The time for climate action is now. Many are talking about it. We are acting. This is humanity’s chance to recalibrate and respond to the dire threats we ourselves created. We are continuing to deeply embed sustainability into the enterprise software this world needs now more than ever. With the help of our solution portfolio, SAP – together with our unparalleled customer and partner base – is best positioned to systematically reduce carbon emissions and help business tackle today’s most complex challenges.
“The world is on fire,” according to satellite images captured by NASA and a recent Business Insider interview with astronauts from the International Space Station. While many parts of the world deal with extreme heat, others struggle with extreme flooding. The recent United Nation (UN) Intergovernmental Panel on Climate Change (IPCC) climate report says nations are “nowhere close” to the level of action needed to fight global warming and the effects of extreme weather caused by climate change. The need for climate action is undeniable and opportunities for green house gas (GHG) reductions are within our grasp. Action to date has been slow, but it’s accelerating.
I see a surge in companies seeking to reduce GHG emissions coming. November’s upcoming COP26, the 26th UN Climate Change Conference of the Parties, is set to ensure that action around science-based target setting will accelerate. And I’m hearing from industry and government leaders that we will see unprecedented corporate climate action, driven by regulation and good business, that aligns with the 1.5 degree of global warming limit set by the Paris Agreement.
Pressure from governments and consumers is mounting as climate change is unfolding before our eyes — faster even than scientists predicted. I’m watching the upcoming COP26 where the International Financial Reporting Standards (IFRS) Foundation’s International Sustainability Standard Board (ISSB) will be launched in November. This robust, globally consistent sustainability reporting standard will adopt a climate-first approach and have a big impact on our customers.
Our customers are asking us to help them make the necessary change at scale. And we are ready to help them meet the requirements. But many businesses have moved forward without reassessing their business models or focusing on the underlying process, data, and governance changes that they must make to accurately measure, manage, and reduce their carbon emissions. Why? Because it’s complex!
Calculating environmental and social impacts across a company’s products and services and across the entirety of their life cycles is simply complicated. Yet supply chain emissions are on average 11.4 times higher than operational emissions. So merely focusing on individual operational emissions is no longer enough. Actually, it was always just a first step.
Understanding complex business challenges and optimizing existing business processes has always been SAP’s strength. The breadth and depth of our industry expertise, spanning 50 years, enables us to help businesses today to not just optimize, but reinvent their business processes, like no other company can. That’s what today’s challenges call for.
As we near our 50-year company anniversary, we build on that legacy today by enabling business to meet new challenges. We know that dashboarding is not enough. When we embed emissions data into underlying business processes, leaders can drive real change by making conscious decisions across the entire value chain. That’s what scales the transition to low carbon pathways, and SAP is uniquely positioned to drive this change across collaborative, intelligent, and sustainable business networks.
These activities are interconnected and must be done together to achieve maximum impact. Our business software applications bring together materials, energy, and financial flows to steer businesses in a holistic way. These are not add-ons. We have found significant value from the interconnectedness of these factors over our decade of integrated reporting and steering, and are working closely with our customers through organizations such as the Value Balancing Alliance to accelerate this approach for all sectors.
We not only enable individual intelligent enterprises, we connect them to each other. We support the move from intelligent sustainable enterprises to a network of intelligent sustainable enterprises. This is the key to achieving real change for the planet. Just as GHG emissions go beyond the four walls of a company, efforts to reduce those emissions must also extend beyond individual companies, into the network of companies.
While every company can start by focusing on their own individual supply chains, those further down the path to sustainability can use the network as a pathway to scale. According to IDC*, “Consolidating data into a unified network means better access, streamlined analysis and the opportunity to more effectively turn insights into action.” Systemic industry change needs the network effect, and it needs a spark.
The customer base that we currently serve covers 94% of the world’s 500 largest companies which represents an immense capacity for real change at scale. Partnerships also help accelerate our product innovation. SAP is innovation partner in WBCSD’s Value Chain Carbon Transparency Pathfinder, dedicated to enhancing transparency in corporate carbon emissions with the objective to ultimately decarbonize supply chains.
We emphasize the role of technology for the green transition and EU taxonomy as a founding member of European Green Digital Coalition. In addition to working with these established partners and others, SAP is supporting sustainability innovation from startups around the world. For example, through our SAP.iO Foundries program, startups play a pivotal role in catalyzing innovations on sustainability across the globe.
We facilitated systemic industry change 50 years ago with our enterprise software based on our founders’ vision. Now we are doing it again in order to tackle the climate crisis. The business model innovation we drive helps improve energy efficiency across both conventional and renewable energy value chains, it supports decarbonizing through electricity generation and transmission such as green hydrogen, and it helps our customers to decarbonize their products and services, for example, by adopting circularity.
We have not slowed down on our promise to innovate in this product space throughout the pandemic. Just recently, we made our SAP Product Footprint Management solution generally available to our customers to support them in monitoring, analyzing, and reducing emissions to deliver on their climate commitments.
We are building for the future. And I believe that future is coming faster than anyone even thought.
Thomas Saueressig is a member of the Executive Board of SAP SE.
*IDC InfoBrief, Sponsored by SAP, Global B2B Collaboration Networks: Critical Enablers of Business Resiliency, IDC Doc. #US47857121, August 2021.