Doing Business the Right Way

May 13, 2008 by John Martin, freelance journalist, Ithaca, New York

SAPlings 2008 SAP employees lend a hand to improve communities where they work by supporting nonprofit organizations. SAP TV accompanied them throughout their voluntary engagement.

Corporate social responsibility is no passing fad. It is here to stay, just as globalization is here to stay. CSR, in fact, is a direct consequence of globalization. “Globalization is a very powerful driver of CSR,” says James Farrar, vice president of Corporate Citizenship at SAP.

“Globalization and technology have enabled businesses to extend supply chains and drive business development far beyond their home markets, where business is conducted in a relatively stable environment and the role of the state, business, and civil society are clearly demarcated. But governing and regulatory frameworks are often weak or absent where market economies are still emerging.”

The private sector has a significant impact on these societies and is wrestling with its obligations. “Corporations are asking, what am I really responsible for? How far should I go? How much is enough?” Farrar says. “There’s no clear answer, so stakeholder engagement and assurance is really important. You need a process for understanding what is important to your broader stakeholders, and to communicate what you intend to do and how you intend to do it.”

Definition of terms

People often use the terms corporate social responsibility, corporate citizenship, and sustainability. What do they mean? The European Commission defines corporate social responsibility as, “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” Corporate citizenship emphasizes the role of the company as a responsible citizen in society. A good definition of sustainability comes from Gro Brundtland in the Brundtland report: “Sustainable development satisfies the needs of the present generation without compromising a chance for future generations to satisfy theirs.”

CSR encompasses not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance and addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence – the workplace, the marketplace, the supply chain, the community, and the public policy realm.

SAP is working on a detailed study to determine its most important CSR issues with the international not-for-profit group AccountAbility, architect of the AA1000 series of principles-based standards for improving the sustainability performance of organizations. It is also working to define what is essential for CSR in the software sector with Business for Social Responsibility (BSR) – a nonprofit business association that helps member companies design and implement socially responsible business policies, practices, and processes.

In 2007, BSR launched an innovative project to define corporate responsibility priorities for the software sector and to identify positive contributions that the sector’s products and services can make to sustainability. Other companies participating in this effort include Adobe, Autodesk, HP, McAfee, Microsoft, and Symantec. Along with SAP, they are committed to working together to understand and meet society’s expectations of a responsible software sector, in addition to developing products and services that enable sustainability. The group continues to reach out to a broad range of key stakeholders and invite them to join the discussion.

“We are asking, what are the issues that are uniquely important to SAP?” says Farrar. “What we’re finding is that we are akin to the pharmaceutical industry, which is always being asked how its products can help solve the world’s health problems. What the technology we develop is used for is an important public debate. What are SAP technologies for? What do they enable?”

One answer is accountability. SAP solutions for governance, risk, and compliance (SAP solutions for GRC) targets corporate accountability. SAP cooperates with nongovernmental organizations (NGOs) focused on this issue, like Transparency International (TI), a nonprofit group that operates on a global scale to combat corruption. SAP is disseminating the group’s message to its industry value networks; SAP is also transferring knowledge and best practices on ecosystem development to help TI create a networked community around the subject. In turn, TI is helping SAP integrate effective transparency tools into its software.

Education is another natural venue for SAP corporate citizenship and community engagement. The SAP University Alliances program provides students and faculty with free access to SAP products through hosting centers. SAP works with FIRST (For Inspiration and Recognition of Science and Technology), a nonprofit group that makes science, math, engineering, and technology “cool” for kids.

Just because SAP tackles CSR from a software-industry vantage point does not mean it ignores cross-sector issues. SAP was one of the first signatories of the UN Global Compact, which seeks to advance responsible corporate citizenship so businesses can be part of the solution to the challenges of globalization. SAP is also addressing the elephant in the room – climate change.

“We participate in the Combat Climate Change [3C] initiative and the Carbon Disclosure Project,” Farrar says. “We have a comprehensive eco-efficiency program that includes initiatives on energy, water, waste, and emissions. We don’t have air conditioning at the headquarters in Germany. Our initiatives include green roofs, solar energy, public transportation, and LEED-certified building construction. We are also reducing emissions across the corporate car fleet.”

Making money doing good

One of the biggest topics in CSR today is the intersection of sustainability and profit-making. “This is often described as ‘Sustainability 2.0,’” says Stephanie Raabe, director of corporate citizenship at SAP. “People are asking, in addition to responsibility and compliance, how can companies exploit new markets and opportunities with CSR? At SAP, we believe we’re in a good position for that, because we’ve always been doing it. Our software is central to resource-efficient growth.”

For example, SAP asset management software helps businesses use capital equipment more efficiently. Its sales and operations planning solutions match demand with supply, optimizing inventory replenishment so companies consume only the resources they need. SAP logistics management offerings enable better utilization of transport and energy. SAP also has a dedicated business unit for taking advantage of CSR opportunities through its GRC software.

SAP also benefits on the ledger side from collaborating with others. Cooperating with Transparency International provides a window into emerging regulatory issues – this helps SAP define product direction for its customers. The SAP University Alliances program develops qualified professionals, who are central to business growth; students also gain familiarity with SAP software, which is crucial to SAP’s ecosystem. FIRST focuses on education, which drives innovation and the development of economies – a precondition for IT growth.

SAP has been widely recognized for its corporate social responsibility performance. It is included in the Dow Jones Sustainability Index, the G-100 Most Sustainable Companies, and the FTSE 4Good Index Series. It is one of only 50 companies in the Global Challenges Index developed by oekom research AG, an independent sustainability rating agency that evaluates companies and countries on the basis of social, environmental, and ethical criteria. SAP is taking CSR seriously because it is the right thing to do – for the world, and for business success.

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