Last Friday was Earth Day 2022. It is the 52nd year of this event (since 1970) which celebrates the modern environmental movement. Initially started by an America senator and a congressman, Earth Day became a global movement in 1990. Today, more than 190 countries, including more than 1 billion individuals, take part in activities to promote the public understanding of the importance of environmental sustainability.
As the theme for this year’s earth day is “Invest in Our Planet” we should be asking the question: “What are private organisations and corporations are doing to support the work of governments and NGOs in reducing greenhouse gas emissions and carbon from fossil fuels?”
With the added pressure on companies to maintain and expand commercial activities in the face of Covid-19 variants and the economic problems associated with the war in Ukraine, sustainability targets may be more difficult to achieve. However, the need to maintain the importance of sustainability targets, and ensuring that commercial activity has a minimal impact on the environment, has increased in importance with every day that passes.
So this week IgniteSAP is going to review the actions that SAP and its partners are taking to support the private sector and government organisations in achieving the targets defined in the Paris Agreement, and more recently at COP26 in Scotland.
The Paris Agreement was an international treaty on climate change that was legally binding. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015. The intention of the Paris Agreement was to limit global warming to below 2 degrees, “preferably” to 1.5 degrees.
In order to achieve the goals of the Paris Agreement governments agreed to undertake economic and social transformations at a national level. This joint effort was codified in a system of Nationally Determined Contributions (NDCs), but countries failed to live up to their promises.
Just before COP26 was held in 2021 the WWF’s Global Lead, Climate and Energy, Manuel Pulgar-Vidal said:
“Governments are failing dismally to address the climate crisis. Their words do not match their actions. We simply cannot waste any more time. Countries who have not yet submitted their NDCs should do so by 12 October. Countries who submitted NDCs that lack the ambition necessary to keep 1.5°C alive must urgently review and resubmit their NDCs. Countries who have enhanced ambition but can do more, must.”
After 13 days of intense negotiations between government representatives from nearly 200 countries attending COP26, all parties agreed to accelerate their efforts to deal with climate change in a new document called the Glasgow Climate Pact: so that a new aspiration of 1.5 degrees was determined to be the new target for reducing the rate of global warming.
As with the Paris Agreement, these pledges will only be meaningful if every country delivers on their promises. These necessary actions fall into four categories Mitigation (to reduce emissions), Adaption (to help those already affected), Finance to enable changes, and international collaboration.
Following COP26 an article published in Nature magazine said that some climate change researchers left the conference unconvinced that enough had been done. They pointed out that loss and damage finance for countries vulnerable to climate change was not agreed on.
Expert analysts said that greenhouse-gas emissions need to be reduced, and carbon dioxide emissions must fall by 45% from 2010 levels by 2030 for global warming to be maintained at 1.5°C above pre-industrial levels. While the Glasgow Climate Pact made some definite progress in this regard, under existing emissions-reduction pledges, emissions will be nearly 14% higher by 2030 than in 2010. India and China both demanded that the earlier promise to “phase out” coal use should be changed to “phase down” coal.
Analysis by Hoehne and others, published on the climate tracker website suggested that global warming would still rise 2.4°C above pre-industrial levels by 2100.
Even the nominal president of COP26, Alok Sharma told the conference:
“We are well aware that ambitions have fallen short of the commitments made in Paris… We have kept 1.5 degrees alive. But its pulse is weak, and it will only survive if we keep our promises and translate commitments into rapid action.”
Following the lockdowns social and economic activity has resumed and air quality (after a brief improvement) is once again declining. The UN Environment Program has pointed out that though the climate crisis is slower moving than a global pandemic, it is ultimately more threatening to humanity, and these effects will impact the poorest and most vulnerable people first.
So while there is some progress on climate change such as the fact that recently Europeans purchased more electric cars than diesel, every macro-economic event has the potential to knock societies further off-course in their attempts to compensate for climate change.
The war in Ukraine has been another massive blow to the world economy. As well as disrupting logistics and business operations, either directly or indirectly, it is also impacting the ability of countries to put in place societal and economic changes required to achieve the UN Sustainable Development Goals, and hold to the demands of the Glasgow Climate Pact.
