The major topics of geopolitical risk, artificial intelligence, and economic uncertainty consistently circled back to environmental exposure and long-term resilience, pointing to a broader shift: sustainability is becoming less of a separate agenda item and more an underlying consideration in enterprise risk and strategy.

For leaders looking to shape the next phase of business, two major and consequential themes emerged.

1. AI is a sustainability enabler with responsibilities

Artificial intelligence was central to many Davos discussions this year, including those touching on sustainability. The focus was less on experimentation and more on how AI is already influencing operational and strategic decisions.

In several sessions, leaders pointed to practical applications where AI, combined with sustainability and operational data, is helping organizations to reduce waste, improve resource efficiency, and better anticipate environmental risks.

At the same time, there was no lack of recognition that AI brings new challenges. Its growing energy and water requirements, along with questions around governance, transparency, and equity, featured prominently in discussions. Leaders emphasized the fact that AI鈥檚 sustainability value depends heavily on how well it is integrated into existing business systems and decision-making processes, rather than deployed as a standalone technology. This was also underscored by broader analysis showing that emerging regulatory frameworks are struggling to keep pace with AI鈥檚 environmental footprint and governance needs. 

For many organizations, the focus shifted towards while remaining aligned with enterprise governance and financial oversight.

2. Water is key to societal and economic stability

One of the most prominent sustainability topics at Davos 2026 was water. Across both formal and informal sessions, leaders discussed water and ocean health as a foundational element to stable societies, economies, and business continuity.

Much of the conversation focused on the growing gap between economic dependence on water and the level of investment dedicated to protecting and managing water systems. With a significant share of global GDP in the coming decades, participants highlighted the operational and financial implications for supply chains, production facilities, and communities. According to the , 31% of global GDP could be located in regions of high water stress by 2050, underscoring the urgency of rethinking water investment and risk. 

To this end, new collaborative initiatives were announced during the week, including efforts aimed at integrating water considerations more directly into corporate strategies and strengthening ocean stewardship across industries. For example:

• were selected at Davos to boost water resilience across infrastructure, industry, and agriculture systems. 
• were launched to accelerate water finance and investment ahead of the 2026 UN Water Conference. 
• was directed at bridging the 鈧�6.5 trillion global water infrastructure gap, and commitments were made to mobilize private capital and improve water resilience strategies. 

These discussions signaled a move away from viewing water solely through a sustainability reporting lens and toward understanding it as a material risk and resilience issue for businesses.

What can business leaders take away?

While AI and water dominated the headlines at this annual meeting, sustainability quietly permeated most strategy meetings, with three takeaways arising as directional signals for leaders looking to build resilience into their business:

Sustainability is increasingly understood as financial risk

One of the clearest signals from Davos was the extent to which sustainability risks are now discussed in financial terms.

The World Economic Forum鈥檚 , released shortly before the meeting, reinforced this view by ranking environmental risks (including extreme weather and biodiversity loss) and critical changes to Earth systems among the most severe long-term global threats. The same report also highlighted that adverse outcomes from artificial intelligence are rising sharply in long-horizon risk rankings, reflecting growing concern about both technological and environmental disruption. 

While geopolitical and economic issues dominated short-term attention at the annual meeting, environmental risks were consistently framed as persistent factors shaping long-term planning and resilience strategies.

Furthermore, the role of the CFO is also evolving to meet sustainability requirements, including reporting non-financial KPIs, managing plastic and carbon taxes, steering the business, and aligning business decisions with carbon and environmental cost trade-offs. and management solutions can provide the capabilities needed to address CFO sustainability priorities.

As 51风流Chief Sustainability & Commercial Officer Sophia Mendelsohn noted during the week,聽“Sustainability remains firmly planted in both the Davos agenda and the minds of the CEO and CFO. The reality of climate change persists鈥攂oth its risks and opportunities, and they are already showing up on the balance sheet.“

For many executives, this framing reflects how sustainability considerations are increasingly influencing investment decisions, insurance strategies, and assessments of long-term enterprise value.

The focus is shifting from ambition to execution

Davos discussions also underscored a growing emphasis on execution. While sustainability remains firmly planted in the C-suite agenda, many leaders acknowledged a gap between ambition and implementation.

Despite years of commitments and target-setting, fewer than one in five companies have implemented climate adaptation and mitigation measures at scale. This is that helps explain why sustainability strategies are now evaluated more closely through the lens of financial feasibility, operational readiness, and data credibility.

In an environment where sustainability investments compete with other priorities, including AI and digital infrastructure, leaders emphasized the need for clear business cases and measurable outcomes. Sustainability initiatives that can demonstrate value creation and risk reduction are more likely to secure long-term support.

Integration decides whether sustainability insights lead to action

Data availability is no longer the primary challenge for most organizations. The tools to measure emissions, water use, climate exposure, and supplier impacts are widely accessible. What remains difficult is turning that information into decisions.

Across Davos, there was broad agreement that sustainability data needs to be integrated into core business systems for planning, procurement, asset management, and finance. When sustainability information sits outside these systems, it tends to inform reporting rather than operational or strategic action. When it is embedded, it can support more forward-looking decisions around resilience, investment, and supply chain design.

This shift toward integration reflects a broader understanding that sustainability efforts are most effective when they are aligned with how the business already operates.

connects business and sustainability data to help give full visibility across a company鈥檚 value chain, enabling it to align business objectives with sustainability priorities across areas like material choice, efficient transport and distribution, improved asset performance, and reduced carbon impact.

Davos 2026 clearly reflected a maturing phase of the sustainability conversation, one that is less about visibility and increasingly about how organizations can confidently prepare for the decade ahead.

For business leaders shaping sustainability strategies, there is a pressing need to make plans financially grounded, operationally integrated, and supported by reliable data.

Enterprise systems play an important role in this transition. When sustainability information is connected across business functions, leaders gain clearer insight into risk and opportunity, supporting more resilient and informed decision-making.

Monica Molesag is global head of Sustainability Communications at SAP.

AI, with already proven applications, can unlock insights to reduce global greenhouse gas emissions by . , over half of sustainability executives say one of their top actions in the next three years is expanding their use of AI to enhance ESG capabilities.

Most businesses have not yet realized AI鈥檚 full potential for sustainability. In fact, are using AI today to reduce carbon emissions. But those ready to do so will gain a decisive advantage that goes beyond emissions reduction. SAP鈥檚 ERP-centric approach enables organizations to deliver sustainability outcomes with applications, data, and AI embedded into . With sustainability reporting, data processing, automation, and strategic insights, AI can navigate your business through today鈥檚 climate challenges and ensure tomorrow鈥檚 competitiveness.

