The figure shows how the tasks and responsibilities of a CFO change to meet the requirements of sustainable business management.
Let’s take a closer look at the tasks.
- Anticipate and adapt to changing regulatory requirements.
Examples such as the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy, the Task Force on Climate-related Financial Disclosures (TCFD), and the Carbon Border Adjustment Mechanism (CBAM) illustrate the importance of these changes. They affect both external and internal dimensions–strategically, and operationally. This includes compliance with tax and regulatory requirements, as well as the effective management of policies.
- Investor pressure regarding environmental, social, and governance (ESG) performance, as well as sustainable financing opportunities, fall under the CFO's mandate.
This concerns both the financing of the business and the management of the investor community (external), as well as the integration of strategies, resource allocation, planning, and financial performance (internal).
- Decision-making based on financial and non-financial value to support the sustainable transformation.
- Adapt processes and technology to incorporate changes driven by sustainability.
Vision: Manage carbon in sync with your financial data.
The goal is to enhance financial decision-making by incorporating environmental considerations, and to increase transparency around carbon emissions and associated risks. Emission figures should be presented in a clear and understandable manner.
There are different approaches to determine and present the emission figures.
Let’s compare the traditional data warehouse approach with the ERP-centric approach.
The benefits of the ERP-centric sustainability approach allow for a faster transition from averages to actuals.
In the data warehouse approach, carbon management is based on a data warehouse. It reports the value chains and carbon impacts using data modeling and aggregation functions. This manual process is based on average-based data from aggregated data models, and includes steps such as data collection, data validation, data allocation, carbon calculation, reporting and analysis, and even carbon footprint planning.
In contrast, the ERP-centric approach provides the ability to link carbon data to financial business transactions and integrate carbon accounting and management into the ERP business processes. This results in a more efficient and structured accounting process embedded in ERP financial transactions, enabling a more accurate and comprehensive analysis of carbon impact.
The SAP Green Ledger solution enables an ERP-centric sustainability approach and carbon accounting.
Carbon:
Refers to CO2, or greenhouse gases in general, and expresses CO2 emissions in terms of the amount of carbon in the CO2 emission.
Carbon Accounting:
Refers to the process of quantifying the number of greenhouse gases produced directly and indirectly by a business or organization.
