Sustainability and ESG reporting solutions from SAP – 7 frequently asked questions
According to EU analysis, if we continue to emit such amounts of greenhouse gases and exploit the planet’s resources at the rate we do today, the resources of three Earths will be needed by 2050. Global environmental, economic and social challenges have grown to the point where they have become impossible to overcome individually. The overarching goal of organizations and governments should therefore be to move toward carbon neutrality, improve sustainability indicators and accelerate the transition to a circular and toxic-free economy.
The Sustainable Development Goals (SDGs) were introduced in the General Assembly Resolution “Transforming our World: The 2030 Agenda for Sustainable Development,” adopted unanimously by all UN member states on September 25, 2015, in New York. The document identifies 17 goals and 169 related targets to be implemented by governments, international and non-governmental organizations, the scientific and business sectors, and citizens. The tasks focus on five areas: people, planet, prosperity, peace, and partnership, and cover a wide range of challenges in reducing the impact of climate change.
That concept stands in opposition to the currently dominant linear economic model based on the “acquire, produce, consume and discard” approach, leading entrepreneurs to reflect on the impact of business on environmental and social issues. EU institutions and member governments acknowledge the need to go beyond core reporting limited to financial statements. Likewise with SAP, which supports organizations in operating according to sustainability goals on a global scale.
What is ESG reporting?
Non-financial ESG (environmental, social, corporate governance) reporting addresses a range of issues related to environmental care, equalizing differences in the labor market or transparent corporate governance. Among the numerous factors that should be included in an ESG report are information on whether a company neutralizes carbon emissions, reduces water consumption throughout the production cycle, implements policies to prevent social exclusion and counteracts corruption. ESG reporting standards are part of larger regulatory changes being introduced by European institutions, but the idea of non-financial reporting could spread rapidly beyond the area of countries covered by EU legislation shortly.
Who is affected by mandatory ESG reporting?
The event that initiated unifying ESG reporting standards was announcing the Corporate Sustainability Reporting Directive (CSRD) draft. The European Commission proposes the project to replace the current Non-Financial Reporting Directive (NFRD, 2014/95/EU) on the disclosure of non-financial information and diversity of October 22, 2014. The unified reporting standard is expected to improve the quality and credibility of reported data and contribute to the European Union’s achievement of climate neutrality by 2050. The CSRD draft introduces new reporting obligations for all large companies and groups, including large listed companies, and implies an expansion of the scope of entities required to report.
When will ESG reporting become effective?
Currently, the non-financial reporting obligation stems from the regulations of the Accounting Act of September 29, 1994, and the NFRD mentioned above, but it applies to a narrow group of public interest entities (PIEs), such as banks, insurance companies, and investment funds. ESG reporting under CSRD regulations will first affect the biggest entities. The draft directive introduces broader reporting obligations for large companies and groups from 2024. The scope will gradually expand to include small and medium-sized listed companies from 2026.
What is SAP Sustainability Control Tower?
Pursuing corporate social responsibility approach and providing sustainable solutions are becoming central points of policy for more and more companies. SAP Sustainability Control Tower makes it easier for companies to report holistically, gain insight into environmental, social & corporate governance key performance indicators (KPIs), set realistic targets and improve key metrics.
To ensure that ESG implementation doesn’t rely solely on estimates and averaged data from spreadsheets, organizations need a fully integrated tool that communicates with financial, purchasing, procurement, and HR systems. SAP Sustainability Control Tower addresses the need for compliance with international and national sustainability regulations and effectively integrates & arranges data beyond ESG reporting standards.
How does SAP SCT support organizations in achieving their sustainability goals?
SAP SCT offers to reduce the time and effort associated with gathering data manually, importing files, and preparing a report according to World Economic Forum (WEF), Global Reporting Initiative (GRI), Task Force on Climate-Related Financial Disclosures (TCFD), Taxonomy Regulation and other defined sustainability metrics. SAP Sustainability Control Tower, built on SAP Business Technology Platform, easily imports corporate data from SAP system and software from other vendors, using a range of APIs and centralizing the most relevant information in one place. In addition, SAP SCT integrates with other solutions in the SAP product portfolio, such as SAP S/4HANA, SAP Ariba and SAP SuccessFactors.
