becomes overwhelming. We talked to Eka Software Solutions to better understand how they are addressing this problem. Eka Software Solutions, leveraging its expertise in procurement, supply chain, and treasury, has expanded its capabilities to help organizations by aggregating, visualizing, monitoring, and reporting on key sustainability initiatives.

In this episode of The Understory Podcast, we talk to Shuchi Nijhawan, Eka Software’s Chief Sustainability Officer and CHRO. Shuchi has a unique founding story - her role as the head of HR led her to develop relevant sustainability solutions for Eka’s customers. She discusses how supply chains and sustainability are interconnected which creates both opportunities and challenges for organizations. Shuchi offers insights into different types of carbon emissions, evolving disclosure standards, and how technology can enable net zero enterprises.

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Episode Transcript:

JJ (Host of The Understory Podcast): Hello everybody. Welcome to another episode of The Understory Podcast. Understory is a global platform, supporting innovators and innovative companies who are making a difference in the world of sustainability and climate tech.

Today, we're thrilled to have Shuchi Nijhawan join us. Shuchi is the Chief Sustainability Officer and Chief HR officer of Eka Software Solutions. So nice to have you with us. To start off, tell us more about your background and your role at Eka Software.

Shuchi Nijhawan: Thank you. Thanks for having me today. I've been at Eka for the last 12 years, and I've performed a multitude of different roles. My primary role for the largest part has been heading the human resources team at Eka globally. In doing so, I realized that I had made such deep and profound connections with vendors, suppliers, clients and of course employees that it charted my narrative to become more of the leader for a business function as well.

About four years back, I also took an additional responsibility of heading some parts of our upstream business where we were creating software for businesses in the upstream side, on the production or the producer side. And that's when I realized that sustainability was a huge narrative, and we started our journey. I started working on that path of sustainability about four years back, and since then to now we've launched a sustainability solution.

Through that connection, through those meetings that I had with some of our partners with some of our different vendors, clients were increasingly focused on sustainability. The seed was sown about four or five years back. Now it fructified into a product and into me, leading the sustainability practice. I'm doing this role of being the Chief Sustainability Officer for the last two years in addition to my human resources responsibility as well.

JJ: That's so fascinating. It's incredible how you're able to connect those synergies together, and I think they make a lot of sense given Eka Software’s global position with your platform for e-sourcing, supply chain, trading risk, and clearly you're ahead of your time and really thinking about the sustainability side of things.

You mentioned the partners and customers in your conversations that really inspired you four years ago to start building the sustainability and ESG software solution. What sorts of organizations do you typically work with, and what sorts of pain points do you see and observe from your partners and customers?

Shuchi: Sure, that's a great question, so Eka works with organizations that are in the industry verticals of manufacturing and natural resources, which means agriculture, metals and mining, energy and utilities, CPG and retail. A whole gamut of organizations across these different industry verticals is typically the organizations that we work. In working with them, we realized that their pain points aside from the existing solutions on e-sourcing supply chain and trading and risk, were the fact that they were not able to accurately measure or report their sustainability narratives or their sustainability risks. Sustainability risks are historically non-financial risks, and because of the nature of the non-financial aspect, they  take a lower priority for organization.

Even so, these non-financial risks tend to become financial risks if there is a mishap that happens. For example, an organization does not accurately report on the labor or the human rights violations in a particular segment or a country. Those can actually lead to the organization's operations being shut down, so it was actually a financial risk. It was a sustainability risk that did not get accurately addressed and therefore it became a financial risk and an operational risk for the organization.

A lot of organizations were struggling with an appropriate narrative on their sustainability risk. They were struggling with measuring and reporting accurately across different stakeholders on their environmental social as well as governance parameters. You know a lot is being spoken about in climate tech. There's a lot of noise around carbon emissions, climate technology or climate change, especially more so after COP26, but that's not the only narrative that organizations need to focus on when they're looking at sustainability across environmental, social, and governance.

