Back in 2010, Christiana Figueres, the former executive secretary of the UN Framework Convention on Climate Change, said that the Carbon Disclosure Project (CDP) is to the future of business what the X-ray was to the future of medicine – without it, doctors could never see the inside of a patient’s health. Exactly this kind of laser-like transparency is needed to move the needle regarding the health of the planet, which incidentally contributes massively to the health of the economy.
CDP was founded at 10 Downing Street 20 years ago in response to a warning by IPCC scientists that if climate change remained unchecked, the world would warm by six degrees Celsius within the century. As the number of climate-related catastrophes mounted over the years, CDP kept urging companies and governments to report on their emissions and take measurable action.
Above and Beyond
Today, the world’s economy looks to CDP as the gold standard of environmental reporting with the richest and most comprehensive data set on corporate and city action. By scoring companies and other organizations from D to A on climate change, forests, and water security, CDP helps them evolve from disclosing sustainability metrics to taking measurable actions that lead to environmental leadership.
In light of the recent climate conference COP26, it is apparent more than ever that the private sector has a critical role in driving change and leading by example. SAP enforced its climate action commitment by moving its carbon neutral target up by two years to 2023. This week, SAP received a spot on the prestigious CDP A list, which announces over 300 companies leading the way to a more sustainable future.
2021 was a record year. More than 13,000 companies reported on their environmental impact through CDP, despite the continuing challenges of the pandemic. This was 37% more than 2020 and 135% higher than when governments signed the Paris Agreement on climate change in 2015. Between them, disclosing companies in 2021 accounted for over 64% of global market capitalization, including 96% of the FTSE 100, over 80% of the S&P 500, and more than 1,500 companies in China.
SAP’s CDP A rating comes only weeks after SAP was named the software industry leader in the Dow Jones Sustainability Indices (DJSI) for the 15th consecutive year, identifying SAP as an environmental, social, and governance (ESG) front-runner.
Setting the Pace
Achieving top scores in the CDP and DJSI rankings sets SAP apart as exemplar when it comes to disclosure. More importantly, SAP solutions for sustainability help companies measure and monitor their emissions, making it an enabler for companies that want to do due diligence on their own performance.
“The DJSI and CDP awards recognize Fortune 500 companies that are taking concrete steps to tackle climate change challenges. It is good to receive ongoing independent recognition that SAP is on the right track,” said Daniel Schmid, chief sustainability officer at SAP, responsible for SAP’s sustainability efforts. “It’s equally important to embed sustainability in the business strategy, so that it impacts all aspects of the business. That’s how we can reduce the negative impact on our environment and create regenerative business.”
SAP customers benefit from a range of products to help them to take climate action or to accelerate their participation in the circular, wasteless economy.
The SAP Product Footprint Management solution enables organizations to combat climate change by capturing the environmental footprint of products across the value chain so they can build sustainability into the fabric of how they do business. Last month, SAP added SAP Responsible Design and Production to its portfolio. The solution helps companies gain better visibility of material flows through their processes including tracking and complying with rapidly changing regulations, especially those concerning product packaging and plastics.
And finally, SAP Sustainability Control Tower helps customers meet their ESG performance targets. This solution enables integration of top-line and bottom-line management with an added dimension – a green line for integrated environmental and social sustainability insights and decision-making.
The importance of disclosure cannot be underestimated. Business is still business, but in today’s challenging world, the purpose is not to just turn a profit; it’s to remain competitive, relevant, and sustainable while turning a profit. While the balance sheet may not always show it yet, sustainability is already material to all companies because the fortunes of business are inevitably linked to those of the planet.
A recent survey by SAP Insights found that the more companies believe sustainability is material to their businesses, meaning it is likely to affect their financial condition and should be publicly disclosed, the more competitive and profitable they are likely to be.
The good news is that after 20 years of running the world’s environmental disclosure system for companies, cities, and regions, CDP finally sees a tipping point. With companies disclosing and reporting more than ever before, it’s becoming easier to accelerate change, especially with the right tools and technology at hand.