Sustainability - a business obligation and an opportunity
Sustainability in business is growing and becoming more relevant than ever. Companies must positively impact the environment to meet customer expectations and succeed, which demands more transparency on data and processes. While some companies seek to only comply with the minimum legal requirements, many are more forward looking and have embarked on the journey to explore longer term sustainable business opportunities.
Having the pleasure of interviewing the very passionated Jesper Schleimann, Chief Strategy and Innovation Officer at SAP EMEA North brought to light some guiding views and actions on driving sustainable businesses, how to make it a competitive advantage, and how to drive leadership and personal sustainable impact.
A treasure trove for innovation and new business opportunities
SAP is spearheading the sustainability revolution to ensure its relevance for the long term, not only in terms of how they inspire and engage with their customers but also how they co-innovate together with their clients and help them transform sustainably.
According to Jesper, digital transformation, sustainable transformation, AI and finance are all closed linked. As he passionately claims, ‘It is a great new filter and lens to put on businesses and a treasure trove for innovation…an important and impactful tool to leverage for driving innovation’. He says that SAP has got sustainability high on the board agenda but with a pragmatic and balanced approach - keeping a high regard for both the individual as well as nature. SAP drives forward thinking by taking an outside-in approach with mentorship from a Stanford professor who is also an advisor to the UN*. The mentor proclaims that ‘the world’s biggest challenges are business opportunities here - people, time, money, and resources that needs to be invested to cultivate the grounds for innovation.’
Finally, speaking of his motivations, Jesper passionately says, “It gives me ultimate satisfaction that you can take something that you are good at and get paid for and apply it to something that can make a bigger difference …to make a big dent in this world …. that’s really what gets me excited!”
Transparency and digitisation go hand in hand
At the outset, Jesper speaks of a maturing sustainability trajectory - from being a CSR (Corporate Social Responsibility) initiative to now naturally moving into parts of the core business. From an industry perspective, the topic is highly relevant to the businesses closest to the customer, like retail and consumer products, also accelerated by the new generation of customers that demand more sustainable goods. Jesper states, ‘Enterprises are concerned with having a profile closer to the end customer.’ On the other hand, the energy sector has become a high- focus area and probably the most crucial due to climate action. Transformation of energy has now a great business case, and enterprises are highly concerned about it and from a resilience perspective willing to look into significant investments to drive the change.
He further emphasises that ‘Transparency is a keyword… it goes hand in hand with the digital transformation.’ The pertinent question is, ‘How can you be more transparent on your core offerings alongside digitisation?’ Addressing the key question on the table, ‘Is sustainability a fad? Is it going away?’ Jesper continues, ‘It is tough to imagine a reality where this is going away. It will just get more and more until we have solved it!’
Challenges faced by enterprises on the sustainability journey
On being asked what he sees as typical challenges that businesses are grappling with in this space, Jesper mentions three key areas:
- Having a strong data foundation and collecting the right data to align multiple data formats across the value chain.
- Taking the insight to scalable actions: How to infuse and embed data available on sustainability performance into the end-to-end processes especially, where there is a good business case for bottom-line impact.
- Building new sustainable services or offerings for top-line growth. Businesses today are challenged on collecting data at scale across the whole value chain and further sharing back across the value chain right until the end consumer.
Practical examples of digital-led transparency for a more sustainable business
SAP is working with a wide range of industries and sectors to support and co-innovate with them on their digital transformation journeys. Some practical applications that Jesper illustrates bring to life the power of aligning the right goals and getting a few key successes to drive change and build on more significant sustainability ambition.
Salzgitter AG - one of the largest European steelmakers, has implemented the ‘SAP Sustainability Control tower’, a packaged cloud-based solution that leverages the analytics from SAP together with standardised reporting frameworks and automated, integrated flows. It enables you to act on your sustainability goals – at scale. It automates data collection and makes sustainability reporting more structured and streamlined. E.g., it allows the user to move away from reporting averages to actuals, giving more precise and sharper visibility of each business element and aiding in better financial investment decisions.
