SAP Introduces Transactional Carbon Accounting to Accelerate Climate Action

SAP Introduces Transactional Carbon Accounting to Accelerate Climate Action

Sustainability has risen quickly to the top of executive priorities, with climate action being the most pressing concern. The central question is no longer why, but how? A big part of the answer may come from the unlikely world of accounting. Companies need to start treating carbon like money ­– they need a carbon accounting system that mirrors their financial accounting system.

However, carbon accounting is still done mainly using spreadsheets and semi-automated tools that use estimates and averages for carbon footprints. Only 9% of companies have a comprehensive view of their greenhouse gas emissions and their impact across the entire value chain.

This is no longer enough. We need to account for carbon with much more precision and control by using actual data values across our business operations and supply chains in sync with financial flows. We need to redefine “resource” in enterprise resource planning (ERP) and extend our understanding of resources beyond financials. SAP now brings a precision-approach to do just that by enabling transactional accounting for carbon.

Introducing Future-Proof Solutions for Transactional Carbon Accounting

SAP’s approach to transactional carbon accounting comprises three future-proof capabilities.

First is SAP Sustainability Footprint Management, a single solution to calculate and manage carbon flows with high granularity on company, process, and product levels across Scope 1, 2, and 3 emissions. The solution integrates capabilities from previously released SAP solutions and adds new functionalities, such as the ability to manage a greater scope of emissions sources and support for a broader range of industry-specific requirements. Using SAP Sustainability Footprint Management helps provide a seamless integration with SAP S/4HANA, allowing for a strong data foundation to calculate footprints directly from individual transactions at each step of production. Companies can reduce their climate risk and make progress towards their climate commitments by better adhering to and reporting on rapidly changing standards. They can also achieve operational excellence by dramatically improving the speed, accuracy, and efficiency of emissions calculations and management. SAP Sustainability Footprint Management will be available from June 2023.

Second, SAP offers SAP Sustainability Data Exchange, a new application designed to securely exchange standardized sustainability data, including product footprints, along the value chain. The application allows precision accuracy by gathering actual carbon data directly from suppliers. SAP Sustainability Data Exchange, part of SAP Business Network, uses the carbon data interoperability standards established by the Partnership for Carbon Transparency (PACT), hosted by the World Business Council for Sustainable Development (WBCSD). The beta version is available and will be generally available in Q3 2023.