Corporate environmental, social, and governance (ESG) management has become a catalyst for companies to minimize their carbon footprints, reduce waste, and create fair, safe, and just working environments for employees.
Many companies are responding to rapidly increasing regulation in this area and have set ambitious ESG targets. Sustainable business is no longer a question of if or why, but how.
ESG Management Relies on Data Transparency
Current ESG management relies heavily on data averages and estimates. Most companies have not fully integrated their ESG data recording and control into their core financial, procurement, supply chain management, and human resources (HR) systems. This financial and non-financial data is disconnected, stored in spreadsheets, not updated from real-time systems, and not easily shared within the company or with partners such as upstream suppliers or downstream logistics providers.
Considering that on average 90% of a business’s carbon footprint lies within its supply chain, the inability to track, manage, and gain insights from live data and embed it into core business processes can cripple even the best intentioned ESG efforts. Worse, it can mislead investors, create compliance issues, and misguide transformation efforts. Unifying ESG data provides significant gains in capabilities and competitive performance.
Companies cannot make sustainable business decisions using data they do not have or cannot use.
ESG Data Moves from Averages to Actuals
That is why we developed SAP Sustainability Control Tower, which we introduced in January this year. In a market update available now, the solution offers what companies are looking for today to run more sustainably.
First, companies want to record ESG factors based on actual data, not averages. SAP Sustainability Control Tower easily imports cross-enterprise data from SAP systems like SAP S/4HANA, SAP Product Footprint Management, and SAP Environment, Health, and Safety. It also integrates with non-SAP systems using a range of APIs to create audit-ready data. Businesses can integrate and analyze granular ESG data using the established structures from their finance, HR, and operations teams using templated data models and calculations.
Second, companies want to report to existing and future standards. SAP Sustainability Control Tower effectively shares and organizes ESG data from across the company. With complete and integrated ESG data, companies can more accurately and readily report their performance to various reporting requirements and frameworks, such as GRI, WEF, TCFD, the EU Taxonomy, and upcoming U.S. SEC requirements. Through APIs, customers can further extend the functionality by bringing in their own metrics as well as industry and regulatory content, and use other applications.
And third, companies want to act by planning with actionable insights, forecasts, and concrete targets to achieve measurable impacts. With SAP Sustainability Control Tower, companies can set targets, gain actionable insights into core processes, forecast outcomes, analyze scenarios and trade-offs, report progress, and create role-specific actions to improve sustainability performance.
For example, our customer Grupo Energia de Bogota (GEB) aims to transform the way it manages and reports ESG performance.
“Grupo Energía Bogota S.A. (GEB), an energy platform group of companies in Latin America with over 125 years of operations in the transmission, generation, and distribution of electric energy as well as the transportation and distribution of natural gas across Colombia, Peru, Brazil, and Guatemala, has chosen SAP Sustainability Control Tower powered by RISE with SAP, SAP Business Technology Platform, and SAP Signavio solutions to manage our sustainability strategy as part of our enterprise transformation goals,” said Jose Fernando Galvis Panqueva, CIO, Grupo de Energia de Bogota. “With this powerful combination of cloud solutions, our company will manage its overall holistic reporting requirements, including ESG KPIs; reduce time and effort in manual data collection and reporting variation with different regulatory requirements and timelines; standardize processes for subsidiaries; and manage and integrate existing SAP and non-SAP data.”
Sustainable business is a goal we will achieve only by working together. It is a collaboration and innovation process for all of us, including SAP. We’re implementing SAP Sustainability Control Tower in our own business to enhance our holistic business management, create insights on the total economic, social, and environmental impact our organization has across a range of measures, and accelerate programs such as our net-zero emissions by 2030 implementation.
Transforming a business to run sustainably is a long-term process, but one with urgency. We are seeing customers join us at different stages of their sustainable business transformations. They are pragmatic and recognize that the transition to sustainability is a “marathon with no finish line.” Some are looking to quickly regain compliance with rapidly changing regulations, while others want to optimize their ESG data management and performance. In nearly every case, these are multi-year digital transformations to become intelligent, sustainable enterprises.
Since most of the world’s Fortune 2,000 companies run SAP software and almost 90% of the worlds finance and goods flows touch SAP systems, much of the data needed for holistic corporate sustainability management lives in SAP systems for enterprise resource planning (ERP) systems and related applications. Harnessing this data is essential to creating and managing a “green line” with the same rigor as their top and bottom lines.
SAP Sustainability Control Tower is vital to creating this holistic capability. It offers a flexible open architecture, powerful integration and scalability, and support from a broad range of partners. The solution works in tandem with the sustainability solutions within SAP Cloud for Sustainable Enterprises, which add additional functionalities including carbon emissions management, waste and materials management for circularity, and people sustainability.
For more information on how SAP helps companies record, report, and act on their sustainability goals, visit www.sap.com/sustainability.
Sebastian Steinhaeuser is chief strategy officer at SAP.