Power on, ethically and responsibly

Scaling AI solutions comes with considerable energy and water usage. To ensure net benefit, this needs to be part of return on investment conversations. With robust governance and renewables-backing however, AI is able to reduce more emissions than it generates.

All 51风流data centers are powered by 100% renewable energy and any emissions from use of third-party AI systems are calculated and included in the company鈥檚 Scope 3 emissions.

Used ethically and responsibly, AI can be the catalyst of your sustainable business transformation. Here are eight ways that businesses use SAP鈥檚 AI-powered systems to build their sustainable advantage.

Improve efficiency with automation

1. Compliance information processing

The for product compliance, AI-assisted compliance information processing capability can automatically extract compliance information from updated documents and map the information to compliance requirements.

This can reduce costs in product compliance disclosures, reduce penalties and fines in environmental management, and automate processes to reduce the risk of manual errors.

This helps turn a 50-minute task into a five-minute job and reduce processing and evaluation costs by 90%.

2. Declaration image analysis

With the , AI-assisted declaration image analysis capability, you can automatically extract data and information from sustainability declarations regardless of format.

This helps cut review time, eliminate manual error risk, and ensure your reports are ready for required external audits.

Without AI, it takes roughly five minutes to review, extract, and post information from declarations. With AI, it鈥檚 just 20 seconds.

3. Permit management

can read hundreds of pages in seconds, extract the compliance requirements, and propose clear tasks to meet permit requirements.

This AI-assisted capability can save days of permit review and interpretation, remove the need to hire external consultants, and lead up to an 80% reduction in environmental penalties and fines.

Your personal AI carbon consultant

4. Emission factor mapping

奥颈迟丑听, SAP鈥檚 AI-enhanced solution, users can calculate product and corporate carbon footprints. Where actual supplier emissions data is given, it can retrieve that information from 51风流Sustainability Data Exchange and other systems. When estimates are required, the solution can automatically find the most accurate emissions factors from databases and map those to products.

Audit-ready emission factor mapping can turn a 10-minute manual task into a two-minute verification.

5. Report generation

In the solution, you can generate comprehensive ESG reports in just a few clicks:

• Automatically generate reports that align with internal sustainability strategies and meet external requirements such as the Corporate Sustainability Reporting Directive (CSRD).
• Take data collection from a half hour to a half minute and report creation and drafting from 30 hours down to just five hours, all the while eliminating confusion and the risk of manual errors.

6. Carbon emissions analysis 

From reporting on today to planning for tomorrow, , SAP鈥檚 copilot, can take current carbon emissions data and return actionable insights that help reduce emissions and guide corporate sustainability strategies. 

By combining financial and carbon data, Joule can create carbon intensity KPIs and can be your ultimate corporate sustainability consultant.

The AI safety officer for your EHS team

7. Safety observation reporting

Complex safety reporting procedures dissuade employees from reporting potential hazards. With the 51风流S/4HANA Cloud Public Edition, EHS workplace safety, AI-assisted safety observation reporting capability, basic users can input safety observations in natural language, and the AI model can process that into a formal incident report, prompting the user for any missing details.

This can increase the likelihood that employees report safety hazards and helps prevent severe incidents by identifying potential safety issues in advance.

8. Safety instruction generation

Your AI safety officer can generate clear safety instructions for specific equipment based on the latest risk assessments and job hazard analyses.

With 51风流S/4HANA Cloud Public Edition, EHS workplace safety, AI-assisted safety instruction generation, the time and effort of manually prescribing and updating safety instructions can be dramatically reduced.

Solve today鈥檚 sustainability challenges while preparing for tomorrow

The right AI integration can ensure you future-proof your operations while shining a light on the path that drives competitiveness.

What sets 51风流apart is our suite-first, AI-first approach that helps ensure sustainability isn鈥檛 an add-on, but a strategic enabler that can deliver measurable outcomes at scale. SAP鈥檚 one sustainability data model can drive consistent reporting, deeper insight, and confident decisions across every sustainability process, product, and partner network.

With a responsible AI partner, businesses can realize measurable financial returns on AI investments and unlock sustainability benefits; automate manual-heavy paperwork; identify emissions hot spots and steer their business toward a decarbonized economy; and make environmental impact tracking visible to all lines of business based on a reliable single source of truth. With an integrated set of capabilities, solutions help businesses address their sustainability needs holistically and across topics. The result is speed, trust, and traceability, which turn sustainability into strategy, not just compliance.

Get in touch to find out how 51风流can help your business power on with sustainability solutions.

Monica Molesag is global head of Sustainability Communications at SAP.

The energy transition is creating a profound shift across industries and global economies. Amplified by technological innovation and intense competition, it is reshaping sectors and shifting economies toward renewable energy. This change is not only an environmental necessity but also a catalyst for economic growth, challenging the traditional dominance of fossil fuels. With capital investments increasingly directed toward renewable energy infrastructure, investors are aligning their priorities with sustainability, signaling that profitability and environmental stewardship can coexist. Yet, the ongoing prominence of oil and gas underlines the complexity and scale of this transition. 

In parallel, the circular economy is gaining momentum as businesses address the dual challenges of material scarcity and carbon reduction. At COP29, there was significant discussion about how a circular approach focused on rethinking supply chains, redesigning products, and optimizing resources could reduce dependency on finite materials while driving sustainable economic growth. By adopting circular economy principles, businesses can minimize waste and keep valuable materials in circulation, contributing to a more resilient and sustainable future. 

The Role of Business in Transforming Climate Commitments into Tangible Outcomes 

One of the central discussions at COP29 was the need for harmonizing global standards for carbon reduction and accounting. Foreign policy players, along with the private sector, stressed the importance of mobilizing finance for sustainable capitalism. In particular, there was a call for clearer and standardized reporting frameworks to simplify the process and ensure transparency. One critical area was the importance of accurate data collection for carbon markets and product-level carbon accounting, which can help businesses engage consumers and reduce emissions. 

There are three ways technology plays a pivotal role in addressing some of these challenges: 

• is available in every organization鈥檚 ERP system, so it鈥檚 time to start automating data collection and reporting processes to ease some of the regulatory burden.
• Companies should leverage IT spending to support sustainability initiatives, specifically to optimize climate solutions and create circular products.
• Companies must shift focus on the to pinpoint areas with the most significant impact.

