Traditionally, the top and bottom lines of a business are its most important metrics. But companies need to start treating their “green line” – the measurement of their environmental efforts – with just as much importance
COVID-19 has caused tremendous economic and human loss. But the impact of climate change could be even greater, so it is important that we learn from our response to the pandemic in order to help avoid ecological disaster in the years ahead.
The pandemic has shown that local action has global consequences. Just as a health crisis in one part of the world can quickly touch every corner of the globe, unsustainable business practices can accelerate an environmental catastrophe that affects us all.
That’s why nations must build resilience into the heart of their economies. With the convergence of crises, many see a green recovery as critical to accelerate action on the environment but also on public health and the economy.
Time is of the essence. Without a healthy planet, there can be no basis for a return to long-term growth and shared prosperity. The environmental impact of COVID-19 is set to reduce global emissions in 2020 by about 8 percent, but we clearly remain on an unsustainable path and pressure is mounting. We must act now to shape a sustainable recovery.
The changing role of business
By driving production and consumption, global business has an enormous impact on our planet. While businesses often are cast as culprits in the environmental crisis, they also play a key role in the solutions, for example by driving the transition to a low-carbon, circular economy.
Historically, the foundation for sound business has been managing profitability and growth. The pandemic has revealed the importance of a second and third foundation for business: resilience and sustainability.
Increasingly, industry leaders are moving these to the top of the corporate agenda. They see that resilient, sustainable business is not only good for communities and the environment but can have a positive impact on their overall competitive performance.
The pandemic has shown that local action has global consequences
Company leaders will need to do much more than just manage their top and bottom lines to keep investors and other stakeholders happy. They will also need to manage their “green line”. This will require openly disclosing, among other information, how they are reducing the carbon footprint of their business down to their individual products and services.
At SAP, we use the UN Sustainable Development Goals (SDGs) as a common global framework for our efforts on sustainability. We believe that steering a company holistically – considering the financial, economic, environmental AND social impacts of corporate actions – leads to better outcomes.
We cannot act alone. To address global challenges such as climate change, businesses must partner on all levels and across organisations, industries and regions.
Leading companies are already taking action. Allianz no longer insures coal-fired power plants, Maersk has committed to having zero-emission vessels commercially viable by 2030 and WalMart wants to eliminate one billion metric tonnes of emissions from its supply chain by the same year.
Meanwhile, more than 950 companies have signed up for science-based emissions reduction targets – many even in line with a 1.5°C trajectory to limit global warming, just as SAP has. But meeting these ambitious targets presents a huge challenge.
The Climate 21 programme
To reduce their overall environmental impact, companies with large and complex supply chains will need to generate a complete “carbon ledger” upstream and downstream.
Once businesses can see the value of carbon management, they will more effectively capture the value of reclaimed resources and be able to keep resources in use for longer periods of time. As well as reducing emissions, this will accelerate the circular economy and help companies optimise all resources in their operations.
SAP supports and enables organisations to do this through the Climate 21 programme. The programme provides insights to help companies assemble, assess and act on their CO2 emissions footprint along the supply and value chain.
It does this, firstly, by assembling CO2 emissions data on inputs, production and operations at all levels of the enterprise. This is essential so businesses can understand the sources of CO2 emissions and engage with suppliers to reduce CO2 emissions of their inputs.
The SAP Product Carbon Footprint Analytics application is now available as the first solution in the Climate 21 programme. The application uses data from SAP S/4HANA and third-party sources to calculate this information within SAP Analytics Cloud. This helps customers understand their emissions down to the individual product level.
In the second stage of the Climate 21 road map, SAP aims to enable customers to visualise their emissions inventory, analyse trends, conduct benchmarking and identify investments that provide the best returns on lowering emissions.
In the third stage of the program road map, SAP will provide integration tools to help companies operationalize their climate plans. By looking at their end products, which have accumulated the emissions generated by suppliers and the company’s own processes, they will have the insights on how to transform their business processes to minimise their CO2 emissions footprint.
SAP ultimately will help customers transform their business to minimize emissions, but also give organisations the power to adapt their supply chains, business models and customer engagement approaches as necessary in order to reach net-zero carbon emissions.
SAP has the scale and industry expertise to lead on climate action. We serve over 400,000 businesses in more than 180 countries, including 92 percent of the Forbes Global 2000 companies, 98 percent of the 100 most valued brands, and 97 percent of the greenest companies.
Our Climate 21 programme puts us in a strong position to support and enable organizations around the world to run as sustainable intelligent enterprises. We will create value for our customers by helping them reach their carbon objectives and make business decisions that promote sustainability. Together, we can make profits sustainable and make sustainability profitable.
To learn more about how SAP is leading with purpose and addressing climate action, visit sap.com/climateaction.
