There is consensus. The recent United Nations Climate Change Conference of the Parties (COP26) made at least two things clear: we need to move faster toward our goal to reduce greenhouse gas emissions and a fair transition won’t come cheap. Therefore, no enterprise can afford to waste time or money when it comes to aligning their sustainability ambitions with their actions.
Stakeholders are coming to the same conclusions that we have long been convinced of. Even before announcing our Climate 21 initiative two years ago, we have been seen as front-runners in providing environmental transparency. We have long understood the importance of measuring sustainability progress holistically and connecting financial and pre-financial data. We’ve been doing that since 2012. That’s when we merged our sustainability and annual reports into an integrated report.
We know that the days of fragmented reporting must end. And now, many more businesses are seeing how fundamental the issues of transparency on environmental, social, and governance (ESG) impacts are. But many businesses still struggle with a multitude of reporting frameworks and lack of appropriate data. This is what stands in the way of consistent investor-focused disclosures. Our planet cannot afford this. Increasingly, consumers want to know the provenance of their products. They want to be assured that they are making choices based on data they can trust.
The sustainability issues we face today are different from all other previous threats and opportunities — in scope, scale, and ultimately in the consequences. Measuring, reporting, and achieving the sustainable business goals we set is imperative to a net-zero, nature-positive and socially-inclusive future.
Businesses Want to Make Sustainable Decisions; They Need the Right Intelligence to Do It
The vast majority of business leaders I connect with want to lead their businesses sustainably. They care about planetary and societal impacts; in fact, their customers, investors, and employees demand it. At SAP, our aspiration goes far beyond enabling businesses to achieve efficiency. We work with customers to reinvent their business processes to achieve sustainable growth. That means enabling businesses to use data in agile ways, across all sustainability dimensions. We provide early alerts that allow companies to be responsive and we give customers the full picture they need to move proactively on their ESG issues.
Sustainability data is “pre-financial,” not “non-financial.” That means the search for sustainability levers must go beyond the financials to bring together all sustainability data dimensions, including emissions, material flows, and social impacts. We know this and it is why we have made this possible today. For example, with SAP Product Footprint Management, companies get visibility into their carbon footprint data throughout a product’s value chain, including for material sourcing and production. And that’s the insight businesses need to make proactive, sustainable supply chain decisions.
Scale Data Across Business Networks to Mitigate Planetary Impacts
Individual businesses can only do so much. Emissions do not recognize company boundaries and therefore we must help companies reach beyond their own four walls. We know we must connect our customers into a network of intelligent, sustainable enterprises.
Intelligent cross-enterprise scenarios that enable data sharing across value chains will create impact at scale. Business networks enable companies to continuously re-evaluate and re-engage with each other, creating additional value for their customers and our planet.
From Voluntary to Mandatory, ESG Standards Are Evolving
ESG reporting is maturing; there is no doubt about that. Climate-related disclosures are evolving from voluntary to mandatory. Around 100 countries have explicitly expressed support for starting negotiations for a global agreement on plastics in 2022. The European Union is already developing a social taxonomy based on global social and human rights norms. SAP also recently released an open letter asking the European Union to act on ESG disclosure standards. We want to encourage a global baseline set of standards. We fully support corporate transparency that meets the needs of all stakeholders and improves connectivity between sustainability and financial reporting.
And, once again, we at SAP have stepped up to provide the solutions that companies need to execute on these evolving standards and connect their environmental, social, and financial values, holistically. Today, I’m proud to say that we just released SAP Sustainability Control Tower, a solution that enables customers to go further on their ESG integration and data transparency journey. Our solution enables non-financial — or, as I prefer to call them, “pre-financial” — disclosures focused on four aspects: people, planet, prosperity, and principles of governance. This includes measurements around greenhouse gas emissions, pay equality, and board diversity. It enables comparisons between companies, regardless of industry or region.
Our two previously released sustainability products, SAP Product Footprint Management and SAP Responsible Design and Production, feed precisely those new data dimensions, which businesses have so far been lacking, into SAP Sustainability Control Tower.
Our new solution has the World Economic Forum’s Stakeholder Capitalism Metrics as its foundation. These metrics are based on existing standards to make ESG disclosures more comparable and consistent. They were developed within the International Business Council, a community of over 120 global CEOs who seek to improve the ways companies measure and demonstrate their contributions toward creating a more sustainable relationship with our planet.
And of course, our partners are integral here. Deloitte, EY, and PwC are a few examples of the partners that bring immense knowledge, not only about the framework, but also about the ESG transformations of our customers. Strategic partners like BCG enable our customers to take a holistic perspective toward establishing ESG and climate compliance.
Time Is of the Essence
Businesses that set out a 10-year agenda for dealing with their sustainability challenges are moving much too slowly. We all need to move quickly to enable the shift to new business models. Time is of the essence.
At SAP, we know how important it is that corporate sustainability efforts be measured, reported, steered, and communicated effectively. And I am personally very proud of the leadership we continue to demonstrate here.