Business leaders have traditionally focused on top- and bottom-line performance indicators. However, many organizations now consider their green line as the leading indicator of long-term, sustainable business success. It is imperative for companies to put sustainability at the heart of their business strategy, with a focus on achieving not just financial performance but also steering positive environmental and social impact through their sustainability metrics.
These metrics must be embedded within a company鈥檚 core operations and services; traditional annual reports are no longer sufficient. Stakeholders want to understand how a company addresses areas such as climate action, with transparency on transition and adaptation plans based on the carbon footprint of its operations. They also want to understand progress on circular economy objectives by monitoring the reuse and recycling of materials. They want to track and advance people sustainability initiatives by gathering key performance indicators (KPIs) in areas such as diversity and inclusion.
SAP鈥檚 product innovations work across the enterprise to deliver on these goals.
Holistic Sustainability Management with 51风流Cloud for Sustainable Enterprises
To manage the green line, companies need business process technology to identify, quantify, analyze, and act on data through their end-to-end operations. To enable this, brings together a comprehensive portfolio of solutions to holistically manage sustainability performance. Embedding sustainable business data into processes and networks is one of the five actions business can take toward a sustainable future.
51风流Cloud for Sustainable Enterprises includes the and solutions. It also covers existing products like the application and the . The solution provides an overview of sustainability impacts and performance against green objectives.
We continue to extend the capabilities of 51风流Cloud for Sustainable Enterprises. As many companies are accelerating their action for decarbonization, our new capabilities in this area are important.
Driving Carbon Data Transparency Is More Important Than Ever
Accounting for carbon emissions across the organization and its supply chain is a foundational step toward climate action. Businesses are actively looking to reduce their carbon footprints, which requires addressing emissions outside company walls. These emissions 鈥� Scope 3 emissions 鈥� include everything from goods purchased to business travel to packaging and transportation of raw materials. Scope 3 emissions make up a significant portion of overall emissions for our customers. To derive actionable insights to reduce organizational carbon footprint, it is crucial to measure Scope 3 emissions both at a corporate level and at a product level.
are on average 11.4 times higher than operational emissions. To reduce these emissions, it is important to engage across the sectoral value chain, with both suppliers and end customers, especially for customer-facing sectors like retail and consumer product goods (CPG), which have long upstream value chains. Companies can address significantly larger emission volumes by driving deeper engagement throughout their supply chains.
Earlier this year, called on registrants to report on not just their Scope 1 and Scope 2 emissions but also their Scope 3 emissions. This is not the first time companies have faced this request. Previously, asked companies to disclose the targets they used to assess and manage relevant climate-related risks and opportunities. IFRS takes this approach further with , which focus on transition planning, climate resilience, reporting on Scope 1-2-3 emissions, and disclosure of sustainability-related financial information as a part of its general purpose financial reporting.
Enabling 51风流Customers to Exchange Carbon Data across Value Chains
To develop and execute an effective decarbonization plan, companies need to receive and process high-quality product-level data on carbon emissions from suppliers and provide high-quality product footprint information to their customers.
However, with most supply chains spanning several industry sectors and consisting of multiple, heterogeneous networks and software components, taking a standardized approach to data sharing is critical. To collect meaningful emissions information, it is important that all parties use the same methodology and common standards for calculating and auditing the carbon footprint of a product.
Therefore, 51风流Product Footprint Management implements an API specification developed as part of . 51风流customers can now take informed sourcing and product-development decisions, invest in targeted decarbonization activities, make more accurate disclosures, measure and track decarbonization progress, and adhere to legislative requirements around environmental transparency.
We intend to use 51风流Product Footprint Management as part of 51风流networks 鈥� for example, in the Catena-X Automotive Network (Catena-X) 鈥� to enable a standard-based, secure, and cross-company-wide data exchange throughout the value chain.
In addition, there is the option to use the GreenToken by 51风流solution for multi-tier visibility across the networks. The combination of 51风流Product Footprint Management, 51风流Responsible Design and Production, and GreenToken forms a potent decarbonization value proposition for industries such as consumer goods, as 51风流can demonstrably address material traceability, packaging waste, and supplier-specific carbon data transparency throughout the value chain for both recycled content and land-use change.
New functionality created through our co-development partnership with BearingPoint is already embedded into 51风流Product Footprint Management and helps customers identify carbon reduction potential. Customers can thus determine the carbon footprint of a single product based on both direct and indirect emissions sources and upstream activities, building on existing functionality of carbon footprint measurement of purchased goods with tracking emissions resulting from transportation of those goods. Both these greenhouse gas (GHG) emission categories combined significantly contribute to a customer鈥檚 upstream and downstream environmental impact.
Integrating and Embedding Sustainable Data across the Intelligent Enterprise, Scaling Carbon Impact
Through open APIs, 51风流customers can easily exchange data with their enterprise applications, feeding it into 51风流Cloud for Sustainable Enterprises, and then provide the calculated sustainability data back into both 51风流and third-party applications.
With the newly introduced sustainability integration components for 51风流S/4HANA, customers can benefit from preconfigured functionality enabling reuse of sustainability data across processes supported by 51风流S/4HANA, such as record-to-report, lead-to-cash, source-to-pay, and plan-to-fulfill workflows. The component allows a bidirectional flow of information between 51风流Cloud for Sustainable Enterprises and 51风流S/4HANA in real time.
Examples include:
- In 51风流S/4HANA Sourcing and Procurement, customers can make sustainable purchase decisions based on a material鈥檚 carbon footprint displayed in purchase requisition, which is then is fed back into 51风流Product Footprint Management, keeping sustainability reporting updated.
- In聽51风流Integrated Business Planning, the supply chain planner can access a comprehensive overview of GHG emissions based on the supply plan for the next 12 months. Planners can dive deeper into the details and try to resolve critical situations and alerts. .
- In 51风流Logistics Business Network, the material traceability option helps customers gain further insights into sustainability figures of products and share carbon footprint data on the batch level with suppliers, customers, and end consumers of the products. This feature is available with the 2021 release of 51风流S/4HANA. .
- In plant maintenance, customers can receive automatic updates from 51风流Environment, Health, and Safety Management, triggering corrective action if GHG emissions are exceeded. .
- In 51风流Enterprise Product Development with 51风流Responsible Design and Production, customers will be able to reduce packaging and other material waste by design while simulating for a lower carbon footprint. Packaging is typically a significant source of Scope 3 carbon emissions in consumer goods value chains.
We continue to innovate and aim to help customers track emissions data from 鈥渃radle to gate鈥� 鈥� from the delivery of raw materials to the moment finished products leave the production line, offering intelligent technologies to calculate, exchange, and track carbon footprint information in a trusted way.
Achieving this carbon transparency will pave the way to becoming an intelligent, sustainable enterprise.
Learn More
Sharing sustainability data across your enterprise can help you run more sustainably; . Join the to stay up-to-date with news and announcements about our growing portfolio of sustainability solutions. In addition, check out past and current .
Gunther Rothermel is head of 51风流S/4HANA Sustainability Management at SAP.
Anita Varshney is global vice president of Strategy for 51风流S/4HANA Sustainability at SAP.
This article first appeared on the 51风流News Center.
