The challenges of sustainability

Sustainability is the new frontier of digital transformation. The time to act is now: investors, regulators and consumers are increasingly demanding socially, environmentally and economically responsible products and services. Companies are looking to reduce GHG (greenhouse gas) emissions, reduce waste, increase circularity and use socially responsible business practices throughout the life cycle of products and value chains. The key challenge for the company is to keep both sustainability profitable and profitability sustainable.

What are SAP’s solutions for sustainability ?

SAP offers a varied portfolio of solutions for recording, tracking and taking action around sustainability, some of which are available exclusively in SaaS mode.

The SAP solutions shown in the diagram above correspond to the following functionalities:

SAP Sustainability Footprint Management

A solution based on existing ERP data in SAP systems, with possible connection to emissions databases, for calculating and managing carbon flows in scope 1, 2 and 3 GHG emissions for accurate, comprehensible emissions results.

SAP Sustainability Data Exchange :

An application for securely exchanging standardized sustainability data with 6 million companies across the SAP Business Network throughout the value chain using Partnership for Carbon Transparency (PACT) standards.

Green Ledger :

A project to combine financial and environmental data for better decision-making and insights directly into SAP S4/HANA Cloud ERP.

EHS EM (Environmental, Health, and Safety – Environmental Management) :

This module, already available on SAP ECC, ensures compliance with environmental regulations relating to emissions. EHS EM encompasses all aspects of environmental compliance, as well as the management of an organization’s impact on the environment, including air and water pollution, GHG emissions inventory and waste management. When SAP SFM is used with SAP EHS EM, SFM can retrieve regulatory data on carbon emissions and environmental material flows, such as water and waste, from EHS EM.

* To find out more about SAP Green Token: GreenToken by SAP (green-token.io). SAP Sustainability Data Exchange and Green Ledger will be covered in the paragraph on SAP Sustainability Footprint Management.

Among SAP’s Sustainability solutions, Applium has selected 3 for its Applium4Green offering: SAP Sustainability Control Tower (SCT), SAP Sustainability Footprint Management (SFM) and SAP Responsible Design and Production (RDP).

Piloting and holistic sustainability reporting with SAP Sustainability Control Tower (SCT) :

The CSRD (Corporate Sustainability Reporting Directive), an EU directive that will enter French law in December 2023, defines the rules under which European companies must publish their sustainability-related information. A progressive timetable including more and more companies has been established for the publication requirements according to the following criteria :

Published for the fiscal year

In 2025 for fiscal year 2024:

The companies* that meet at least 2 of these 3 criteria:

More than 500 employees on average over the financial year
More than €25 M balance sheet
More than €50 million in sales

groups (consolidating companies)* that meet at least 2 of these three criteria:

More than 250 employees on average over the financial year
More than 30 M€ balance sheet
More than €60 million in sales

*which are public interest entities, such as listed companies, credit institutions, mutual societies, …(defined in article L 821-2 of the French Commercial Code).

In 2026 for fiscal year 2025 :

All companies that meet at least 2 of these 3 criteria:

More than 250 employees on average over the financial year:

Over €25 million in assets
Over €50m in sales

In 2027 for fiscal year 2026 :

Listed SMEs.

In 2028 for the 2027 financial year:

Large non-European companies generating more than EUR 150 million in sales in the EU / subsidiary in the European Union.

The European Financial Reporting Advisory Group (EFRAG) has also launched a voluntary publication initiative for SMEs not subject to regulation. a voluntary publication initiative.

The CSRD specifies the need to develop sustainability standards to be applied in Europe : the ESRS (European Sustainability Reporting Standards) adopted by the European Commission on July 31, 2023 provide information requirements in terms of ” functional ” content (12 standards : ESRS1, etc…) and axes (governance, strategy, impacts, risk and opportunity management, metrics and targets).

After a double materiality analysis, the company publishes its information in narrative, semi-narrative or quantitative format, from among the more than 1,200 data points listed.