The other side of the coin is that the war is acting as a catalyst in the conversion of countries from reliance on fossil fuels to renewable energy sources. Currently Europe relies on Russia for roughly one-third of its oil and 40 percent of its natural gas requirements. At the time of writing, Russia has just decided to stop supplying Poland and Bulgaria because they would not pay for gas in Roubles. While Europe cannot switch energy supply overnight, the war has put more weight behind the political argument to reduce carbon energy consumption.
Though the war is likely to reduce the appetite for fossil fuels in the long run, it is also causing massive supply chain issues for electric car producers, just as they are becoming a viable option for the general population.
An analyst at industry forecaster Benchmark Mineral Intelligence, Gregory Miller said:
“Rising prices of nickel, lithium and other materials threaten to slow and even temporarily reverse the long-term trend of falling costs of batteries, the most expensive part of EVs, hampering the broader adoption of the technology”
When politicians are concerned with national security, then defence spending increases and large-scale projects to mitigate climate change are eclipsed by more immediate necessities. In the face of this lack of appropriate concern for widespread environmental sustainability initiatives and limiting climate change, it falls to individual members of the public and the private sector to make up for the failure of governments.
The public now understands climate change and the need to change their own behaviours to compensate for it, and following their lead, corporations who want to demonstrate that they share the concerns of their customers are making dramatic changes in the way they operate their commercial activities. With the introduction of carbon accounting and the circular economy, multinational companies are making genuine changes for the benefit of everyone and not just greenwashing as a marketing tactic.
Deloitte has just demonstrated that large IT companies understand that sustainability is a permanent feature in the business landscape. They announced on April 14th their investment of $1 billion in a global Sustainability and Climate practice.
The Deloitte Center for Sustainable Progress will develop and deploy the latest thought leadership, research, and solutions. Deloitte Sustainability and Climate will “bring together advisory, assurance, audit, consulting, finance, and tax services and will equip Deloitte’s 345,000 professionals and client network with the skillset and knowledge to further this societal imperative”.
This will enable large clients of Deloitte to transform their organisations to be more sustainable at scale.
Punit Renjen, Deloitte Global CEO, said: “We have the resources, skills and influence to help build stronger and more sustainable communities. And it’s our collective environmental and societal footprint that has the potential to make or break this decade of action.”
SAP has made substantial changes to the way it runs its own operations in order to address its duty as one of the largest technology companies. It has also put its substantial resources into researching and developing solutions for other corporations to meet their own environmental responsibilities and carbon accounting requirements.
IgniteSAP has covered some of the ways SAP addresses its environmental responsibilities over recent years, and the evolution of SAP’s carbon accounting and initiatives for the circular economy. Throughout the pandemic and despite the economic changes caused by the war in Ukraine, SAP has been continuing in its attempt to solve the biggest challenge facing all of us.
Here are some of SAP’s most recent actions to fundamentally transform the way businesses and organisations achieve their sustainability and carbon reduction targets.
SAP has been developing ways for companies to measure, manage and optimise their “green line” as much as their bottom line. SAP’s new offering SAP Cloud for Sustainable Enterprise is a “comprehensive portfolio of solutions that enables businesses to holistically manage sustainability performance”.
The solution is a customisable cloud offering which has one license and implementation support from SAP and its partners. SAP Cloud for Sustainable Enterprise aims to help companies bring their carbon down to net-zero, comply with new sustainability regulations, and take advantage of the circular economy, among other benefits.
In March SAP announced a new sustainability partnership with Boston Consulting Group. Using a combination of strategy, technology and business model adjustment BCG and SAP intend to provide companies with sustainability transparency. With an implementation period of just weeks, BCG and SAP will accelerate companies towards zero waste and emissions.
This collaborative transformation package seeks to help corporations find the business value in sustainability so that it becomes part of an integrated business strategy. Bjoern Stengel IDC’s global sustainability research lead said:
“BCG and SAP have both been at the forefront of operationalising sustainable transformation with their clients, and this partnership will further help IT buyers use sustainability-focused technology strategically to achieve their goals.”
Guided by a Holistic Steering and Reporting solution backed by the SAP Sustainability Control Tower solution, and the Compliance Target Operating Model by BCG, customers will be able to address their sustainability goals.
Christian Klein, SAP CEO, said:
“Being sustainable requires coordination across the value chain, and this is where SAP’s partnership with BCG plays a key role. Bringing together BCG’s expertise, tools, and services with SAP’s technology gives companies the transparency, actionable data, and strategic guidance they need to successfully tackle end-to-end sustainability and create value for all its stakeholders.”
