Companies embarking on the decarbonisation journey face two key issues. One is to measure supply chain emissions and two is to meet reporting guidelines. Arjun Vijayaraghavan launched his startup Karbonwise in 2023 to the relief of companies that are struggling like this. A decade of experience as a sustainability consultant helped Arjun Vijayaraghavan envision a technology platform that can rapidly aggregate, analyze and understand data so that companies can meet their sustainability goals and reduce their carbon footprint.
This Mumbai-based startup aims to provide comprehensive solutions to all entrepreneurs who want to decarbonize. "We understand the urgent need for enterprises to measure and reduce their carbon footprint and adopt sustainability practices amid increasing pressure from stakeholders such as consumers, investors and regulators," says Vijayaraghavan, Founder and CEO, CarbonWise.
The decarbonisation efforts of Indian companies are part of a larger ambition. At COP26 in 2021, India had announced that it aims to become a net zero carbon emission country. This will require 1,000 leading companies to report on their ESG (Environmental, social, and governance) performance, including strategies used to reduce their carbon footprint, through a Business Responsibility and Sustainability Report. India plans to generate 500 GW of non-fossil electricity by 2030 and source 50% of its energy use from renewable sources.
“India aims to achieve net zero emissions by 2070 and enterprises play a critical role in this transition. "We aim to help enterprises by providing them with the right tools," he said.
Prior to his entrepreneurial venture, Arjun Vijayaraghavan worked at Susnomics, a UAE consultancy known for low-carbon building design. He later joined McKinsey & Co. in London, where he worked on climate initiatives, net-zero pathways and supply chain emissions.
What does this platform do?
CarbonWise is a web-based platform that aggregates data from various sources to provide enterprises with insights into carbon emissions and environmental data. The startup provides services such as automating carbon accounting, helping in setting realistic targets, reducing carbon emissions and streamlining reporting requirements to ensure compliance with global ESG standards.
“Our platform uses AI-powered modeling to analyze and identify carbon hotspots in an enterprise by aggregating and incorporating enterprise data from internal systems and applying specific models to calculate carbon footprints and other ESG metrics,” he adds.
The company uses advanced data engineering and AI/NLP expertise to integrate data from various sources and automate calculations for Scope 3 emissions that companies cannot directly control, such as carbon emissions from employees commuting to and from the office.
"Furthermore, a branch of generative AI is under development which pre-recommends pathways and alternative inputs/lever to reduce the footprint," says Arjun Vijayaraghavan.
Currently, the startup works with more than 10 clients divided into two groups: medium to large enterprises that struggle to calculate carbon emissions, especially scope 3/supply chain emissions, and major companies that seek product or project lifecycle analysis to meet customer needs. The company plans to onboard three to four times the current number of clients in the next eight months.
"Businesses often struggle to balance growth, costs and environmental impact, due to a lack of comprehensive understanding of the impact of their operations on sustainability metrics such as carbon footprint, ozone depletion and biodiversity," he added.
For example, the pharmaceutical industry faces many challenges, including the lack of standardized sustainability metrics, the difficulty of tracking emissions across complex supply chains, and the limitation of renewable energy sources.
Sector-specific approach
CarbonWise offers lifecycle analysis modules for construction projects and portfolio emissions management for property managers and developers. The startup helps mid-sized suppliers in decarbonization, aligning with the net zero emission goals of leading global pharma/chemical companies. The company plans to enter the financial services sector later this year.
For example, a construction company with 10 projects in multiple countries can use CarbonWise to get real-time information on carbon emissions and their environmental impact. It analyzes project materials and operations to help track emissions, identify inefficiencies and develop strategies to reduce their environmental impact.
"We combine industry specific expertise to help organizations use data and insights to make informed decisions," said Arjun Vijayaraghavan.
The startup competes with San Francisco-based Watershed, New York-based Greenlee and Arizona-based Persephone.
"What sets us apart in the market is the importance we place on Scope 3 and supply chain emissions, early clients attest to nothing like this anywhere else," explains Arjun Vijayaraghavan.
Data accuracy is in accordance with globally accepted carbon accounting standards such as GHG Protocol and ISO 14064. "Our software's calculation methods and algorithms are designed to be sufficiently amenable to third-party audits," he adds.
Business model and future
According to Research and Markets, the carbon accounting software market is forecast to grow at a CAGR of 29.27% to USD 16.55 billion during the period 2023-2028.
The startup generates revenue through platform subscription fees, one-time system integration fees for setup and implementation, and consulting services that offer bespoke solutions for specific client needs.
“Our pricing structure varies depending on factors such as the size and complexity of a customer's needs, the specific modules they choose, and the level of consulting they want embedded in the offering. So it's difficult to determine a number that works for everyone," adds the founder.
Carbonwise plans to invest in sales and growth to expand its customer base through inbound and outbound efforts.
The company is looking to expand its product offerings, especially in ESG reporting, build an intelligence layer based on generative AI, and strengthen its market presence.