To meet this regulatory need for standards-based reporting, SAP offers SAP Sustainability Control Tower (SCT). SCT can already meet the need for publication according to GRI (Global Reporting Initiative), TCFD (US), European Taxonomy (EU), WEF (World Economic Forum) standards, and for CSRD on part of the indicators, with the next ones planned on the roadmap.

SAP Sustainability Control Tower: the answer to regulatory needs

Registering consolidated data thanks to multi-channel feeding

Restitution according to different criteria (Country, Business Unit, etc…) and to meet different standards

Calculating footprints with SAP Sustainability Footprint Management (SFM):

Sustainability is a top priority for managers, and accurate carbon accounting is essential to effectively combat climate change. SAP Sustainability Data Exchange enables the standardized exchange of sustainability data. Green Ledger in SAP S/4HANA CLOUD enables sustainability data to be stored at the heart of ERP processes.

Transactional carbon accounting enables more precise and granular tracking of emissions across all operations carried out by the company.

Unlike other products on the market for calculating a carbon footprint, SAP’s competitive advantage Sustainability Footprint Management (SFM) is integration with ERP upstream and downstream of the calculation flow :

The Sankey diagram above is the basic tool for studying the results of emissions calculations. It offers transparency on input factors, such as purchased energy, and the exploitation of different levels of detail, including calculation data and formulas, to understand carbon footprint emissions…

The application enables results to be published on connected SAP S/4HANA Cloud or SAP S/4HANA systems. This makes the information accessible to users, enabling them to integrate these criteria into their decision-making processes (e.g. purchasing, inventory).

SAP SFM offers a dashboard with key performance indicators: incoming and outgoing flows of emissions, emissions by products bought and sold and energy consumers, emissions by scope, category and energy source of GHGs.

SAP SFM: the 3 features to remember

REGISTRATION

Seamless, automated integration of SAP S/4HANA data, third-party data, supplier data and plant energy flows for data acquisition and footprint distribution.

PUBLICATION

Calculation of auditable carbon footprints with details by type of contribution.

ACTIONS

Tracking GHG emissions reduction targets with the carbon accounting tool, which supports scope 1, 2 and 3 transparency and generates analytical information from footprint data.

Calculating production-related data and impacts with SAP Responsible Design & Production

In our current economy, we take materials from the Earth, make products from them and end up throwing them away as waste – the process is linear (“Take / Make / Waste”). In a circular economy, the model advocated by the Ellen McArthur Foundation, we slow down the production of waste thanks to three design-led principles (“Eliminate / Circulate / Regenerate”):

SAP Responsible Design and Production (RDP) is part of the circular economy and addresses Extended Producer Responsibility (EPR):

91% of citizens and consumers are concerned about plastic waste – source UNEP
73% of consumers are willing to pay more for eco-responsible packaging – source trivium packaging

EPR contributions are calculated differently in different countries. SAP Responsible Design & Production is SAP’s solution for companies that have to draw up a CITEO declaration in France.

In addition, this solution can also be used for other countries that have to calculate plastic taxes, such as the UK and Spain.

RDP makes it possible to track corporate eco-design commitments according to the proposals of the Ellen McArthur Foundation or to adopt the SPHERE framework proposed by the WBCSD in order to eliminate unnecessary costs and waste.

The RDP solution:

Collection of data on production, recipes, batches, logistics, materials used and sales
Audits volumes of material types, assesses impact indicators
Makes measurements and manages EPR declaration forms, fees, payments, plastic taxes
Provides information for financial reporting, sustainability reporting, investors and audits
Rethinks products and packaging to make them more sustainable
Provides detailed design screens for product managers, product designers and packaging designers

SAP Responsible Design and Production integrated with S/4HANA enables:

Holistic packaging and regulatory risk management for global markets : Supporting the transition to a sustainable product portfolio
Cost reduction: Accurate calculation of fees and taxes, and implementation of measures to reduce regulatory risks
Keeping commitments: Identifying the right trade-offs and helping to decide on a strategic portfolio of products in the circular economy
Empowered consumers : Transitioning to a circular economy-aware product portfolio and increasing consumer engagement through zero waste commitments.
More sustainable products : Helping to redesign products and packaging by assessing the design impact of using new materials.