Daniel Schmid – Chief Sustainability Officer, SAP
With 2024 touted as the year of full disclosure and enterprise-wide sustainability awareness, it has never been more crucial for organizations to embed sustainability into their business operations.
By following certain principles and learning from more advanced companies on their sustainability journey, businesses can make great strides to meet new regulations better. In addition, connecting their sustainability strategy with their business goals should provide greater commercial resilience, leading to successful outcomes.
Make sustainability a pillar of business strategy
A common mistake businesses make is treating sustainability as a separate subject to their organization’s strategy. At SAP, our ambition led us to understand quickly that we couldn’t achieve our sustainability goals in a siloed fashion. Sustainability, therefore, became a core pillar of SAP’s overall strategy.
Aligning net-zero goals with broader business objectives may require a strategic overhaul, but by pinpointing synergies between environmental goals and revenue growth, it is possible to demonstrate that sustainability can drive success. Leaders from all areas of the business need to look at the myriad ways to operate more sustainably, from employees to the supply chain to engaging with their customers.
Plan for the transition to renewable energy
Two clear imperatives for switching to renewable energy sources are emissions reduction and cost savings. Transitioning from energy from fossil fuels can entail considerable financial investment and infrastructure changes and may not result in immediate returns. A comprehensive strategy with short and longer-term benefits can help spread cost and build confidence in the process.
SAP already uses 100% renewable energy to power its data centers and is also investing in solar for energy generation. In addition to this, we are collaborating with partners to accelerate and scale green hydrogen production and other solutions. Various funding options are available to help organizations transition including green bonds, partnerships and business networks.
Implement a single data management system
Fundamental to a company’s ability to embed sustainability in its business strategy is its capacity to capture data and leverage technology. With 2024 the first year for regulated ESG reporting for many businesses (such as those subject to EU’s Corporate Sustainability Reporting Directive) many organizations will be scrambling to find tools to support their ESG compliance.
Having a single data repository, or ‘single source of truth’, for aggregation and analysis is optimal for an integrated business approach. The data is the basis on which sustainable actions can be taken. Cloud-based digital technologies are the obvious option for flexible and rapid integration of varying datasets. They can also scale with the company as it transitions to net zero.
Cope with Scope 3
Management should also think beyond their own company when it comes to data integration. Scope 3 emissions, those across the supply chain, represent a significant proportion of most organizations’ carbon footprint and are therefore a meaningful opportunity for reduction. With Scope 3 reporting requirements also on the rise, ESG data solutions must be able to share data and integrate with the systems of their key suppliers.
Catena X is an example of software that provides the radical collaboration required to understand and act on emissions data across value chains in the automotive industry.
At SAP, we have just kicked off our “Top 100 Supplier” program allowing us to report Scope 3 emissions based on actuals, not averages, and work with our suppliers to reduce overall emissions in our procurement through benchmarking, validation, training, and support processes.
Engage Employees
An important part of SAP’s sustainability approach involves the workforce and adopting policies that benefit them directly. An example is SAP’s investment in LEED-certified office locations. These buildings are designed to be significantly more energy and water-efficient than traditional offices, meeting our sustainability goals while providing more natural light, a connection to the outdoors, and a variety of work and social spaces that enhance the employee experience.
Upgrading transport policies also engages personnel in our sustainability goals. Targeting a completely electrified fleet by 2030, SAP provides employees subsidies to assist them with the higher cost of buying an electric vehicle and installation of home charging points. In 2023, we took our transport policy a step further for broader benefit with a personal mobility budget designed to be used on any mode of transport (bus, car, electric bike, train, etc).
Take an integrated approach and invest in training
Achieving a net-zero transformation can require significant operational changes. Success depends on the involvement of every business unit and all functions across an organization.
Internal communication is vital to ensure teams understand the goals, approach, and, most importantly, their role in making the strategy a reality.
To help reduce any potential resistance, make it clear that achieving net zero is complicated and multi-dimensional and will benefit society and business and provide opportunities for employee development.
Upskilling the workforce is an integral part of the puzzle as, according to Chief Sustainability Officers, there is a significant ‘green skills’ gap. Work closely with HR to identify the competencies required and the existing gaps to develop training programs to upskill employees. ecetc.
SAP designs and publishes a wide range of learning content. This enables employees to gain certifications and gives them access to industry partnerships with organizations including the World Business Council for Sustainable Development, World Economic Forum, Ellen MacArthur Foundation, econsense – the Forum for Sustainable Development of German Business – and others.
Communicate transparently about progress
Finally, transparency around your net zero strategy and communicating progress against it is key for building the trust and engagement you need for success. Beware greenwashing, where your communications are perceived to be based more on branding and marketing than genuine action, which can create skepticism amongst the stakeholders you need to have onboard. Remember that sustainability isn’t the end state, it’s a state of being.
At SAP, we provide transparency through a credible, audited integrated report that includes our non-financial metrics. We also showcase our progress through third-party platforms, including CDP, EcoVadis, and the Dow Jones Sustainability Index. Additionally, SAP board members are rewarded not only for financial performance but also on non-financial aspects such as customer loyalty, employee commitments and SAP’s greenhouse gas emissions.
By taking a multi-faceted approach using the right technologies, supportive policies, and cross-industry collaboration, and obtaining commitment from every level, businesses can balance short-term profitability and long-term sustainability and accelerate to a more resilient, net-zero future.
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