Wednesday, March 30, 2011

SAP 2010 Sustainability Report

I can't resist taking a few minutes out of an extremely heavy workload (it's reporting season, folks!) to record a few impressions from my conversation last evening with Peter Graf, the Chief Sustainability Officer of SAP, who talked me through the highlights of the SAP 2010 Sustainability Report, the online showcase for everything that SAP can do to "help the world run better." Moving from "having a sustainability strategy" to having a "corporate strategy which is sustainable", SAP seems to be doing and saying some great things, some of which managed to cause even me to be impressed, which takes some doing, and presenting them in a creative and innovative way in their second fully online PDFless twitterable facebookable report, complete with interactive customizable graphs and data. Whereas last year's report was more about the social media song and dance, I feel this year's report has matured and reflects a stronger focus on accountability for impacts rather than  actions. Indeed, the SAP Advisory Panel, which includes Aron BSR Cramer and Bill Cradle-to-Cradle McDonough, amongst others, together with online feedback on the last report, was instrumental in urging SAP to attempt to quantify to what degree they are helping the world to run better. The Advisory Panel engages in regular conference calls and meets annually with the SAP Board. That's good practice.

SAP's response to feedback is evident in SAP's attempt to define customer impact, claiming that SAP solutions have improved the safety and health of 800 million people. 800 million people? Skeptical? SAP thought you might be. So they included a pop-up describing how they calculated this not insignificant proportion of the global population.
The customer section reads like one big marketing campaign but there is some substance to the proposition that SAP's core purpose is about helping businesses to operate more efficiently and therefore save the world. If you have it, I guess you might as well flaunt it. Next to Ecomagination and Plan A, this is probably one of the best demonstrations of how a truly strategic approach to sustainability actually does pay off. It is encouraging that the business case for sustainability seems in no doubt at SAP, though this comes only after achieving a certain level of maturity on the sustainability continuum.
We are apparently becoming a global community of Sappites. But this may not be such a bad thing, given the big strides SAP is making in environmental sustainability. SAP's absolute carbon footprint reduced by 6% in 2010 and is presented nicely, with the graph bars shown below the line, because emissions are always a liability and not a demonstration of positive impact. The shorter the line is, the lower the emissions are, and SAP appears to have been working hard to reduce the bar-length since their emission peak in 2007.

Graph options allow you to view this data by region, normalized to Euro revenue and number of employees and by GHG Reporting Scope 1, 2, or 3. But the best of all is the Abatement Cost Curve, which shows how SAP intends to reduce emissions to 2000 levels by 2020, generating not only emissions reductions but also significant cost savings, which will fund the purchase of energy from renewable sources and the generation of solar energy. This is a strong commitment and will require many changes in corporate and individual behavior.  I admire a company who makes clear plans and commits to them in a public report.

One of the changes relates to vehicles. 79% of SAP's Scope 1 GHG emissions are from company cars. One of the ways SAP is addressing this is through more virtual interactions (43 telepresence stations) and the use of electric cars. These cars are now being used in SAP USA, Germany and India and SAP is building 16 charge spots in the SAP Palo Alto site, the largest charging site in corporate USA at this time. SAP is even enabling 1,000 people to test drive the Nissan Leaf for short periods so they can get the feel of the future. Sometimes it pays to work for a large company.

The SAP strategy is defined in terms of three impact areas - operations, (which includes environmental impacts),  customers and social  and in each area, SAP defines key strategies, metrics and impacts. At the center of this is SAP's sustainability map, a very nice overview of what's on the SAP sustainability radar. (Yes, I "like" 'd it and gave it 5 stars!)

What's material about SAP's business? Again this year, SAP presents their
D-I-Y Materiality matrix in which you can see the way materiality has changed over the years and develop your own matrix of issues as a SAP stakeholder. It also has a very beneficial therapeutic effect, a little like Tetrix. If you look at SAP's materiality in real-time, you can see they have a lot to be thinking about!

The user interface of the report seems to be a little easier to navigate this year, or maybe it feels that way because it's the second time around. However, the best way to find what you are looking for is the GRI Index page. I understand that for PDF geeks like me, and print-it-out investment analysts, a 3 page Exec Summary will soon be produced.

However, one test the SAP report failed is my EN22 test. This is a core indicator and should be reported fully in a GRI A level report. See a previous post of mine on this subject. SAP's response to this indicator is not in line with the GRI requirement despite it being noted as fully reported. I have not checked the rest of the indicators one by one (maybe I will, one day, just for fun :)), but the EN22 test is an indication of a lack of rigor both in reporting and in verification.