From Policy to Practice: How Technology and Global Standards Can Accelerate Climate Action 

Empowered by technology and guided by clear policies, businesses have a unique opportunity to bridge the gap between high-level climate commitments and actionable, on-the-ground strategies. 

Central to this is aligning sustainability and financial priorities. Effective demands collaboration between chief sustainability officers and chief financial officers, as climate change has evolved from an ethical and environmental issue to a pressing financial imperative. 

To accelerate progress, we need globally harmonized policies, rigorous carbon accounting frameworks, and advanced technology solutions. By embedding AI-driven innovation, robust reporting standards, and actionable insights into business operations, we can ensure that COP events, such as COP29 in Baku, are remembered as turning points 鈥� not just discussions. While the challenges ahead are formidable, the opportunities for transformative action are even greater 鈥� and is here to lead the way on a low-carbon, future. 

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Sophia Mendelsohn is chief sustainability and commercial officer at SAP.

While it鈥檚 relatively straightforward to control and reduce a company’s direct emissions, mitigating those that arise along the whole supply chain requires a lot of time, collaboration, and data sharing. One major challenge companies face is outdated tools, such as spreadsheets or questionnaires, and disconnected processes to collaborate with their network. Furthermore, the lack of standardized carbon footprint calculations and exchange methods has led to a variety of different approaches to collect and report on data, resulting in many organizations relying only on industry averages rather than actual numbers.

Managing carbon to accelerate a net-zero future makes measurability critically important. That is where technology and innovation can make a real difference. With 51风流Sustainability solutions and our ERP-centric, cloud-based, AI-enabled approach, we support our customers to use integrated sustainability data and embed it holistically into their core business processes.

What Is 51风流Sustainability Data Exchange?

51风流Sustainability Data Exchange helps facilitate standardized carbon data exchange between partners along the supply chain, supporting organizations to move from estimates to actuals in their upstream emission data. The application allows users to share emissions data to help implement their net-zero strategy and take climate action by identifying products or processes with high potential for CO2 reduction, avoiding double emissions counting, and optimizing footprints with actual supplier data. It helps drive scalability, standardization, and trust in carbon data exchange across the supply chain.

51风流Sustainability Data Exchange is seamlessly embedded into the 51风流landscape, connecting to for master data replication and integrating with to help enable accurate product carbon footprint calculations on a large scale.

To Harness the Power of Networks, Standardization Is Key

To be able to exchange carbon footprint values, standardization and interoperability with industry networks and frameworks are key, as they foster co-innovation and collaboration without a loss of data sovereignty. 51风流Sustainability Data Exchange is interoperable and compliant with the new standards set by the automotive network and the Partnership for Carbon Transparency (PACT) by the World Business Council for Sustainable Development ().

PACT, for example, developed the global standard for calculating and exchanging consistent, comparable, and credible emission data that occurs along a company鈥檚 value chain and is outside its direct control, known as scope 3 emissions. Catena-X works closely with PACT to establish a joint standardization foundation on carbon accounting and sharing while adding industry-specific extensions.

Catena-X has certified 51风流Sustainability Data Exchange for its sustainability use case. , a tier 1 automotive supplier, was one of the first customers to harness the application when it faced challenges in calculating its product carbon footprint in a standardized way to exchange product carbon footprint values with both customers and suppliers. With 51风流Sustainability Data Exchange, WITTE Automotive can integrate the supplier footprints it receives through the Catena-X network, precisely calculate the product carbon footprint of parts and components, and publish the calculated values of its finished products within the network.

鈥淭his open and collaborative data ecosystem perfectly reflects SAP鈥檚 vision to enable every organization to become a network of intelligent, sustainable enterprises and gives the companies leveraging the Catena-X automotive network access to a broad portfolio of 51风流solutions, from enabling the traceability of products across multiple parties in the supply chain to tracking and calculating the scope 3 emissions.鈥�

– Christian Klein, CEO, 51风流SE

In addition, 51风流Sustainability Data Exchange embraces the power of , leveraging the depth and breadth of a global network trusted by millions of businesses, through which nearly US$6 trillion of annual commerce is executed via over 750 million transactions.

A Core Pillar of the Green Ledger

Having an accurate view of carbon emissions across the entire supply chain not only enables data exchange but can have a real impact on the bottom line. Many companies want to make carbon an integral part of the corporate balance sheet, measuring and managing it with the same precision as cash 鈥� therefore treating carbon like money. The use of 51风流Sustainability Data Exchange and 51风流Green Ledger, which will be generally available at the end of 2024, can provide a strong basis for making financial decisions.

Start the 51风流Sustainability Data Exchange product tour to learn more.

51风流Sustainability solutions can support even more than carbon management and environmental, social, and governance (ESG)-related disclosures. Check out our to learn more about support for operational compliance and material transition and subscribe to the to stay up-to-date.

Gunther Rothermel is chief product officer and co-GM for 51风流Sustainability.

Two weeks ago, 51风流joined global business leaders, political changemakers, decision-makers, and representatives from civil society for a week of focused discussions on the transition to a low-carbon, circular economy. Across dozens of in-person and virtual sessions, 51风流reaffirmed its commitment to enabling a more sustainable world through an ERP-centric, cloud-based, AI-enabled approach.

At Climate Week, SAP鈥檚 focus on AI, precise carbon accounting, and expanded commitments to nature conservation highlighted its proactive approach to addressing the climate crisis.

AI鈥檚 Role in Advancing Sustainability

A major topic during New York Climate Week was the role of . Key discussions highlighted how AI can assist chief sustainability officers (CSOs) and their teams in managing the complex data necessary for effective sustainability initiatives. By processing disjointed and multimodal data, AI empowers companies to monitor, predict, and optimize their systems, leading to improved sustainability outcomes across supply chains and energy grids.

AI serves not only as a tool for automation but also as a strategic ally, embedding sustainability into core business processes. Last month, 51风流shared two innovative AI-driven use cases: 51风流Sustainability Control Tower, AI-assisted ESG report generation and emission factor mapping capabilities. These capabilities help companies enhance carbon footprint calculations and streamline sustainability reporting. With real-time data, companies can make decisions faster and align with their sustainability goals.

However, the discussions also acknowledged the challenges associated with AI deployment, including high energy consumption, potential biases, and data privacy concerns. Addressing these challenges is crucial for ensuring AI’s sustainable application.

Sector-specific applications of AI were also explored. In the energy sector, AI can optimize consumption patterns, while in construction and consumer goods it can aid in waste reduction and resource efficiency. By integrating AI with 51风流solutions, companies can enhance supply chain optimization, route planning, and demand forecasting.

