A recent McKinsey survey found that 83% of c-suite leaders and investment professionals expect that environmental, social, and governance (ESG) programs will contribute more to shareholder value in five years than they do today.
Beyond the financial implications, companies’ brand value and reputations depend on their commitment to social responsibility. For example, a Deloitte study found that 90% of consumers would switch brands to support a good cause or boycott a brand due to irresponsible business practices. In a world where organizations’ missteps are broadcast on social media platforms, it is critical that companies do the right thing — or they may be called to account.
Companies’ pledges to become more sustainable are commonplace, but business leaders have begun to put their money where their mouths are. For example, Procter and Gamble has committed to spend US$3 billion with diverse suppliers and switch to 100% recyclable or reusable packaging by 2030.
Moreover, ever-increasing environmental regulations are being enacted globally. For example, the UK authorized the Plastics Packaging Tax, which taxes “plastic packaging manufactured in, or imported into the UK, that does not contain at least 30% recycled plastic.” Inaccurate reporting for this and other regulations can result in significant costs.
To succeed, companies need accurate, holistic insight across their organization and supply chain. A modern technology platform such as SAP Business Technology Platform (SAP BTP) can provide that level of integrated information, which enables employees to track, measure, report, and take corrective action where required.
SAP BTP provides three main benefits. First, it helps companies ingest and combine business data by providing one data model and a holistic view of sustainability information from disparate business process and applications. Second, it helps companies harness that data with its capabilities for advanced analytics, data visualization, data cleansing and predictive modelling. Third, it allows business users to build and customize applications for their specific needs and make them accessible to all relevant stakeholders.
SAP also offers out-of-the-box reporting and key performance management tracking, based on SAP BTP technology.
Below are examples of how a technology platform can help companies successfully meet their sustainability goals.
Companies are under increased pressure to certify sustainable production of consumer goods and show that natural resources have been responsibly harvested.
For example, with growing concern about oceans being over-fished, consumers want to know that seafood is responsibly sourced. A platform like SAP BTP makes it easy to extend applications to fishermen via mobile devices so they can easily enter information on the day’s catch.
Using a platform that has integration and comprehensive data and analytics capabilities, companies like Royal Greenland can capture information — for example, which fish species were caught, how much, and where — and feed it back into their enterprise resource planning (ERP) and supply chain systems. This allows organizations to analyze the data and provide full transparency into fishing practices, while helping ensure that fishermen are paid accurately.
Reporting and Compliance
Organizations want to show progress against their sustainability goals and must comply with ever-changing regulations. But according to Deloitte, 57% of senior executives indicated that data availability and data quality remain their greatest challenge in ESG reporting.
A platform with data integration, data quality, and analytic capabilities helps customers break down data silos. With accurate and complete data, companies can more easily conduct automated, timely and auditable ESG reporting against a variety of regulations, standards and ratings; and visualize key performance indicators (KPIs) in a dashboard that shows progress and areas of risk. These capabilities are critical when calculating an organization’s carbon footprint, waste management, or women in management.
For example, the EU approved the European Green Deal in 2020, designed to make the EU carbon neutral by 2050. To support it, the EU Taxonomy was enacted, requiring companies to demonstrate which of its economic activities are “environmentally suitable.” As the regulatory environment grows in scope and complexity, organizations must be able to aggregate and report on disparate data.
SAP BTP allows companies to comply with new regulations quickly and simply in the EU and globally.
Energy and Resource Management
According to the World Economic Forum, “one-fifth of the world’s carbon emissions come from the manufacturing and production sectors.” To lessen their carbon footprints, manufacturers must reduce energy consumption.
SAP BTP enables plant managers to harness and analyze sensor data from machinery to better monitor and understand energy consumption patterns. They can set up data models that visualize operational efficiency, pinpointing where most energy is consumed and opportunities to reduce energy use and emissions.
Similarly, utility companies are using analytics to handle the huge amount of data generated by smart meters. For example, Belgian water utility company, Farys, uses SAP BTP to generate meter indexes and use water-usage data to build new services for its customers. Moving forward, Farys wants to use the platform to address water scarcity, an ever-increasing problem due to climate change. Using smart meter data, Farys can improve its understanding of water inflows and outflows, and identify where and why water losses occur.
A platform that provides fully accurate insight can advance companies’ sustainability goals in many more ways, such as driving the circular economy, eliminating food waste, or improving agricultural efficiency.
As the United Nations General Assembly (UNGA) meets this week to discuss pressing global issues, it’s a good reminder that technology can help solve the world’s most critical problems.
Ragunath Ramanathan is chief revenue officer for SAP Business Technology Platform.