Another poor performance area is SAP's advancement of women where the rhetoric is not aligned with the performance. "Diversity as a business driver" is the pronouncement, but despite all these wonderful Nissan Leaf cars, there is not much driving being done at SAP from the gender equality perspective. Women at SAP represent only 11.5% of top management which is 0.1% higher than the 2006 level. Clearly all the nice words around advancing women are not getting through to the male (chauvinist?) SAP leadership which  includes 16 Supervisory Board Members  of which one appears to be female, if am guessing the gender correctly based on members' forenames, and an Executive Board of 6 members which includes one women in the HR role who just made it into the report, having been appointed in 2010. Two out of 22 top roles makes 9% of women in the key leadership positions in the company. SAP says "In 2010, we established a global women’s program advisory council to promote career development for female employees".  I say that there needs to be more than a council. There needs to be a major mindset change among  men at SAP. Statistics prove that companies with women in leadership positions deliver greater shareholder returns. As I have often said, women do not need to be counseled, trained, mentored and fixed. They need to be promoted. SAP should stop womenwashing and get on with it. A good start would be to replace SAP's two male CEO's with one woman CEO providing a chance for both a cost saving and improved performance. :)

There are some other very nice features of the SAP report but time prevents me from elaborating here and now (it's reporting season, folks!), but I recommend you check it out. It has never been easier to provide feedback on a sustainability report so let SAP know you value this. I understand from Peter Graf that last the 2009 report generated over 100 meaningful queries and suggestions, many of which were incorporated in SAP practices and in the 2010 report content. Influence is a wonderful thing and SAP are making it easy for all stakeholders to grab a slice of the action.

My conversation with Peter Graf was fascinating and covered many points which I have not been able to expand on here, but I will follow up in additional posts as relevant over the next few weeks. Peter, of course, didn't tell me what to write about in this blog but I am sure he will be pleased to hear that I applaud SAP for an excellent demonstration of transparency and overall encouraging sustainability performance.

The only thing I forgot to ask Peter during our conversation was "What was it that SAP chose NOT to report?" . Hmm. Probably a good thing. Why burst the bubble ?

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)


Doug Hadden said...

SAP doesn't talk about the impact of the software footprint for customers. The minimum requirements for computers and network bandwidth has significant electronic power implications given so many customer installations. SAP should talk about how it plans to eliminate software bloat to optimize the product technical footprint with reduced power and bandwidth needs. Perhaps the ByDesign service will have a positive impact.

It just seems ironic that SAP has developed tools that monitor environmental impact without acknowledging the roll ERP software makes to needlessly increasing carbon footprints.

Mehrdad Nazari said...

Interesting blog post, Elaine. - Reflecting on your comments, I am not convinced that it is appropriate for SAP to “claim” that its solutions have improved the safety and health of 800 million people. It is a bit like Canadian miner Teck, which supplied the precious metals used to produce the Olympic medals, claiming that it enabled and hand-picked the winning performers of the 2010 Vancouver Winter Olympics. I think this attempt to desperately find the causal linkages (silver bullets) of a CSR-related strategic impact oversimplifies the very many signals and activities which are required to generate any sort of major impact. Not sure if any health & safety professionals who have worked hard on introducing and maintaining a health & safety culture and performance would or should share their achievements with SAP - or any other spreadsheet provider. Let me end with this question: will SAP also claim the incidents, injuries and fatalities which occurred at those companies which run SAP software?

elaine said...

Hi Doug, thanks for reading and commenting, I am not much of a technical expert but I think I understand your point. It does seem to make sense that power savings at customers should be a priority. Having said that, data collection and analysis is one of the most significant challenges companies have in managing their footprints so I do believe that such software is a key element of developing sustainable business
warm regards, elaine

elaine said...

hi mehrdad, I also viewed the 800 million as rather sensationalist and difficult to substantiate.

Your point about reciprocity is a good one!
warm regards

Mark McElroy said...

Hello again Elaine:

Two things struck me about your coverage of SAP's 2010 Sustainability Report. First was that you lauded it as "an excellent demonstration of transparency and overall encouraging sustainability performance" despite the fact that you know there can be no meaningful reporting of sustainability performance at all in the absence of context. Notwithstanding your reservations about the viability of establishing context as a basis for reporting, the fact that you have such reservations does not in any way invalidate the point that context is fundamental to measuring and reporting sustainability performance. Thus, SAP's report is not a sustainability report at all - some other kind of report, perhaps, but not a sustainability report.

Next is a similar infraction, this time committed by SAP's assurance provider, KPMG. In their 'Assurance' statement at the end of SAP's report, they say: "Nothing came to our attention to indicate that the other information in The Report is not, in all material respects, fairly presented in accordance with the Sustainability Reporting Guidelines (G3) of the Global Reporting Initiative."

Well, what about GRI's reporting principle of 'Sustainability Context' and the fact that it is utterly missing from SAP's report? If costs are missing from income statements, are they still income statements? Of course not. The same goes for sustainability reports. Instead of costs, however, we have what GRI rightly requires as 'sustainability context'.

If ever there was a vivid illustration of the crisis we have before us in mainstream sustainability measurement, reporting and assurance, this latest case of reporting by SAP and the failure of its assurance provider to catch and call attention to the absence of the most basic element of sustainability reporting, context, provides it.



elaine said...

Hello Mark, thank you for sharing your perspectives. By now you know where I stand on your definition of context-based reporting so it will come as no surprise to you that I respectfully beg to differ.

Mark W. McElroy said...

Elaine, it's not about definitions. Definitions are political, if not arbitrary and a function of custom and habit over time. Choose any words you like. What I'm talking about is the absence of comparisons between impacts in the world, and the capacity of the systems being impacted to withstand them. All of that is missing from the SAP report, ergo it is not a sustainability report.

Of course, if that's not what sustainability means to you, then I guess we're living on different planets - literally.



Related Posts with Thumbnails