Beyond the Sustainability Report

March 25, 2013 by Brian Wasson

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(Photo: istockphoto)

For the past few years, SAP has published one of the best-regarded sustainability reports in the technology industry and beyond. So interested observers were naturally curious about how the company would continue to push the envelope with its 2012 sustainability report.

The answer: SAP didn’t do a sustainability report for 2012.

What? Yes, it’s true. SAP’s stand-alone sustainability report vanished this year, replaced by what many see as the next evolution in sustainability and financial reporting: the “integrated report.”

A new concept in reporting

The 2012 SAP Integrated Report brings together what used to be the SAP Annual Report and SAP Sustainability Report in a single online experience that highlights the connections between the company’s financial and non-financial performance. With the new format, SAP hopes to highlight the increasing importance of embedding sustainability into the company’s overall corporate strategy to create value for customers, shareholders, partners, employees, and the public.

“Our integrated approach shows that the business landscape has changed, and the information needed to evaluate performance must change with it,” said Werner Brandt, chief financial officer and member of the Executive Board of SAP AG. “Considering our past financial results and our financial outlook alone does not adequately capture our ability to respond to today’s challenges or demonstrate how we create value. Our future success hinges on a holistic approach which helps us — and our customers — navigate the social, environmental and economic contexts in which we operate.”

Integrated reporting is a relatively new concept. Leading the development towards a new global reporting framework is the International Integrated Reporting Council (IIRC), a coalition of regulators, investors, companies, standard setters, the accounting profession, and NGOs. As part of the organization’s pilot program, SAP is among a select group of businesses worldwide putting the principles of integrated reporting into action.

“The lack of stability demonstrated by the financial crisis, allied to the need for more sustainable practices, has led to a crisis of confidence by investors of business,” said Paul Druckman, CEO of International Integrated Reporting Council. “These events show we need a wider, more complete picture of corporate performance, rather than only the financials, focused on an organizations strategy, prospects, governance and value creation. SAP is one of the leading members of our Pilot Programme that has made substantial progress in their journey to drive truly integrated thinking in their decision-making process at the highest levels.”

Next page: SAP saved €2.3 million by using ride-sharing app

The new report format both facilitates and reflects a new way of thinking about value creation. In its report, SAP assesses its performance through four company-wide objectives that balance financial and non-financial measures: revenue growth, margin expansion, customer satisfaction, and employee engagement. Many non-financial performance indicators impact those objectives.

“An integrated report challenges us to consider the connections between our financial performance and our management of natural and human resources,” said Peter Graf, SAP executive vice president and chief sustainability officer. “It demonstrates how actions in one area impact another and pushes us to further consider and measure the links between financial and non-financial numbers.”

Connecting all aspects of the business

A good example of SAP’s holistic approach to value is the impact of “TwoGo,” a ride-sharing application SAP developed to be used internally by employees. Within TwoGo’s first year of use, SAP employees in Germany generated more than 22,500 carpools, avoided more than 500,000 kilometers of driving, created an additional 1,400 days of networking, and saved 47 tons of greenhouse gas emissions. SAP has estimated the value through cost savings in company fleet and travel, networking, and emission reduction generated by the solution during the first year at €2.3 million.

For more information, visit www.SAPIntegratedReport.com and the sustainability area on SAP.com. Follow the conversation on Twitter with the hashtag #sapintegrated.

SAP seeking co-innovators

SAP is interested in sharing its experience as a reporting company and enabler of many others, and is looking for companies to co-innovate with them on future integrated reporting initiatives. Companies already running SAP Business Suite can easily identify the interdependent value drivers between financial and non-financial performance. Contact: james.farrar@sap.com

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