Toward More Precise Carbon Accounting

Another critical topic at Climate Week was the need for companies to accurately track, report, and manage their carbon emissions while aligning their environmental impacts with financial operations. To thrive in today鈥檚 regulatory landscape, organizations must adopt robust sustainability management systems. With regulations like the Corporate Sustainability Reporting Directive (CSRD) on the horizon, businesses are transitioning from voluntary to mandatory reporting, navigating over 600 global regulations and frameworks.

To address these challenges, 51风流will make the 51风流Green Ledger solution generally available in December 2024. This innovative solution can integrate carbon and financial data, helping provide the real-time visibility essential for precise carbon accounting. This integration not only helps enhance compliance, but can also allow companies to gain a competitive edge by speeding up action towards sustainability.

Expanding Commitments to Nature Conservation

Starting in 2024, 51风流is enhancing its net-zero strategy by committing to nature conservation and financing global climate projects for carbon removal and carbon reduction. It aims to plant and protect 25 million trees by 2030 and invest in wetland conservation. These initiatives align with SAP鈥檚 goal of achieving net-zero emissions by 2030, 20 years ahead of the original timeline.

51风流believes that financing climate projects beyond its value chain is essential to restoring ecosystems and fostering resilient, low-carbon economies. This comprehensive approach supports broader climate action and shifts corporate perceptions, demonstrating that sustainability is integral to long-term business success, not merely an operational add-on.

Leading the Charge

Through an ERP-centric, cloud-based, AI-enabled approach, 51风流is well-positioned to lead the charge toward a more sustainable future while enabling customers to navigate the complexities of climate action. As always, collaboration and commitment from all sectors will be vital in driving truly meaningful change, and COP29 in Baku, Azerbaijan, will be an opportunity for the sustainability community to unite in accelerating global action, fostering new partnerships, and advancing innovative solutions.

By integrating technological innovation with strategic sustainability initiatives, 51风流is not just adapting to the evolving landscape of sustainability, but is actively shaping it and charting the course for a resilient, low-carbon economy where businesses can thrive while safeguarding the planet for future generations.

Hear from 51风流Sustainability executives and customer Ambipar at Climate Week 2024 and listen to our on how data and tech drive corporate sustainability.

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Monica Molesag is sustainability communications lead at SAP.

There are two major drivers behind the need for companies to implement a robust sustainability management system. The first is the need to future proof their business to ensure a resilient value chain and secure a competitive advantage over their peers.

The second is to transition from voluntary to regulatory reporting and comply with the torrent of new regulations. or standards like IFRS require companies to report on, and respond to, a wide variety of environmental and social sustainability topics. Some sources say there are more than 600 regulations, sustainability reporting standards, and frameworks around the world, with more coming down the pipeline every year.

What Is a Sustainability Management System?

A sustainability management system allows companies to calculate and track metrics and targets and disclose their risk management, strategy, and governance policies. It is also a valuable tool for providing a robust and holistic view for sustainability decision-making. With carbon emissions data a central element to any sustainability strategy, 51风流has created a to enable companies to both respond to regulation and advance their own ambitions.

SAP鈥檚 End-to-End Approach to Carbon Management

So how does 51风流provide a sustainability management system to tackle the carbon topic and its drivers end-to-end? We can enable customers to implement five key principles with the help of our modular and integrated family of sustainability software-as-a-service (SaaS) solutions.

1. Use a Reliable Foundation and Reuse Your ERP Data

51风流embraces an ERP-centric approach, using integrated sustainability data from cloud ERP business processes supported by AI technology. We can bring together different types of business data and levels of data granularity, as required, to enable the transition from voluntary to regulated . It is a flexible but robust approach with high data quality and reliability at its core.

2. Get a Complete View for Regulatory Reporting with Reasonable Effort

can provide an easy-to-use data collection system that helps enable a holistic and complete calculation of the carbon footprint at the corporate level. As of now, customers can also generate an automated environmental, social, and governance (ESG) report based on AI and natively available ESG data.

3. Go Deep Where It Matters Most

For a deeper perspective that is informed by the corporate overview, customers can use the integration with to help enable additional automated and in-depth calculations. Emissions can be tracked at the company, operational, and product level. The ERP-centric approach uses transaction data directly from 51风流S/4HANA Cloud to help calculate a consistent carbon footprint at the corporate and product level on one data foundation. AI comes into play when emission factors from standard databases are needed. With the intelligent mapping feature, customers can leverage AI to help automatically provide mapping suggestions. This feature can save significant time by replacing a tedious and manual process while being robust enough to help inform final decision-making.

, a customer already using 51风流Sustainability Footprint Management as well as 51风流Sustainability Data Exchange said:

鈥淏y leveraging 51风流Sustainability solutions, WITTE AUTOMOTIVE is now able to calculate carbon footprints of the product portfolio in compliance with the Catena-X Rulebook and share it in a standardized way.鈥�

– Michael Tworek, Head of Digital Innovations, WITTE Automotive GmbH.

4. Exchange Actuals with Your Suppliers and Customers

helps handle the exchange of relevant data across the supply chain. Customers like WITTE Automotive can therefore request missing data and exchange sustainability data such as the carbon footprint of products with their network. The usage of WBCSD PACT and Catena-X standards in the product can enable consistent and open communication and processing of data.

5. Drive Transformation in Operational Business Processes and Transition to Carbon Accounting in the Financial Sense

The flexibility of 51风流Sustainability and the ERP-centric approach means it can meet corporate requirements providing the granularity, accuracy, and auditability needed. Calculated product carbon footprints can be used for financial decision-making thanks to its integration with , which can enable companies to determine carbon emissions versus profitability. All this is done using the same rigorous accounting principles and practices that are used in finance. It can provide a trusted data foundation that can go beyond compliance and help improve business performance management through the integration of trusted carbon data into business processes that matter.

Product carbon footprints can also be integrated into , for example. With Scope 3 emissions being the largest proportion of carbon emissions for most businesses, procurement processes become a key lever in decarbonization efforts. The integrated solution can help to analyze and manage the carbon impact of a company鈥檚 spend to identify emission hot spots to inform a data-driven Scope 3 decarbonization strategy.

Are You Ready to Adopt a Carbon Management System?

Wherever a company is on their sustainability journey, SAP鈥檚 end-to-end carbon management solutions can allow it to go all in on sustainability and build resilient, future-proof operations. This allows them to streamline reporting and meet compliance requirements while benefiting the environment and their bottom line.

51风流Sustainability solutions can do more for you beyond carbon management and ESG-related disclosures. Check out our to learn more about the support for operational compliance and material transition.