Unilever – the global consumer goods conglomerate uses palm oil across many products and markets. It is important to know the quantity needed, where it is harnessed, and ensure it has been procured sustainably. Further, they face the mass balancing challenge for all raw commodities that are traded in volumes. To address this business challenge, together with SAP, Unilever has implemented a ‘Green token solution’ where they can map a single gram of palm oil to a single token that can then be traced across the value chain. Furthermore, the solution allows for mapping of ‘co-mingled products’ where they can infer the ‘level of recyclability’ of that element. A highly and widely replicable solution.
Energy sector – SAP is working with various enterprises on the energy transition to support the move away from fossil fuels to more sustainable biofuels or solar and wind energy. For this, tracing whether the power source or energy is green, and thus, the digital passport becomes extremely important. This is becoming highly relevant from multiple standpoints – ensuring a sound business case, supportive of the upcoming regulations and legislations, and customer-facing viewpoint.
Tetra Pak: SAP is leveraging their product SAP RDP (Responsible Design of Production) to help companies like Tetra Pak manage the impact of increasing new plastic taxes and ultimately design-out plastics.
The intelligent and practical starting point
For any enterprise starting its sustainability journey, Jesper proposes three core dimensions to approach to be ultimately aligned – the target, the organisation, and the process.
It is important to focus on key areas and targets that ideally have a close co-relation with the core business. E.g., for a brewery, a core area could be water consumption that could have the most significant impact. Next, how to align and validate core data across the organisation. What data insights do we have, and what data is missing from our core systems? E.g., transactional data in SAP is a rich source and could be a good starting point. Finally, align your process to bring more rigor to your governance around the sustainability data and reporting. An intelligent way to approach this could be to align this process with your financial closing processes and leverage your competencies in your finance center. A person appointed in the finance department could probably be responsible for the sustainability data and can thus easily leverage the already set financial processes and systems. This aligns with the final goal of having a single internal and external data foundation where sustainability data will be just another currency.
In sum, set a few core targets, take a stock check of data, and start linking your processes to finance to create that forward-looking sustainability currency to make a difference and give you an edge in the marketplace. E.g., early movers that have reduced CO2 emissions are already reaping benefits as they are more energy efficient.
Sustainability fuels the Air, Food, and Water for an Enterprise
To drive the point, Jesper urges thought on how sustainability plays a significant role in enhancing a company’s core elements that are crucial for its survival, relevance, and growth. He compares an enterprise's key elements of air, food, and water.
Air: Cheaper and more favorable access to capital - Enterprises that have better and more transparent sustainability reporting will have an edge with better access to capital intrinsic for their long-term sustenance.
Food: Customers - With the increasingly conscious customer, the more sustainable an enterprise is, the more customers it will be able to attract and retain and thus accelerate growth.
Water: Access to resources, including talent - Access to the best talent and skills is imperative for laying the right foundations for innovation and the next phase of growth. Employment rates are high, and new generations are entering the workforce with companies with sustainability on their core agenda.
Each one can make a difference
Highly motivated by the topic on a personal front, Jesper believes change starts at every level of an organisation and encourages leaders and project members to think about how they can make a ‘small dent’ to address sustainability in their current roles. For leaders, it would be a great exercise to work with their team to align their personal purpose to the enterprise-level goals and see if they can find a sweet spot. Here the right motivations and grounds for innovation and driving change will rise.
SAP offers products in the areas ESG reporting, climate action, circular economy, and social responsibility. Sustainability solutions from SAP deliver company-wide functionality and industry-specific features that can help incorporate sustainability in business at scale by embedding operations, experience, and financial insights into the core business processes.
For more information kindly refer to:
SAP's Approach to Sustainability: https://www.sap.com/denmark/sustainability/our-approach.html
SAP Interactive Sustainability Navigator: https://www.sap.com/sustainability.html
Interviewee: Jesper Schleimann, Chief Strategy and Innovation Officer, SAP EMEA North (Benelux, UK, Ireland, France, Nordics)
Interviewer: Frans van Hoesel, VNSG
Text: Radhika Gupta, Business and Digital Transformation Writer
*SAP signed an MOU with UN in 2019 to begin an early-stage pilot towards establishing global enterprise transparency and impact. Today in 2023, this has grown into a full-fledged portfolio with SAP where they are working with enterprises to co-innovate and uncover new ways to support sustainable transformation.