Sustainability is a major priority in today’s economy. As stakeholder pressures rise and regulations increase, such as with SEC reporting, EU Taxonomy, or plastic tax regulations, the topic of sustainability secures its place on the CEO’s agenda. How can technology support this ever-changing global economy and, in turn, meet the surmounting stakeholder demands?
With the complex challenge of sustainable business transformation at hand, businesses are being observed under a magnifying glass to present accurate environmental, social, and governance (ESG) measurements against global standards organizations and check Scope 3 Emissions, circularity, and ethical practices of trading partners throughout the entire supply and value chain.
SAP sees this challenge as an opportunity to help businesses take on corporate accountability in a genuine way. SAP solutions can provide needed insights, backed by data and process-enabled technology, to help businesses see in a granular view where they can reduce their carbon footprint, optimize resources, and drive social responsibility.
Record Actuals, Not Averages, Across Value Chains
There are three key steps when it comes to taking on this challenge of sustainable business transformation. The first is to record actuals across value chains, not averages.
“In the old world, it was good enough to know data within your own four walls. Now, in the new world, it’s beginning to move out of the four walls and into your supply chain,” said Jim Sullivan, head of Sustainability Product Management at SAP. Sullivan discussed the need for accurate, comprehensive, and industry-specific data during the closing roundtable of the Dow Jones Energy and Sustainability Webinar held on September 28th. He expressed the demand for data transparency in not just company operations, but also in taking responsibility for impact beyond the supply chain and into the broader cross-industry value networks to keep materials in use at their highest value.
Report Against a Quickly Evolving Set of ESG Standards
The second step is that businesses must report against an evolving set of ESG standards. With plastic taxes on the horizon in the UK and the October 20th announcement from the International Sustainability Standards Board (ISSB) that companies must disclose Scope 3 emissions, the ability to form resilient business models falls on how flexible a business can be when ESG standards rapidly change.
To zero in on what matters most, businesses need to capture their data in a way that meets standards across the board. Being fluent with KPIs that cover common ESG frameworks based on an open, extensible solution empowers businesses to be ready when new regulations arise and communicate their metrics clearly to stakeholders, investors, and customers.
Janine Guillot, special advisor to the ISSB Chair at IFRS Foundation, explained in the Wall Street Journal Pro Sustainable Business Forum on October 10th how the ISSB provides comparable sustainability-related reporting standards for companies such as climate risks that will be integrated into the global International Financial Reporting Standards (IFRS). “We’re trying to create a common language for companies and investors when it comes to sustainability performance, which is what financial standards did for accounting decades ago,” Guillot said.
Act Beyond Ambitious Targets
The third step is that for businesses to drive a successful, sustainable business transformation, they must act beyond ambitious targets.
“To act” means to plan a future with granular insights, set targets, track initiatives, and change business processes. It means to take significant strides by “creating new, bold partnerships and ecosystems to share ESG data and best practices on climate action,” stated Sebastian Steinhaeuser, chief strategy officer, general manager of Sustainability, SAP.
In the end, “Sustainability is a team sport,” Steinhaeuser said at the Dow Jones Energy and Sustainability Webinar. Communicating and sharing data with other companies is critical to achieving a global transformation that transcends a single company’s sphere of influence. SAP is committed to supporting the execution of data sharing and ultimately provide the backbone to a sustainable business strategy. With solutions that capture veritable data, a growing ecosystem of partners, and the ability to provide strategic insights, SAP enables companies to work towards a more sustainable world, together.