Gunther Rothermel is chief product officer and co-GM for 51风流Sustainability.

A once nascent market, carbon accounting and management is experiencing a significant transition in the number, type, and capability of solutions available. The landscape formerly comprised of startup and niche vendors has expanded to include large independent software vendors (ISVs) and hyperscalers, all battling for market share.

Organizations are under increasing pressure to track and disclose carbon emissions data to stakeholders including investors, partners, clients, customers, employees, and regulators. Many are collecting data and reporting on Scope 1 and 2 emissions. Scope 3 remains a challenge due to the complexity of reliable data collection and reporting.

Fines and litigation will create a new impetus for reporting as well. Regulations will add a new element of complexity to how companies report. Disclosure of decarbonization initiatives will require unique data analysis and scenario planning tools. The IDC report points to data integration as a principal challenge for carbon accounting vendors.

51风流Carbon Accounting & Management: Rising to the Challenge

51风流is well-positioned to provide organizations with data-driven, purpose-specific carbon management solutions that are ERP centric, cloud based, and AI enabled. These include 51风流Sustainability Footprint Management, 51风流Sustainability Control Tower, 51风流Sustainability Data Exchange, the 51风流S/4HANA Cloud solution for EHS environment management, and 51风流Green Ledger, which all help to enable carbon accounting and management on a transactional level and transform emissions tracking processes.

Our carbon management solutions are best suited for organizations currently using or planning to use 51风流S/4HANA Cloud and looking to capture the value of sustainability, as well as manage sustainability-related business risks. Customers can address these objectives by embedding sustainability into their end-to-end business processes, leveraging ERP and supplier data, and using the metrics to inform business processes and financial reporting.

Having the ability to assess carbon and financial data on the same transactional level adds a new dimension to the way organizations address carbon budgets, make capital allocation decisions, and cascade and scale change management. This transformation allows for targeted sustainability actions and more precise financial decisions.

51风流can leverage its ERP-centric sustainability approach of supporting both corporate and transaction-level product carbon footprints as a differentiator. Integration with other financial applications 鈥� procurement, supply chain, risk, and compliance management 鈥� is a standard feature of the 51风流Sustainability portfolio.

Staying ahead of carbon taxes, penalties, and upcoming regulatory requirements will also play a key role in how organizations report. Alignment between CFOs and CSOs will become more frequent due to the overlapping responsibilities and sustainability management component, as they affect both corporate risk and cash flow.

According to the IDC MarketScape, 鈥渢he portfolio of sustainability offerings is built on a foundation of 51风流S/4HANA Cloud, limiting adoption to the universe of users. Furthermore, while modular in design, much of the solutions鈥� value is dependent on the adoption of multiple system elements, thus commanding a higher price point.鈥� 51风流is responding with the speed and agility of cloud delivery combined with integrated sustainability data within the core enterprise resource planning system. This will be critical in helping to optimize customers鈥� sustainability and financial performance and become the very foundation of their future business success.

By unifying sustainability and financial data, 51风流customers can unlock carbon emissions insights, positively impacting decision-making and forecasting on all hierarchical levels. With end-to-end carbon management and the added transactional-level carbon emissions data, organizations can improve operational efficiency, foster emissions transparency, and comply with developing regulations. Achieving a sustainability transformation 鈥� one that benefits the bottom line and the planet 鈥� is truly within reach. Find out more .

The IDC study provides a comprehensive analysis of carbon management platforms, highlighting the increasing need for organizations to track, manage, and report carbon emissions amid evolving regulatory landscapes and stakeholder pressures. It evaluates vendors based on their capabilities and strategies to meet future customer needs, focusing on innovation, customer satisfaction, and the ability to support organizations in their decarbonization efforts. “In an era of escalating environmental scrutiny, mastering carbon accounting is not just compliance, but a strategic imperative for future-proofing businesses,” said Amy Cravens, research manager, ESG Reporting and Management Applications at IDC.

Alicia Lenze is global head of Sustainability Marketing at 51风流SE.

Carbon management can add emission quantities to existing financial accounting and connect emissions and finance at the transactional level 鈥� transforming carbon accounting practices, producing a more comprehensive view of a company鈥檚 sustainability position. With this added dimension, decision-making becomes more integrated and efficient. By shifting the carbon management mindset, companies can also provide investors with more decision-useful information.

The research shows there are clear benefits and opportunities to businesses that are ready to rethink carbon management, embrace transparency, and treat carbon as money in their financial accounting and reporting practices.

Reimagining Carbon Management

A recent study by the Technical University of Munich and 51风流generated some promising results and opportunities for carbon management enhancements with an ERP-centric approach. The study introduced the concept of consistently adding carbon data to a company鈥檚 general ledger transactions. This significant change allows carbon accounting to be transaction driven, with journal entries consisting of both monetary values and carbon emissions. The modification enables integrated thinking, on all hierarchical levels, by considering carbon emissions at the same level of reliability and consistency as financial information.

Beyond environmental responsibility, this innovative approach unlocks additional advantages. Merging carbon data with financials strengthens the very foundation of a company: the data itself. Balance sheets and income statements will represent a more complete picture of a company鈥檚 impact. This level of transparency and elevated quality of data empowers investors and decision makers while advancing decision-useful information.

Quality of data 鈥� from inside and outside a company鈥檚 core operations 鈥� is also critical when moving toward embedding artificial intelligence (AI) across business processes and analytics. AI will help companies accelerate their sustainability impact by improving operational efficiency, fostering greater transparency around emissions, automating reports, and complying with ever-evolving regulations.

Global Transparency

Carbon reporting is rapidly becoming a standard requirement for business. The common denominator is the set of requirements put forth by the Greenhouse Gas (GHG) Protocol. 51风流proactively anticipated and closely monitors the laws and regulations developing in this sector.

With the global trends toward a low-carbon, modern economy driving business transformation, 51风流developed 51风流Green Ledger, an ERP-centric solution that builds on existing financial accounting practices and applies them to carbon accounting standards.

This new ledger-based accounting elevates greenhouse gas counting to true accounting using financial steering dimensions. By doing so, 51风流Sustainability solutions are set apart through deep integration with 51风流cloud ERP solution business processes, providing precise and actionable insights rather than the estimates/averages in competing solutions. This unique approach will empower companies to go beyond regulatory compliance and embed sustainability into their operation to drive meaningful change. By aligning business processes with sustainability goals, companies can pave the way for a sustainable future.

