Challenges for Business Sustainability Development
While it’s relatively straightforward to control and reduce a company’s direct emissions, mitigating those that arise along the whole supply chain requires a lot of time, collaboration, and data sharing. One major challenge companies face is outdated tools, such as spreadsheets or questionnaires, and disconnected processes to collaborate with their network. Furthermore, the lack of standardized carbon footprint calculations and exchange methods has led to a variety of different approaches to collect and report on data, resulting in many organizations relying only on industry averages rather than actual numbers.
With the core element of every sustainability strategy being carbon emission data, SAP has created a cloud-based solution suite: Sustainability Management System, which helps businesses calculate metrics and track targets, providing a more comprehensive view for sustainability governance. Among these, SAP Sustainability Data Exchange, a SaaS application for sharing standardized carbon data, has also been developed to transform the way companies collect, share, and analyze carbon-related data. With SAP sustainability solutions and AI-driven capabilities supported by Cloud ERP, businesses will be able to integrate this data into their core business processes optimally.
Why should businesses adopt SAP Sustainability Management System?
Sustainability is a key driver of business success, creating a strategic differentiation for organizations in the modern economy. To meet the demands of a rapidly changing market while remaining more cost-effective than competitors, sustainable development must start from the core operational practices of the business. Sustainability Management System allows companies to calculate and track metrics and targets, while also disclosing their risk management policies and governance strategies.
SAP sustainability solutions within the system are developed with a focus on carbon emission data, serving as a useful tool to provide businesses with a comprehensive view for making decisions related to sustainability management. Among these, SAP Sustainability Data Exchange is seamlessly embedded into the SAP ecosystem, connecting with SAP S/4HANA to replicate master data and integrate with SAP Sustainability Footprint Management for accurate calculation of the carbon footprint of products on a large scale. SAP Sustainability Data Exchange facilitates standardized carbon data exchange between supply chain partners, helping organizations transition from estimated input emissions data to actual data.
This application allows businesses to share actual emissions data to implement their net-zero strategy, while also taking climate-related actions by identifying products or processes with high CO2 reduction potential, avoiding double counting of emissions, and optimizing the carbon footprint. From these optimization measures, the ability to scale standardization and build trust in managing and exchanging carbon data across the entire supply chain will be further strengthened.
5 Principles for Effective Implementation of the SAP Sustainability Management System
1. Use a Reliable Foundation and Reuse Your ERP Data
SAP embraces an ERP-centric approach, using integrated sustainability data from cloud ERP business processes supported by AI technology. We can bring together different types of business data and levels of data granularity, as required, to enable the transition from voluntary to regulated carbon management. It is a flexible but robust approach with high data quality and reliability at its core.
In addition, SAP Sustainability Data Exchange embraces the power of SAP Business Network, leveraging the depth and breadth of a global network trusted by millions of businesses, through which nearly US$6 trillion of annual commerce is executed via over 750 million transactions.
2. Get a Complete View for Regulatory Reporting with Reasonable Effort
SAP Sustainability Control Tower can provide an easy-to-use data collection system that helps enable a holistic and complete calculation of the carbon footprint at the corporate level. As of now, customers can also generate an automated environmental, social, and governance (ESG) report based on AI and natively available ESG data.
With Scope 3 emissions accounting for the largest share of total carbon emissions in most businesses, the procurement process becomes a key factor to reduce the carbon footprint. The solution of integrating carbon footprint into SAP Sustainability Control Tower can help analyze and manage the carbon impact from the company's spending to identify hotspots, thereby building a data-driven strategy to reduce Scope 3 carbon emissions.
3. Maximize the Automated Support from AI Integration Into the System
The integration of SAP Sustainability Footprint Management into the System can help enable additional automated and in-depth calculations. Emissions can be tracked at the company, operational, and product level. The ERP-centric approach uses transaction data directly from SAP S/4HANA Cloud to help calculate a consistent carbon footprint at the corporate and product level on one data foundation.
AI comes into play when emission factors from standard databases are needed. With the intelligent mapping feature, customers can leverage AI to help automatically provide mapping suggestions. This feature can save significant time by replacing a tedious and manual process while being robust enough to help inform final decision-making.
4. Exchange Actuals with Your Suppliers and Customers
To be able to exchange carbon footprint values, standardization and interoperability with industry networks and frameworks are key, as they foster co-innovation and collaboration without a loss of data sovereignty.
For example, Catena-X has certified SAP Sustainability Data Exchange for its sustainability use case - WITTE Automotive, one of the first customers to harness the application when it faced challenges in calculating its product carbon footprint in a standardized way. With SAP Sustainability Data Exchange, WITTE Automotive can integrate the supplier footprints it receives through the Catena-X network, precisely calculate the product carbon footprint of parts and components, and publish the calculated values of its finished products within the network.
5. Drive Transformation in Operational Business Processes and Calculating Carbon Profits
Having an accurate view of carbon emissions across the entire supply chain not only enables data exchange but can have a real impact on the bottom line. Many companies want to make carbon an integral part of the corporate balance sheet, measuring and managing it with the same precision as cash – therefore treating carbon like money. The flexibility of SAP Sustainability and the ERP-centric approach means it can meet corporate requirements providing the granularity, accuracy, and auditability needed.
Calculated product carbon footprints can be used for financial decision-making thanks to its integration with SAP Green Ledger, which can enable companies to determine carbon emissions versus profitability. All this is done using the same rigorous accounting principles and practices that are used in finance. It can provide a trusted data foundation that can go beyond compliance and help improve business performance management through the integration of trusted carbon data into business processes that matter.
The comprehensive carbon management solutions of SAP in the SAP Sustainability Management System offer the ability to simplify regulatory reporting and meet standardization requirements based on a Cloud ERP platform supported by AI, while also generating carbon-related profits for businesses. With over 16 years of experience as SAP Gold Partner in the Vietnamese market, CMC Consulting is committed to help business clients effectively implement SAP Sustainability Management System, along with advanced emissions reduction technologies, aiming for sustainable business governance and development.
CMC Consulting
25/12/2024
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