Across industries, sustainability has transformed from a mere buzzword – and a box to be checked – to a critical component of corporate strategy.
“There have always been regulations, rules, and expectations on how companies operate in order to make sure there isn’t a negative impact on the environment,” says Michael Censurato, global solution manager for Environment, Health, and Safety (EHS) at SAP. “What’s changed in the last couple of years is that there’s a lot more focus and scrutiny. It’s in the news. It’s on consumers’ minds. It’s on investors’ minds.”
A recent report by the Forum for Sustainable and Responsible Investment found that in 2022 climate change was the top environmental, social, and governance (ESG) issue, in asset-weighted terms, for money managers and institutional investors alike. SAP’s own research shows that, between 2021 and 2022, the importance of customer demand as a motivator for sustainable action increased sevenfold.
Joining the Green Vanguard
While executives now consider ESG initiatives integral to the future success of their businesses, they’re also acutely aware of the difficulty in measuring the progress of these initiatives and of translating their successes to regulators. In research conducted by Oxford Economics and SAP, only 27% of executives surveyed had established policies for working with regulators to ensure the implementation of sustainable practices. For businesses of all sizes, the risks and costs of non-compliance are high – ranging from penalties and fines to suspended operations, loss of business, and even personal liability on the part of executives.
Among the most significant difficulties in ESG reporting is ensuring that environmental metrics are both transparent and accurate – reflecting actual values, rather than averages. In many organizations, environmental compliance strategies have historically required a highly manual effort, relying on spreadsheets and weeks of data aggregation and processing across multiple time zones and working structures, often leading to oversights and delays.
Finding a solution that offers a better route towards ESG reporting and compliance is a critical step in the broader business strategies and outcomes of teams big and small. As the imperative to establish a carbon-neutral bottom line becomes stronger than ever, those companies that are able to meet these challenges will emerge as market leaders.
End-to-End Environmental Management
Since 2003, SAP’s EHS team has been helping enterprises comply with environmental regulations through a range of solutions, including SAP Environment, Health, and Safety Management. This application can provide the consistency, auditability, risk reduction, and transparency that companies require. It can also supply environmental managers and technicians with an easily navigable platform, helping to unlock in-depth insight into their operation’s environmental impact.
Powered by SAP S/4HANA, SAP EHS Management helps support teams throughout the process of aggregating, preparing, and analyzing their environmental data. The application’s advanced capabilities can also allow for early detection of deviations from target emissions values – so that if, for example, carcinogenic compounds released during a particular production process exceed their environmental limit, a plan can be instantly put into action, giving teams plenty of time to adjust and remain compliant.
The Emissions Declaration Challenge
Within the broader category of EHS compliance, emissions declarations in particular are notorious for the time and diligence they require. Companies based in Germany, for example, must file detailed reports every four years for the BImSchV ordinance on emissions declarations, while European companies at large must file annually for The European Pollutant Release and Transfer Register (E-PRTR). There are more regulations on the way: earlier this year, the International Finance Reporting Standard’s (IFRS) International Sustainability Standards Board (ISSB) announced the development of a standardized language for disclosing ESG-related risks and opportunities. The new criteria will come online in January 2024.
And for companies in heavy-emitting industries, such as chemical, oil and gas, or steel and iron production, the diversity of emissions that need to be recorded and included in these declarations range from the dust and exhaust released during the transportation and processing of raw materials to passive emissions such as fuel tank venting. As a result, the extent of the reporting itself – and the challenge of remaining compliant – is immense, particularly for global operations operating across jurisdictions.
In the past, the burden of these emission reports fell on the shoulders of environmental and operations managers, who have had to struggle with the inefficiencies built into the highly manual procedure of gathering, calculating, and reporting the necessary information, all within a strict timeline.
Reporting Made Easy
Addressing this bottleneck, the new SAP Fiori app “My Emissions Declarations” is designed not only to help fast-track the creation and completion of emissions declarations but also to help establish a governed backbone to the process itself. My Emissions Declarations is currently designed specifically for the filing requirements of the BImSchV ordinance, but additional filing procedures, triggered by legal requirements, will soon be featured as part of the app’s offering.
The My Emissions Declarations app helps emissions reporting stay on track from the very beginning of the process. Plant managers are in charge of ensuring that the required reports are started and filed on time. When plant managers need to initiate a declaration, the app sends a notification directly to the manager’s e-mail and automatically creates a task on the homepage.
Once the task has been successfully opened, the plant manager can hand over responsibility to others, like plant operators or environmental technicians, who will typically take charge of entering all necessary data into the app for each emissions source. The flexibility of the My Emissions Declarations app can support automatic data collection, by way of sensors, meters, operational systems, and data historians.
After data has been entered, the app takes the lead, running the complex calculations required to generate accurate emissions data. “Within the app, the respective experts are able to simply input the minimum information required by the calculation formula,” explains Mariya Krasteva, area product owner for SAP EHS Management. “Then, as soon as the concentration of a specific emitted substance is entered, all other parameters are calculated automatically.” Whereas some solutions store these equations in a database or in the software coding, making them difficult to validate and edit, the My Emissions Declarations app allows end users to easily view, edit, and maintain these equations all within the platform.
Crucially, My Emissions Declarations can also enable plant managers to quickly validate the data’s accuracy, helping to ensure its quality throughout the process. And, with seamless integration to SAP EHS Management as a whole – and by extension, to the SAP S/4HANA digital core – the app can allow teams to establish a holistic understanding of their operation’s footprint. After all, enterprise-wide sustainability management does not exist in a vacuum. Companies must juggle a wealth of other compliance, monitoring, and maintenance procedures. In many operations, compliance processes overlap with plant maintenance because the manufacturing equipment also needs to be maintained and monitored for any pollutants it produces.
“Our solutions help to tie these pieces together, making the handoff to other processes much more seamless,” explains Hitesh Patel, product manager for SAP EHS Management. Integrating the My Emissions Declarations app into the broader management system helps teams utilize company data previously defined in the software’s asset management feature, creating a comprehensive view of emissions sources – including scope 3 emissions, such as those related to facilities and assets. By calculating actual emission amounts, rather than averages, teams are now able to make even more accurate, data-driven decisions.
“The bottom line is that this is out-of-the-box compliance and an end-to-end solution, which allows auditability at anytime,” says Krasteva. “One precise emissions inventory, one source of truth.” And when, ultimately, the plant manager is ready to prepare the declaration itself, the app generates an XML report, which it can then directly submit to the relevant authorities before closing the task until next time.
Taking the Lead
Maintaining efficiency and diligence in compliance procedures is an indispensable step for companies looking to chart a more sustainable future for themselves and their industries. SAP EHS Management, as well as My Emissions Declaration, can give teams crucial support in charting that future and in reaching the sustainability goals and benchmarks that will help them get there.
Learn more about how SAP can guide your team in this journey today.
Sami Emory is a brand journalist for Sustainability Communications at SAP.