I’ve said it before, but it can’t be said too often: We cannot continue to live and work as we are doing today. To truly accelerate the pace of change that is needed to make an immediate and positive impact on a sustainable path, we must partner on all levels and across organizations, industries, and regions. We need tangible action now.
There are several positive aspects to consider. The energy technologies that the world needs to cope with the environmental challenges are widely available in the developed countries, and their costs continue to fall. These include producing renewable wind and solar power, biofuels, and potentially carbon capture and storage and hydrogen power.
Local governments incentivize technologies that use natural resources wisely or have programs in place to encourage organizations to change their behavior through emissions trading schemes or carbon taxes. In addition, there are many non-governmental organizations (NGOs) that continue to push for a change in our mindset. Like other companies, SAP engages in many of these initiatives because we are in the unique position to take a role as an orchestrator in enterprise networks. SAP joined the World Economic Forum’s Global Plastic Action Partnership community, which provides tools, solutions, and insights for organizations to eliminate or at least reduce waste by 2030. We are also a member of the Ellen MacArthur Foundation to help companies enhance their resource productivity and realize a circular economy. These initiatives and partnerships are crucial as one company or organization alone cannot address these global challenges.
When it comes to climate change, we have a convenient measurable performance unit in the form of CO2 to drive and track performance at a global, national, and industrial levels. It is encouraging to see that we have the technologies to act, the support from local and global authorities, and a unit of measurement to know how we are doing. However, the central challenge is that we all need to move faster, together. We must move faster and at much greater scale than any industrial transition in the history of civilization in order to stop global warming and other environmental degradation and pollution, which already has a measurable impact across ecosystems as diverse as the Arctic, rain forests, and oceans.
I strongly believe that technology is an enabler, but people make it happen. To go faster, I see two essential levers, both of which SAP can play a pivotal role in supporting.
The first, and hopefully a very powerful lever, is an economic incentive for companies. Together with our customers, we can accelerate action through the financial instrument of carbon pricing. With the World Bank estimating that there are currently more than 50 carbon pricing schemes being implemented or scheduled, this is a new business reality for the 2020s. Carbon pricing is complex. While governments and regulators are responsible for setting carbon pricing, it is in our DNA to build software that helps companies measure, account, and take the right action in dynamic and heterogeneous regulatory environments.
The second lever is choice both for consumers and companies. We are inevitably going to see more CO2 labeling for goods and services in society, creating more transparency and, consequently, awareness. Consumers will demand more transparency into the CO2 footprint associated with products and services they consume in the future – in the same way that we have had more visibility in recent years into calorie content of the food we consume. This will be true for both individual consumer choice, as well as companies buying through their supply chains. I also believe that there will be a mindset shift resulting in a willingness to pay a premium for the low or lowest carbon alternative. This is already a reality in some markets for renewable energy. Preferential low carbon purchasing behavior will shape markets and company strategies. Carbon pricing will help effectively allocate capital to the most cost-effective options to de-carbonize, and the choice of customers will define who not only survives but thrives in a carbon constrained and sustainable business world. Every organization and every individual needs to move into the same direction.
SAP provides a starting point to help companies preparing for a change driven by incentive and choice, with the Climate 21 initiative in 2020. I couldn’t be happier to announce SAP Product Carbon Footprint Analytics, the first solution available to the market. Our customer Doehler is the first to go live.
Embedding an enterprise-wide approach to CO2 will help businesses gain transparency and awareness, provide an economic incentive to companies to act now, and can be a starting point for action at scale. Adding a green line to the top and bottom line for measuring a company’s performance symbolizes our ability to change for the better of our global community. It is a decade of delivery, and SAP is ready to support.
Thomas Saueressig is a member of the Executive Board of SAP SE for SAP Product Engineering.