Understanding Sustainability in SAP Solutions

Objectives

After completing this lesson, you will be able to:

  • Explain how sustainability is interwoven in SAP's solutions

Sustainability in SAP Solutions

Sustainability is more relevant than ever

How much could an organization's lack of sustainable practices cost their business? It turns out, quite a lot. We'll look at some data from customers, investors, employees, and regulators to get a better perspective.

Customers and Sustainability

A report from the Capgemini Research Institute found 79% of consumers are changing their purchase preferences based on social responsibility, inclusiveness, or environmental impact, and the COVID-19 pandemic especially increased consumers' awareness of the scarcity of natural resources. More than half (52%) of consumers surveyed said they share an emotional connection with products or organizations they perceive to be sustainable. In addition, 77% of organizations surveyed in the consumer, product, and retail space reported that sustainability leads to increases in customer loyalty, and 63% reported it increased their brand revenue.

Investors and Sustainability

An report from Deloitte found investors have been adding "sustainable" or "socially responsible" investments to their portfolios at a rapid pace. With artificial intelligence and better-quality environmental, social, and governance (ESG) data becoming available to evaluate the sustainability of organizations, the Deloitte Center for Financial Services demand from clients to drive ESG-driven assets to account for half or all professionally managed investments by 2025.

Employees and Sustainability

An analysis from Future Business found 71% of job seekers want to work for an environmentally-friendly employer, with 67% being more interested in applying for positions in sustainable companies. One third of those surveyed even said they would accept a lower salary to work for sustainable or socially responsible organizations.

Regulators and Sustainability

A review of events from the 2022 calendar year by EY highlighted several different ESG reporting standards being proposed or adopted globally, and the tight relationship between the finance line of business and ESG reporting, with some organizations even creating a dedicated "ESG Controller" role. A few major events are:

  • The International Financial Reporting Standards (IFRS) Foundation announced the establishment of the International Sustainability Standards Board (ISSB) at the 2021 United Nations Climate Change Conference in Glasgow. Research by EY estimates there are 600+ ESG reporting standards globally, and the ISSB intends to develop global sustainability reporting standards that require organizations to provide reliable, consistent, and comparable metrics.
  • In March 2022, the Securities and Exchange Commission (SEC) in the U.S. proposed new rules to enhance and standardize disclosures that registrants make about climate-related risks, their climate-related targets and goals, greenhouse gas emissions, and how the board of directors and management intend to address these risks moving forward.
  • In October 2022, the European Union adopted the Corporate Sustainability Reporting Directive (CSRD) to support the European Green Deal, which is intended to transform the EU into a modern, resource-efficient, and competitive economy with no net greenhouse gas emissions by 2050. Companies that operate in EU-regulated markets are expected to start reporting beginning in 2024 in line with the mandatory EU sustainability reporting standards.

Make Sustainability Core to Your Business

SAP has embedded sustainability insights into our end-to-end business processes to make it possible for customers to make sustainability core to their business, in addition to providing the dedicated solution, SAP Cloud for Sustainable Enterprises, with applications designed to help customers reduce their emissions, create zero waste, and stay socially responsible.

The SAP Cloud for Sustainable Enterprises solution supports customers in regulatory compliance, real-time insights, and sustainable future growth. Customers can proactively ensure they are compliant with global and local regulations, taxation, and sanctions through the deep transparency into financial and non-financial data.

The real-time data across the entire solution can be used to assess your actual carbon footprint and learn where to improve. For example, designing a circular business model where waste is reduced and/or reused as much as possible, with the ultimate goal of creating zero waste. If zero waste isn't possible for a particular use case, customers can support a local facility that burns approved materials to create renewable energy, rather than burying the waste in a landfill that produces carbon dioxide and methane as it decomposes. In addition, all materials involved in the production of semifinished and finished goods should be grown and/or gathered in a responsible way, with the employees working with these materials at every step in the process being paid a fair, livable wage in safe work conditions.

Often, the people involved in growing and gathering raw materials can be overlooked, and native plants or trees are removed in favor of growing materials that can be sold for profit. With detailed and descriptive data about each step of the production process, businesses can make thoughtful, informed decisions that have a real impact at a human and environmental level, while even identifying new sustainable products, services, and solutions they wouldn't have originally thought of.

Watch a video

Watch this video to get an overview of the SAP Cloud for Sustainable Enterprises solution.

SAP Cloud for Sustainable Enterprises Solutions

SAP Cloud for Sustainable Enterprises includes a suite of solutions to help customers manage their carbon footprint, reduce materials waste, and become a socially responsible business.

This includes:

  • Sustainability and ESG (environment, social, governance) Reporting Solutions
    • SAP Sustainability Control Tower enables customers to define their own organization-specific targets and track performance with a set of data management and performance insight tools targeted to helping businesses understand their environmental, social, and governance (ESG) data.
  • Climate Action Solutions
    • SAP Sustainability Footprint Management and SAP Environment, Health, and Safety Management enable customers to reduce the carbon footprint of their entire value chain based on actual business transactions.
  • Circular Economy Solutions
    • SAP Responsible Design and Production and SAP Green Token enable customers to build a circular supply chain where the business finds ways to reuse its own outputs to create as little waste as possible.
  • Social Responsibility Solutions
    • SAP Environment, Health, and Safety Management and SAP S/4HANA for product compliance enable customers to understand the impact of their business on people and society in a larger context.

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