There are so many more different metrics that need to get reported and we see that that's where the organizations need to focus their energy, because that's where they're struggling. Currently they're struggling with reporting across environmental, social and governance metrics, and they're struggling with an accurate stance of their sustainability or non-financial risk. And they're struggling with what their carbon footprint is. Countries, companies, and individuals alike are focusing a lot of their energies on carbon footprinting. In a nutshell, those would be the pain points that we are trying to address.

JJ: I think that's incredibly useful, and I think you really touched on the complexity of organizations trying to achieve aggressive sustainability goals or even meet the net zero goals. There are lots of challenges and if you can't measure it and measure it in the right way, you can't really operationalize the new processes and so forth. You're actually talking about something that we have heard a lot about, which is carbon accounting.

What is carbon accounting in your perspective? And how does Eka Software help your clients to really tackle this emerging and really front and center role of doing carbon accounting in the right way.

Shuchi: Carbon accounting, or carbon footprinting analysis as we also call it, is an organization's understanding of their measurement, or rather, the relative measurement of the amount of carbon dioxide equivalent that is released in the environment during the lifecycle of a product or an activity or a process. That's how we typically calculate or say that this is  the carbon footprint of the organization. It's normally calculated from the analysis. Both the direct as well as indirect emissions of resources consumed in a certain product, activity, or process.

Different operating conditions scenarios such as raw material, diversity process, integration degree, utility type, you know many different facets. We are characterizing this process simulation or use of the industrial data that goes into computing your carbon dioxide equivalent release in the organization’s environment. That's what organizations struggle with computing right now. How do I understand what my direct and indirect emissions are?

That's where I think we have a very sweet spot, because ultimately you need to move or gravitate towards a technology that helps you measure these in a standardized manner that helps you articulate and collect in an appropriate manner your scope 1, scope 2, and scope 3 emissions. For the purpose of this conversation, let me also clear up what scope 1, scope 2, and scope 3 emissions are now.

Scope 1 emissions are the direct emissions from owned or controlled resources by an organization.

Scope 2 emissions are really indirect emissions from either the generation of purchased electricity or steam heating and cooling that are consumed by the organization that is reporting the scope 2.

Scope 3 are all indirect emissions that occur in a company’s value chain, but they do not have a direct control over them. These are the three different specific narratives on carbon accounting that organizations need to measure.

Scope 3 is what organizations need to have a much better control of and that's where I believe a technology solution like Eka’s plays a great role in helping organizations bring in data in a standardized format and that it is compliant with some of the accounting standards that the organizations need to report on. Then our tool also helps articulate using emission factors and company specific, industry specific as well as country specific formulas to say what the total carbon emissions for the organizations are. That's what a technology solution like Eka’s does really well. We do that across the different sectors of manufacturing, natural resources, which is agriculture, energy, utilities, metals, and mining as well as CPG and retail. That's where I think a technology solution would really help organizations articulate their carbon footprint and do their carbon accounting well.

JJ: Thank you for that perspective. I think you just outlined how complex this is. I'm glad that you proactively defined scope 1, scope 2, and scope 3, because whether you're a small company or a large company like all the clients that Eka has, these are all incredibly important.

One of the things that I found really interesting and compelling about Eka’s platform for sustainability and ESG is that it's end-to-end. Shuchi, you mentioned this as well. It's not just about visualizing, even though that's important, but it's helping a client aggregate different data sources, helping them to really understand the data, and then all the way down to reporting and analysis and making it useful across the organization.

Shuchi: Absolutely, very rightly said. For example, it's not just important for organizations to understand their carbon footprint. Their procurement teams or their environmental teams to have an emissions-based procurement strategy.

A cement industry or a construction industry, for example, needs to understand that if I need to procure my product from two different countries, and I need to land my product and process my product in a different country. Where is it that I'm going to be able to optimize my procurement strategy such that emissions are minimized? But they're also cost balanced. So you need to understand your footprint first. Then you need to analyze in detail to be able to understand - can I give this power to my procurement teams or even my finance teams?