SAP and the Ellen MacArthur Foundation announced in April that SAP is becoming a partner in the Foundation’s network to deliver circular economy solutions, led by regenerative business with customers, non-governmental organisations (NGOs), and other partners.
The organisation has a joint commitment to accelerate the establishment of a circular economy which seeks to eliminate waste and pollution, (re-)circulate products and materials, and regenerate nature through widespread structural change and innovative business models.
Commenting on the new partnership with SAP, Andrew Morlet of the Ellen MacArthur Foundation said:
“Collaboration across all sectors and industries is critical in order to shift the system and accelerate the global transition to a circular economy: an economy designed to eliminate waste and pollution, circulate products and materials, and regenerate nature. Technology has a crucial enabling role to play, and we welcome SAP’s leadership in this space.”
In order to reduce the amount of plastic polluting the ocean environment, partners, including SAP are calling for Extended Producer Responsibility (EPR): “a policy framework that shifts financial responsibility from governments onto product producers for the management, treatment, and disposal of consumer products.”
It is believed that when producers are made more responsible for the extended lifetime of their products this will create the incentive for them to innovate and reduce plastic waste at the source.
SAP Responsible Design and Production, their first circular economy solution, was launched at COP26. It aims to help companies gain transparency in the flow of materials through their businesses. This new partnership demonstrates SAP’s intention to fundamentally change the culture around material use in business and industry.
SAP has also become one of the first corporations to join the Partnership for Carbon Transparency (PACT), which is led by the World Business Council for Sustainable Development. PACT seeks to foster cross-industry transparency on greenhouse gas emissions and corporate climate accountability. This transparency will reinforce commitments by organisations to deliver on climate change targets and environmentally sustainable policies.
The World Business Council for Sustainable Development, with their knowledge partner McKinsey and Co. has been developing the Pathfinder Network. It enables “confidential and secure exchange of granular, primary and verified product emissions data across organisations… which will provide an open, decentralised network infrastructure allowing different technology solutions to connect and support peer-to-peer sharing of data across value chains and industries”.
Over the past year SAP, along with other partners such as IBM and Siemens, has been working collaboratively towards this goal. Daniel Schmid, SAP’s Chief Sustainability Officer said:
“SAP is very pleased to be one of the first companies to exchange emissions data across technology systems. The success of this pilot represents a big step forward to achieving cross-industry transparency and will enable businesses to make informed decisions for sustainable business outcomes. Sharing sustainable business data across networks is fundamental to our collective success.”
In January Daniel Schmid announced on behalf of SAP that the company had decided, in response to the outcomes of COP26, SAP will be bringing forward their target to reach net-zero by twenty years to 2030.
Initially SAP will reduce emissions from their sold products, followed by purchased goods and services. Elsewhere the company will be supporting this move by accelerating the transformation of on-premise customers to the cloud, engaging with all suppliers to commit to net-zero, using in-house and third party data centres with sustainable programming and a “cloud carbon footprint calculator” for all SAP solutions.
SAP’s current Chief Financial Officer and board sponsor for sustainability Luka Mucic summed up the thinking behind SAP’s new sustainability ambitions:
“We must reinvent the global economy. That is what it will take to limit global warming to 1.5℃. All of us must build sustainability into the fabric of how we do business. Only when a business strategy is sustainable itself, and is embedded in all aspects of the business, can we reduce negative impacts and create regenerative systems.”
IgniteSAP has been covering SAP’s efforts over the past few years to become a sustainable enterprise and to transform itself into a global corporation which is carbon-neutral. These more recent efforts build on a history of engaging with environmental issues that goes back well over ten years.
SAP understands that, as well as making changes to the way it runs its own operations, the potential for them to make a global impact by helping others to transform their own companies into environmentally responsible organisations is huge.
With other pressures on corporations such as the coronavirus and the war in Ukraine, it is clear that transforming an organisation so that it makes a positive, rather than a negative contribution towards a sustainable future may be seen by some companies as a secondary goal in comparison with maintaining the company’s profit margin.
With this in mind SAP is clearly leading by example and making it as easy as possible for other organisations to make the right choice.
Are you a SAP professional? Get in touch with IgniteSAP if you would like to learn about the extremely rewarding roles that are available for someone with your skills and talent. We can help you find a position that makes the most of your training and experience in SAP.
