Sustainability is at the top of the agenda of CEOs globally. Climate change, in particular, has become a topic of public concern and shareholders are demanding action from corporations to set targets and reduce greenhouse gas emissions. Embedding climate transformation into the business strategy and the decision-making process remains one of the biggest challenges for companies.
What is the role of digital solutions to support sustainability transformations?
From a digital technology point of view, the question is often ‘where to start and how to keep up with change’? In future, non-financial sustainability data will be subjected to the same scrutiny as finance data. A system of record is needed for full auditability, and this is where an enterprise solution such as SAP, comes in with a holistic and robust portfolio for Sustainability. Foundational solutions such as S/4 HANA EHS Environment Management can deliver immediate business value to global corporations, by providing granularity, transparency, accuracy, and auditable records.This SAP solution is essential to:
- Embed sustainability processes into operations with automated or manual data collection, validation, calculation, approval, exception- and change management with clear audit trails
- Gain real-time visibility of operational and asset-related emissions and provide insight into the business to understand key drivers and levers to reduce emissions and meet targets
- Generate on-demand operational reports and automated internal or external reports on emissions, energy, water, waste, or other pollutants
Besides the corporate view of operational emissions, there is a fast-evolving requirement to declare Scope 3 emissions. Within the Natural Resources industries especially, emissions in downstream value chains often constitute more than 80% of their total emissions. Due to the nature of how Scope 3 emissions are calculated, there is considerable overlap with ‘Product’-centric emissions.
How can corporations stay ahead and turn targets into results?
The emissions intensity of ‘Products’ are often used in the procurement selection process. It is also a measure that can be used for own benchmarking, or it may be requested by customers. This is precisely where SAP Product Footprint Management has an essential role to play. This solution is unique in its ability to harvest existing business data from SAP processes such as inventory, finance, or transportation to calculate product emissions at scale.
Together, these two climate change solutions from SAP are essential building blocks, that provide ongoing simplification, innovation, and total cost of ownership (TCO) reduction. It also feeds into holistic steering and reporting solutions, such as SAP Sustainability Control Tower, which supports the broader roadmap for Environment, Social and Governance (ESG) transformation.
Could early movers create a competitive advantage?
Looking to the future, various push and pull mechanisms are causing a radical shift to improve the accuracy of value chain emissions. There is an incentive to capitalise on consumer demand for verified ‘green’ products. There is also a financial and marketability risk for laggards, due to regulations such as EU-CBAM. Both will require sharing of actual, verified emissions data across company and industry borders. By adopting these foundational climate change solutions from SAP, corporations are taking their first steps towards a Sustainability transformation journey that is fit for the future.
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