Differentiating Business Value Drivers and Benefits of SAP's Sustainability Solutions

Key issues with the Data Lake approach to ESG reporting:

1. Control Issues: Poor data quality alignment with financial processes and master data.
2. Disconnected Processes: Separation from business processes hampers strategic decision-making.
3. Complex Auditing: Difficult data lineage increases audit costs.
4. Inefficiency: Slow and limited reporting frequency.
5. Higher Costs: Increased total cost of ownership (TCO) due to maintenance, alignment, and auditing costs.

Key enablers of the ERP centric approach

1. Integrated Reporting: Combines financial and sustainability metrics for transparency and stakeholder accountability.
2. Single Source of Truth: Aligns ESG data with ERP master data for consistent and accurate reporting to all stakeholders.
3. Data Utilization: Leverages existing business data to reduce redundancy and enhance integrity across the organization.
4. Enhanced and Efficient Reporting: Streamlines reporting and auditing processes, saving time and resources.
5. Strategic ESG Integration: Factor in ESG elements like carbon pricing into strategic planning.
6. Sustainable Operations: Align stakeholders with ESG goals for sustainable business processes.

SAP's Sustainability Solutions are distinguished by integrating sustainability data within ERP systems. Unlike the current approach many companies adopt, which involves moving from spreadsheets to data lakes with help from sustainability system integrators or best-of-breed solutions, SAP's approach avoids the separation of sustainability and finance systems. This integration is critical for aligning sustainability impacts with financial reporting, especially as carbon pricing and other related topics become more prevalent.

Separate systems pose problems, such as preventing the integration necessary for cohesive and credible reporting, which stakeholders—including investors and consumers—expect to be reconciled with financial data. SAP addresses this by making sustainability reporting an intrinsic part of the ERP system, ensuring auditable and reliable data.

The benefits of integrated financial and sustainability reporting, emphasizing not just regulatory compliance but also the pursuit of sustainability ambitions within various business processes like procurement, product design, and sales. This integration supports better decision-making and operational efficiency.

Emphasizing double materiality, SAP's approach ensures companies consider both the financial impacts of climate change and their impact on the environment and society. Business benefits include energy savings, reduced cost of capital, lower incident costs, and achieving better compliance with regulatory requirements, ultimately aligning sustainability goals with financial objectives for comprehensive business improvement.

This holistic integration addresses regulatory requirements while delivering substantial business benefits, including reduced cost of capital and incident costs. By embedding sustainability into core business processes like procurement, product design, and sales, SAP enables companies to act on their sustainability ambitions effectively.

SAP integrates sustainability data within ERP systems. The cohesion of sustainability and financial systems ensures reliable and auditable data, supporting better decision-making and operational efficiency.

Business Benefits:

1. Reduced energy costs and incident costs
2. Lower auditor and legal fees
3. Decreased risks and insurance costs
4. Reduced taxes (carbon, plastic, waste)
5. Increased sales and premium pricing from sustainable products
6. Enhanced customer and employee retention
7. Improved brand capital and ESG ratings
8. Reduced cost of capital

TCO Benefits:

1. Lower IT complexity and risk from combining ERP and ESG data
2. Reduced implementation and maintenance costs by maintaining one integrated system instead of two separate systems