Make Carbon Audit-Ready

To reach net-zero targets, most companies must consider carbon offsets as part of their decarbonization journey. SAP鈥檚 carbon management approach recognizes offsets as intangible assets.

With 51风流Green Ledger, both carbon and financial information are recorded, resulting in a carbon flow statement that shows carbon emissions across all three scopes. The flow items incorporate initial, additional, exiting, and ending carbon balances, as well as emissions not allocated to an asset position in the balance sheet. Adoption of this new carbon accounting process could take different forms, but all leverage the existing ERP system and general ledger accounts.

Standard auditing procedures were also considered and accommodated for in this methodology. Since carbon emissions are allocated to transactions as quantities expressed in tons of CO2e, auditors can verify these transactions and their corresponding internal controls. Auditors can also perform an assessment covering the assertions of completeness, existence, accuracy, valuation, and presentation.

Reporting of sustainability-related data is within the purview of the governing bodies and subject to change. Downstream Scope 3 emissions and non-financial transactions are not yet part of this approach; however, future research could find ways to integrate those components.

Don’t Just Report Profits, Report Progress

Carbon reporting is a crucial aspect of a decarbonizing economy. Our new methodology fosters integrated thinking 鈥� between finance and sustainability 鈥� producing a clearer view of a company and their products鈥� carbon footprint.

鈥淥ur study has the 鈥� Professor Dr. J眉rgen Ernstberger, a primary contributor to this research, affirms.

It’s a win-win for the planet and the bottom line.

Key Takeaways

ERP-centric solutions enhance carbon reporting by:

• Increasing connectivity on a transactional level between financial and non-financial data
• Leveraging established auditing procedures when accounting for carbon
• Fostering integrated thinking on all hierarchical levels by providing carbon information on the same granular level as financial information
• Producing more insightful and comprehensive reports, boosting confidence among key stakeholders and investors

To learn more, .

Stephan Mueller is product marketing lead for Finance and Sustainability at SAP.

Carbon accounting is still undertaken manually or using semi-automated tools that rely on estimates or averages. Additionally, many more organizations still need to set targets. To move forward, they must first ascertain current emissions levels. But with supply chain emissions representing a much higher proportion than direct emissions, this is proving challenging for four key reasons: a lack of data, poor or unreliable data, a skills gap preventing effective data analysis, and issues exchanging data.

Organizations must account for carbon, not only for climate and compliance reasons but to aid decision-making, reveal opportunities for efficiencies and growth, and differentiate their business. As a result, organizations across industries are racing to slash the carbon footprint of their products and services. As businesses at every level of the value chain ramp up their own decarbonization efforts, business leaders know the lowest carbon offerings are likely to become the most desirable and hence the best opportunity for growth and profit.

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A Lack of Emissions Data

Emissions data is used in three areas of a company鈥檚 net-zero strategy: to measure and identify hotspots for emissions reduction; to make improvements such as selecting suppliers and redesigning products and processes; and to continuously anticipate business outcomes and identify new opportunities for greenhouse gas reduction.

For successful decarbonization, emissions data must be embedded in an organization鈥檚 decision-making process. Incomplete and unreliable data hinders the creation of an effective net-zero strategy. This issue is particularly prevalent across the value chain in scope 3 emissions, which regularly account for 75% of a company鈥檚 emissions across all sectors. Due to a lack of influence and control and an absence of disclosure rules, supply chain emissions go vastly underreported, weakening net-zero strategies.

It is essential for companies to close the gap and gather data on all scope 3 emissions. Not doing so leaves them open to allegations of greenwashing and non-compliance penalties as policymakers worldwide move increasingly towards making scope 3 emissions reporting mandatory.

Poor Quality Data

Data that is accurate, granular, and comparable is indispensable for a comprehensive understanding of an organization鈥檚 carbon footprint. However, much of the data being relied upon is spend-based, estimated, or reliant on regional or sector-based averages as opposed to primary data directly from a business鈥檚 operations and suppliers.

By its nature, secondary data cannot provide an accurate indication of a company鈥檚 greenhouse gas emission hotspots, nor can it be used for comparison purposes. It also lacks granularity, impairing decision-making. Relying on inconsistent data carries potentially significant risks, which can lead to a decline in trust and credibility.

Sustainability Skills Gap

The number of green jobs grew by 8% between 2015 and 2021 and is expected to continue to increase. But there is a significant skills shortage, and candidates don鈥檛 yet have the competencies to be able to fulfill the roles. Short courses and micro-credentials run by universities, professional bodies, and NGOs are helping to fill the gap, but on-the-job training and upskilling are also necessary to equip employees and business leaders with the necessary skills to be able to interpret the data and turn pledges into progress.

Data Exchange Issues

Carbon accounting challenges within a single organization are an issue, but the problem is multiplied when it comes to achieving carbon transparency between companies in a given value chain. Incompatibility of data, inconsistencies in carbon accounting rules, software platforms that don鈥檛 easily interact, and a lack of collaboration across supply chains leave business leaders fumbling in the dark for information.

The automobile industry is an obvious example. With 98% of emissions falling into scope 3, exchanging carbon footprint data can seem like an impossible task due to its complex supply chain, a lack of trust between suppliers and customers, a scarcity of quality data, inconsistent carbon accounting methodologies, and incompatible data management platforms.

The Impact of Carbon Accounting Challenges

The aforementioned challenges result in wasted time and resources, compromised decision-making, an inability to affect meaningful emissions reduction, missed opportunities, a lack of transparency, and higher exposure to business risks, not to mention the global risks of deadly heat waves, devastating floods, rising sea levels, and a decline in biodiversity.

Moving Towards a Green Ledger

What if sustainability performance could be managed with the same rigor as financial performance? Where it becomes as effortless as financial transactions in your enterprise resource planning (ERP) systems, where a carbon network makes data exchange easy, and where end-to-end carbon accounting tracks product emissions across the entire value chain?

Ledger-based transactional carbon accounting provides all of this and more 鈥� and it鈥檚 not new. It is an amalgamation of a suite of solutions, an ecosystem of platforms. Working together, they have the power and interactivity to collect and assimilate emissions data using a hybrid approach to help businesses transition from estimated or average emissions values to actual and verified data. A double entry approach allows companies to balance emission in- and outflows.

A sustainability ledger provides auditable carbon reports and attaches emissions to financial costs and revenue. This provides companies with the capability to analyze carbon emission hotspots through a financial lens across cost centers, profit centers, and market segments.