A great combination of a mission-based strategy with a cost-based strategy for procurement can enable the organization to reduce their carbon dioxide emissions. Organizations need to put that in perspective and need to give the power in the hands of these different stakeholders. Even within the organization, not just the sustainability team, not just the environmental management teams, but also the procurement teams that are making the decisions or the finance teams that have a very defined lens of only looking at the best cost analysis can both these teams marry the usefulness of a certain technology intervention to help them reach a midway strategy where the organization balances its ultimate carbon dioxide narrative.

JJ: The bigger the company, more complex the industry, the more cross-functional they must be. Eka Software Solutions rightly addresses those needs.

As an expert in this area, how do you see disclosure standards, reporting standards, evolve and where do you see whether it's carbon accounting or carbon footprinting analysis and generally, sustainability and ESG reporting evolve for large and small companies.

Shuchi: Very relevant question, one that often organizations struggle is that there are over 40 different disclosure standards for sustainability and carbon accounting together. Organizations struggle with which one should I comply with. Even if they pick up one or two different standards to comply with and report on, there are the investor interests for the reporting of those different standards. They still struggle because these standards are evolving at a very fast pace. The GRI Standards has evolved three times in the last four and a half years. How do you keep up?

Even a technology innovation needs to keep up because that means at the backend, we also need to keep upgrading the technology to match the fast change of the different disclosures. The magnitude or the number of standards is big. They're also evolving because you know every new year there are new challenges in sustainability. For example, the global pandemic.

Covid brought so many challenges, and organizations and countries that they needed to look at sustainability in a different lens. To be very honest, it was just the climate action and the climate narrative that was being talked about a lot pre-pandemic. But during the pandemic, organizations have realized that the social and governance resilience, and their entire supply chain from farm to fork needs to be better built. It needs to be more sustainable and needs to carry through sustainably. Disclosure standards are changing really fast, and they are too many in numbers. Those are the two major reasons that organizations struggle and that’s when they also come to us. They usually ask us which are the standards that I should be picking and why. What is pertinent for my country and for my industry. A lot of these large conglomerates are operating in multiple countries and therefore they need to comply with a multitude of different standards and disclosures because some standards are pertinent to a specific country. It is these standards that are not very well evangelized, and organizations do not have a great handle on what is applicable to them, because they're all nuanced to [a particular] industry and to processes that are managed by an organization.

Truly in this manner, technology can play a very important role when you don't understand your sustainability compliances. Companies like Eka, and I'm sure there are other services providers as well, are at the forefront of making sure that we accommodate more than 500 different metrics across environmental, social and governance. Standards which we've compiled are looking at all these different disclosures and standards such that the organizations can pick and choose within the realm of a single technology solution. Which ones do they need to manage? Which ones do they need to disclose? Which ones do they need to report on?

If you bring in your data once, then we can tell you how well you are suited to each of these different disclosures and standards that we cover. Technology is a huge enabler in an organization’s journey for reporting on different disclosure standards.

I hope that answers your question.

JJ: That's excellent insight. I think what makes your perspective so powerful is that you yourself, as we introduced you before, is a Chief Sustainability Officer of a global company. You see this from a user’s perspective. The fact that you are also the Chief HR Officer for this global company and you as you're talking about the social elements, the governance, resilience and so forth. There is a huge human element to all of this in sustainability, because this ultimately is about how to account for the responsible behaviors of corporations to make our world better. I really loved the founding story and how it inspired you and your team to build such a differentiated solution serving your peers and others in those organizations.

One last question for you, Shuchi. Where can partners and customers and organizations interested in Eka Software find you or connect with your company to learn more?

Shuchi: You can find us on our website which is https://eka1.com/. That's numeric 1 so www.eka1.com. You can find us there on our website. We have a very active LinkedIn and social handle, and I would love for the audience to interact with us there as well.

JJ: Shuchi, thank you so much for your time and joining us on this episode. We learned so much about your work and your background and how you've built a global platform for sustainability and ESG. Thank you for educating us on carbon accounting and the complexity around that topic.

Shuchi Nijhawan, the Chief Sustainability Officer and Chief HR Officer of Eka Software Solutions. Thank you so much again for joining us here on The Understory Podcast.

Shuchi: Thank you so much for having me. Thank you.