Carbon Accounting: You Can’t Manage What You Don’t Measure

Of all the challenges the world is facing today, climate change represents the greatest threat. Tipping points that we did not expect to see crossed for many years have already been reached, and there is little time left to stop irreversible and disastrous changes to the Earth’s climate systems.

The global pursuit of net-zero carbon emissions is a huge undertaking. A significant transition to renewable energy alone can only address 55% of global emissions. The other 45% result from transportation, land use, building management, and the production of consumer and industrial goods. This shows that taking climate action requires many different, interlinking solutions and needs to be a joint endeavor among nations, civil societies, and business alike.

The shift toward sustainable business practices is being driven by governments, consumers, investors, and even employees. While most companies monitor and measure the CO2 emissions of their production sites, customers are increasingly demanding visibility into the full carbon footprint of the individual products they purchase.

As one result, companies need to move from the linear economic model that still dominates the industry today to the principle of circularity – a systemic shift that builds long-term resilience, generates business and economic opportunities, and provides environmental and societal benefits.

In this new equation, carbon is increasingly becoming a new vehicle of transformation. It is effectively a global, universal “currency” that can be tracked, traded, managed, and minimized like any other resource. Still, for most businesses, managing carbon is either seen as a necessary cost of doing business, or a tax that serves as a penalty. One way or the other, it is considered to be corrosive to profits.

But what if we could convert carbon management into an investment strategy that can also drive profit? What if we could make sustainability profitable and profitability sustainable, without sacrificing one for the other?

This is just as visionary as it is promising. Let’s take the example of a large fast-moving consumer goods company. On a five- to 10-year horizon, depending on legislative developments, there is an opportunity for avoided offsetting spend of one to two percent of revenue per year, top-line growth of one to three percent of revenue per year, and cost savings of €2 to 5 million per year based on more accurate and efficient emissions accounting and reporting.

This needs software that helps companies measure, account, and take the right action – and SAP is uniquely positioned to help enterprises tackle this challenge. As we run the supply chains of the largest companies in the world, we can play a central role in helping companies manage their green line by minimizing the carbon footprint and negative environmental impact of their products.

Watch this space for more information on the SAP Sustainability Summit and further details on how we help companies to responsibly manage their green line.


Christian Klein is CEO of SAP.
This story was originally published on LinkedIn.