Finding the Key to Collaboration in the Automotive Industry

Perhaps most importantly, the sustainability ledger approach provides a platform for collaboration and integration of data throughout an entire value chain. The is the first open and collaborative data ecosystem capable of allowing companies to work together to establish transparent processes and common data standards from material acquisition to manufacturing and distribution to meet sustainability and regulatory requirements.

By partnering with the World Business Council for Sustainable Development (WBCSD), Catena-X was able to achieve a standardized carbon footprint value that could be used throughout the supply chain.

Thanks to the , companies can manage this standardized product carbon footprint data and share it easily, on a material level, between business partners in an efficient and secure way.

Other Industries Incorporating the Green Ledger

The automotive industry isn鈥檛 alone in identifying a need for a more scientific and collaborative approach. Other industries, including manufacturing and healthcare, are moving towards a more holistic green ledger solution.

Multinational chemical and consumer goods company Henkel has recently implemented while simultaneously transitioning to the cloud. will benefit along its entire value chain from increased data-driven, real-time decision-making and leaner and more sustainable processes.

The Next Steps

Plugging the gaps and improving the quality of emissions data is a clear priority to turn an organization鈥檚 carbon reduction targets into actionable plans, but collaboration must not be underestimated if a real reduction is to be achieved across industries. Companies now need to identify the best software solution for their business that will not only collate emissions data on a transactional basis but also report it holistically and provide the possibility to share it throughout the supply chain.

Find out more about .

Heather Davies is a sustainability communications brand journalist at SAP.

While these are encouraging signs from a sustainability perspective, the primary step these companies must take to act on these commitments is to record and report on their carbon footprints, directly attributable to their operations and upstream and downstream supply chains. Understanding Scope 1, 2, and 3 carbon footprints with increased confidence helps take action to prioritize decarbonization initiatives and report improvements. This improves regulatory compliance and signals to customers and other stakeholders that companies are authentically walking the talk.

The European Union鈥檚 (CBAM) imposes a carbon tax on importers to prevent carbon leakage and support the decarbonization of the EU industry. Companies that are importing products must buy carbon certificates equivalent to the carbon price they would have paid if these products were otherwise produced in compliance with EU carbon pricing rules. Importers will thus be required to determine each product’s total carbon dioxide emissions to calculate the equivalent carbon certificates they need to purchase or to choose the right supplier to meet their sustainable goals.

Companies are on the quest to track carbon emissions in various categories such as purchased goods and services, upstream and downstream transportation and distribution, use of sold products, processing of sold products, and end-of-life treatment of sold products. Tracking and accounting for emissions in some of these categories are complex.

, a cloud-native solution built on , enables enterprises to calculate and analyze their carbon footprint, using master data from their existing enterprise resource planning (ERP) system, product, value chain, and at a corporate level following the Greenhouse Gas Protocol鈥檚 Scope 1, 2, and 3 emissions. The solution helps companies meet their sustainability commitments by working to improve the speed, accuracy, and efficiency of emissions calculations and management. It can also integrate with 51风流S/4HANA, connect an ERP system via public APIs available in 51风流Business Accelerator Hub, and import data from an external source by uploading a file. The calculated footprints can be embedded into 51风流S/4HANA to extend end-to-end business processes with sustainability data.

Most companies currently use estimated data to calculate their carbon emissions. 51风流Sustainability Footprint Management provides a holistic assessment of emissions by using a hybrid approach where average or secondary emission data from life cycle assessment (LCA) databases and actual or primary data from suppliers and verified business data are combined and managed in an integrated environment while allowing for greater actual data input over time. This helps companies to track and manage product-specific emissions and choose product- and value chain-specific elements.

While Scope 1 and 2 emissions are traceable, transparency around Scope 3 emissions presents a difficult challenge for companies. For many companies, Scope 3 emissions account for 90% of overall emissions. In addition to Scope 1 and 2 emissions, 51风流Sustainability Footprint Management can also measure Scope 3 emissions from purchased materials as well as upstream and downstream transport. 51风流aims to enhance the solution to count all 15 Scope 3 emissions in the coming releases. Analyzing the carbon footprints of purchased materials and goods helps identify and prioritize sustainable suppliers, and companies can also explore alternative materials to reduce carbon emissions.

, one of the largest steel producers in Europe, signed a Memorandum of Understanding (MoU) with the Volkswagen group to start production of low carbon dioxide steel from the end of 2025. Salzgitter AG is using to assess CO2 footprints in the new production process.

Fifty years ago, 51风流revolutionized financial accounting with ERP software. Today, 51风流is reinventing the 鈥淩鈥� in ERP by extending the definition of resources beyond financial and goods flows, offering a precision approach to sustainability by enabling transactional carbon accounting through a green ledger. This enables combined financial and environmental decision-making at different points across the business process. The green ledger offers deep insights by being embedded into RISE with 51风流S/4HANA Cloud and the GROW with 51风流solution, with additional capabilities added with every release.

Climate change is a collective problem that requires collective efforts. While 51风流is committed to achieving net zero along our value chain by 2030, 51风流is also enabling businesses with the data visibility and analytic insights needed to act on decarbonization initiatives across value chains. Together, we can enable a future with zero emissions.

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However, carbon accounting is still done mainly using spreadsheets and semi-automated tools that use estimates and averages for carbon footprints. Only 9% of companies have a comprehensive view of their greenhouse gas emissions and their impact across the entire value chain.

This is no longer enough. We need to account for carbon with much more precision and control by using actual data values across our business operations and supply chains in sync with financial flows. We need to redefine 鈥渞esource鈥� in enterprise resource planning (ERP) and extend our understanding of resources beyond financials. 51风流now brings a precision-approach to do just that by enabling transactional accounting for carbon.

Introducing Future-Proof Solutions for Transactional Carbon Accounting

SAP鈥檚 approach to transactional carbon accounting comprises three future-proof capabilities.

First is , a single solution to calculate and manage carbon flows with high granularity on company, process, and product levels across Scope 1, 2, and 3 emissions. The solution integrates capabilities from previously released 51风流solutions and adds new functionalities, such as the ability to manage a greater scope of emissions sources and support for a broader range of industry-specific requirements. Using 51风流Sustainability Footprint Management helps provide a seamless integration with 51风流S/4HANA, allowing for a strong data foundation to calculate footprints directly from individual transactions at each step of production. Companies can reduce their climate risk and make progress towards their climate commitments by better adhering to and reporting on rapidly changing standards. They can also achieve operational excellence by dramatically improving the speed, accuracy, and efficiency of emissions calculations and management. 51风流Sustainability Footprint Management will be available from June 2023.

