# Illustrating Calculation Logic

Objective

After completing this lesson, you will be able to Illustrate the calculation logic in SAP Sustainability Footprint Management for your organization and each of your products.

## Calculation Logic

The figure, Calculation Setup: High Level Task Overview, shows the tasks that you must perform for the footprint calculation once, periodically, and ad-hoc.

### Example

Our Energy Flow example illustrates a process in a bakery.

The bakery produces two end products, a chocolate and a strawberry cake. By using the energy flow model, you try to answer the question "What is the carbon footprint of these cakes?".

Take a closer look at all the components that are part of the production process. You need raw materials such as dark chocolate, baking mixture, and the strawberries that are purchased from suppliers.

There's also one intermediate product, the biscuit, that is used for both cakes. When those raw materials are delivered, they already have a carbon footprint, and it is important that this amount of CO2e is part of the final calculation.

In addition, an oven is required to produce the biscuit as well as assembly equipment to assemble the strawberry and the chocolate cake. All the information about which components, be it raw material or production equipment, are required and also in which amount, and the different production steps is coming from an ERP system.

This is illustrated by the light blue lines here in the picture.

The production resources that are used in the production process also require energy which is provided as purchased gas or electricity. In addition, there is also process equipment like a cooling system for which energy is required and which also delivers energy, here in the form of cooling water to other resources.

Finally, you have a warehouse where the products will be stored. Here you face the challenge that the consumed energy of a warehouse cannot easily be allocated to a specific product, so it requires an allocation method, and you will see later how this is applied in the solution.

All the dark blue lines indicate the energy information that is maintained in SAP Sustainability Footprint Management.

In order to get this information, metering is required to collect the correct energy consumption. For all the resources that are maintained in the ERP system either metering or other calculation options can be used.

### Emission Balancing

The following image summarizes the goals of SAP Sustainability Footprint Management:

• Calculate the total carbon footprint of a company in a period of time
• Track it to the manufactured products and allocate corporate overhead
• Achieve a leveled emission balance.

### Fully Metered Scenario

Let's start with an ideal scenario where the entire energy flow can be metered correctly.

At the end of the month, you receive the energy bill from the energy provider that you consumed 500 m3 gas, you also know that these 500 m3 correspond to 1000 kg CO2e.

Two installed meters measure the consumed gas by the oven, which are 400 m3, as well as the cooling system, which are 100 m3. Based on the consumed energy you can derive the distribution factor which is 1 to 4.

This leads as to a CO2e of 800 kg for the oven and 200 kg for the cooling system.

The cooling system provides cooling water to the assembly resources which means that the consumed energy is distributed between the two resources.

As water consumption for both resources is also metered, you know that the chocolate assembly resource requires 75 l and the fruitcake assembly requires 25 l of cooling water.

Similar to the gas consumption, you can derive a distribution factor of 1 to 3  which results in a CO2e of 150 kg for the chocolate assembly resource and 50 kg for the fruitcake assembly resource.

The consumed energy is now fully assigned to the different production resources. The information about how much which resource is used to produce the different products is available in the ERP system.

This information is then used to allocate the carbon numbers to the production of the different products.

In this example two important principles are illustrated:

• One is that you need metering if there are process resources like the cooling system involved and these resources are not known in the ERP system.
• The second principle is that for resources that are known in the ERP system, metering is nice to have but not mandatory as you have an alternative to calculate the energy consumption.

Even if you have meters installed that measure the consumed energy, in the real world the metered consumption might differ from the numbers of the energy bill.

The reason could be that the meters are not 100% accurate or there is a leak through which some energy is lost.

To make up that inconsistency, SAP Sustainability Footprint Management follows the law of energy constant to ensure that no CO2e is lost, which is the 3rd principle. This means that you use the metered values as the basis for the distribution factor to ensure that the input amount of CO2e equals the output amount.

### Calculation Logic

For our example you divide 380/480 and multiply the result with 1000 kg CO2e which is the share of CO2e that is equal to the metered consumption. The same approach applies to the second meter

This method ensures that the 1000kg CO2e of the received gas is fully allocated to the consuming resources.

### Partially Metered Scenario

In case there are no meters available to measure the energy consumption of the production line, it is possible to add the planned energy consumption rate into the energy flow model of SAP Sustainability Footprint Management.

Let's assume you plan that the chocolate assembly would require 2 kWh and the fruitcake assembly 1kWh for 1h of work.

At the end of the defined period, you get the actual work numbers, and you see that assembly resources youre used for 200h and 100h.

Those numbers are then used to derive the distribution factor which is taken to calculate the CO2e emission by assembly resource.

Based on those numbers you can then calculate the actual consumption rate of the assembly resources.

That was already everything you need to know about how the energy consumption is measured within SAP Sustainability Footprint Management.

Now continue with the emission calculation for purchased goods.

### Purchased Goods

At first, purchased goods are always valuated on plant level which means that the same product could be valuated differently in two plants of the same company.

At the moment, the records must be entered manually but it is planned to automate this process in one of the future releases.

If you have specific footprint records from the supplier, you can use those records but if this is not the case, you can use footprint records from external sources like a LCA database.

Independent from the source, always use the record valid on the first day of the calculation period.

Let's assume you want to calculate the footprint for dark chocolate purchased from the supplier Mayer Foods and the calculation period starts on August 1st, you would use the value 12 kg CO2e / 1 KG.

Assuming that you would purchase dark chocolate also from the supplier Malmer and you want to calculate the footprint for the same period, you would use 15 kg CO2e / 1 KG as footprint value.

If you create your product footprint inventory for the first time or for a new valuation period, the opening inventory is valuated with the calculation result for the preceding period.

If this value is not available, you can use the purchased product footprint record.

### Purchased Goods (Example)

This slide shows the table from the previous slide extended by concrete numbers for the months of August and September to illustrate how the opening balance and the information from the supplier are used to calculate the monthly product footprint.

You can see that for August the CO2e footprints from both suppliers are taken and the calculated average is used as monthly product footprint and as opening value for September.

### Production

Let's continue with the footprint calculation of the production.

As you know, the calculation in SAP Sustainability Footprint Management is done at the end of the defined period and not per production process. Hence, the production evaluation is done on product level and not on individual production lot level.

Input products as well as the consumed resources are valuated with their known footprint based on their consumed quantity as you can see in the example on the slide.

For every production calculation the rule applies inputs equals output.