What benefits does SAP Ariba Network offer in terms of increasing supply chain transparency?
Responsible enterprises are trying to find synergy between the pro-environmental, economic, and social aspects of the company’s operations. More often, organizations decide to include CSR in their development strategy and, consequently, to publicize their non-financial statements, sharing information about the origin of their products or hiring practices.
One of the tools for reaching out to contractors is Ariba Network, the largest global network of suppliers and buyers using he SAP Ariba, a procure-to-order solution. Ariba Network connects business partners, allowing to collaborate remotely on transactions, build an ethical and sustainable supply chain, and maintain long-term relationships. Purchasing Directors and Category Managers can decide who they want to establish partnerships with, as well as purchase goods and services from organizations that aim to make a positive social impact. Ariba Network helps ensure that the organization holds the necessary information at the right level of detail and that all partners throughout the supply chain are willing to provide the right data for ESG reporting purposes.
SAP collaborates with trusted third-party service providers, such as Bureau van Dijk, D&B, ScreenIQ, Made In A Free World and RapidRatings, to offer a holistic view of suppliers within the SAP Ariba Supplier Risk module. EcoVadis, an SAP partner and a global leader in business sustainability assessments & analysis for global supply chains, provides best-in-class performance metrics, including financial and non-financial insights, as well as scorecards to monitor environmental, social, and ethical risks.
SAP Ariba Consultant
In addition, the SAP Ariba Supplier Risk module allows users to assess the collaboration risk, acquire knowledge on possible future events, manage the supplier lifecycle and proactively monitor potential threats so that purchasing decisions do not negatively impact revenue and brand reputation. With SAP Ariba and Ariba Network, you can not only simplify procurement, invoicing, and payment processes but also address current social, economic, and environmental challenges while generating additional business value.
How do SAP Analytics Cloud and SAP Data Warehouse Cloud help companies fulfill their ESG reporting obligations?
EU requirements and the responsibility to fulfill information obligations entail the need to include in the report data that in the largest organizations is stored in multiple systems and processed by representatives of different departments. Therefore, companies obliged to comply with ESG requirements are reaching for software that allows them to automate the processes of completing the report. SAP’s portfolio features software solutions that can simplify these operations, supporting users in non-financial reporting that reflects the environmental, social and economic context of an organization’s performance.
SAP Analytics Cloud is a flagship Business Intelligence software for reporting, data mining and, visualization. The system offers built-in planning and forecasting capabilities, including what-if simulations, allowing users to visualize any scenario and estimate the implications of certain actions before making final decisions.
SAP Data Warehouse Cloud, on the other hand, is a cutting-edge cloud data warehouse that combines analytics and assets from various distributed sources. SAP DWC offers business users more flexibility and autonomy to explore and share insights, relieving the workload on the IT department. The advantage of SAP Data Warehouse Cloud is the ability to build your own data models or expand the central models independently, enriching them with local information.
Part of the demand for solutions for, e.g., calculating the tax on single-use plastic products or reporting CO2 emissions comes from the obligation to comply with European regulations. More often, however, meeting sustainability goals is becoming an integral part of a company’s strategy. By promoting a culture of transparency, organizations can increase investor interest, gain consumer trust, boost stakeholder reliance and minimize the risk of capital outflows from financial institutions. It means that by taking steps to standardize ESG data, companies can win more business opportunities and discover a new source of competitive advantage.
How does Apollogic meet its sustainability goals?
Before the non-financial reporting obligation covers a broader range of companies, and Polish entrepreneurs must publish reports for 2024 according to unified EU standards, we decided to analyze our organization’s impact on the environment, society, and all aspects of company management.
We started by reviewing used electronic and electrical equipment that was no longer sufficient for daily tasks. Last year, we joined the ranks of volunteers supporting the non-profit project World Community Grid, donating the free computing power of our unused computers for research purposes.
Also, intending to secure information systems and ensure the privacy and personal data, business information, and confidential company data, in recent years, we have implemented the standards of the international ISO/IEC 27001 norm. Acquiring this certification provides more effective oversight of processed data, better identification of risks, and mitigation of their impact on the organization’s operations.
Do you want to prepare your company for emerging ESG requirements?
- On 15/12/2022