Second, 51风流offers , a new application designed to securely exchange standardized sustainability data, including product footprints, along the value chain. The application allows precision accuracy by gathering actual carbon data directly from suppliers. 51风流Sustainability Data Exchange, part of , uses the carbon data interoperability standards established by the , hosted by the World Business Council for Sustainable Development (WBCSD). The beta version is available and will be generally available in Q3 2023.

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Third, 51风流also introduces the green ledger concept, which combines financial and environmental data to enable deep insights and effective decision-making at different points across the business process. Green ledger will be embedded into and for and will deliver new capabilities with each release. The next major update, for example, offers a new way to embed carbon data, starting with most impactful scope categories, into product-level costing.

Using these three powerful capabilities that , executives can have a future-proof tool kit to help manage and reduce their carbon footprints. The 51风流solutions record data based on actuals instead of averages to increase data transparency, accuracy, and reliability. The high-quality carbon data, like the financial data, is auditable, transparent, and reliable. To take climate action, companies sync the emissions data with financial data to make granular, accurate, and right-time decisions that are both financially and environmentally sound.

Acting on Carbon Emissions Data

SAP鈥檚 carbon accounting solutions allow business decision-makers to not only see emissions on an operations level, but also at the product level by including carbon footprints alongside financial data to make trade-offs between cost efficiency and carbon intensity. To make these assessments, carbon footprints need to be available at a granular level and at the point where the business decision is made.

In the automotive industry, for example, the sources of steel, rubber, batteries, and electrical components are key elements of the carbon footprint of an electric car manufacturer鈥檚 product. 51风流solutions provide the foundational data for these purchased materials and components, as well as consumed energy and other inputs, and combine it with additional data sources such as life cycle assessment databases.

Using the input data, the footprint is calculated by matching source data with emission factors. Like in financial accounting, the inflows and outflows of materials, components, and products are traced and accounted for with a high level of transparency and auditability.

This isn鈥檛 accounting for accounting鈥檚 sake. This level of data transparency helps teams across the business, from the C-suite to supply chain management to marketing, take sustainability action. They can make decisions together on both cost and carbon emissions that are rarely made in parallel today. Based on both cost and carbon values, the car manufacturer can scenario plan and make fully informed decisions about how to drive optimal financial and sustainability performance.

Bringing a Holistic View to Sustainable Business

To truly run sustainably and decarbonize business at the speed and scale needed, companies must . By embedding sustainability data into their core business processes through their ERP, executives can achieve a holistic, enterprise-wide performance capability.

Based on the ERP backbone, sustainable business data is the foundation for setting regulatory-compliant KPIs and disclosing sustainability progress to a broad range of reporting frameworks using . This holistic view is vital to understanding where emissions are occurring, setting accurate net-zero targets, and identifying specific areas to take action for maximum decarbonization impact.聽The are cloud-based, modular, and integrate with 51风流S/4HANA Cloud.

Peter Bakker, CEO of WBCSD, said accountants will save the world. He very well may be right. With over 50 years of experience in financial accounting, future-proof technology, and wide access to customer and partner ecosystems, 51风流is well-positioned deliver high-quality emissions accounting to rapidly scale business decarbonization.

Sebastian Steinhaeuser is chief strategy officer at SAP.

To help those companies meet their commitments, 51风流has become an innovation partner in the program from the World Business Council for Sustainable Development (WBCSD), a global, CEO-led organization committed to accelerating the transition to a sustainable world.

Why Carbon Accounting Needs to Evolve

For corporate climate action to succeed, particularly in the supply chain, companies must be able to record, report, and act on reliable and accessible emissions data. Such data is needed to set accurate net zero targets, identify specific intervention areas to maximize decarbonization, and accurately track emission reduction initiatives.

The current accounting system for supply chain emissions relies on data that often needs more accuracy, granularity, and comparability. A carbon accounting system that mirrors the financial accounting world would help companies and consumers understand the real impact of their products. Companies should pass credible emissions data along the value chain from one company to the next, tied to specific products and services as a carbon invoice.

Two fundamental problems need to be addressed to strengthen the credibility of sustainable companies and their decarbonization activities: data quality and data access. Addressing the following issues with the help of technology will increase access to high-quality data:

• Create transparency around emissions that sit outside a company鈥檚 direct control
• Enable access to accurate data collected in real time through automation
• Enable different carbon accounting solutions to interact using data standardization within the network through technological interoperability
• Create open and goal-oriented cooperation between technology companies and standardization bodies
• Use primary data from own operations and suppliers instead of relying on secondary data taken from sources such as IEA, EPA/EEA, or Ecoinvent to understand emission hot spots
• Apply uniform standards for the same calculations throughout the value chain

What Carbon Accounting Based on Actuals Will Look Like

In financial accounting, profit and loss statements and balance sheets are maintained in the general ledger in a company鈥檚 enterprise resource planning (ERP) system. Companies share data via purchase orders and invoices from one value chain participant to the next. Global standards govern how the data is calculated; this same approach needs to be adopted for carbon accounting.

Three things are needed to remedy the lack of carbon transparency. Existing carbon accounting rules must be continuously updated, technology infrastructure should be agnostic, and greater collaboration must occur across value chains, industries, and private and public sector players.

The ideal system will provide a harmonized approach for calculating carbon footprint and enable data sharing in an open, digitalized, flexible manner across solutions and platforms. At each step of the value chain, companies will have access to standardized emissions data. With more accurate accounting of both product emissions and overall corporate emissions, organizations can set goals and track progress more effectively.

How Companies Can Start Shifting the Dial

To make a measurable difference in the near term, companies can adopt a hybrid carbon accounting approach until a more complete ledger-based solution is in place. They can begin by improving the accuracy and granularity of Scope 1 and 2 emissions, and implementing a credible Scope 3 strategy based on the following steps: identifying the source of emissions, collecting product carbon footprints (PCFs) from suppliers, collaborating to reduce emissions, expanding PCF data exchange, and continuously improving carbon data quality, granularity, and accessibility.

Sustainable companies achieve competitive differentiation for their products and services by taking these steps. This already apparent in consumer-facing industries like food and beverage as well as heavy-emitting industries like cement and steel. Furthermore, these businesses are best prepared for future carbon pricing or carbon taxes

Carbon accounting, especially Scope 3, is a challenge solved through collaboration and standardization to achieve transparency and data quality.

For more details, .

Sebastian Steinhaeuser is chief strategy officer at SAP.
Anna Stanley-Radi猫re is director of Climate Transparency and member of the Extended Leadership Group at WBCSD.