SAP Sustainability solutions can help shield against backsliding

Disclaimer: these are my personal and professional opinions and not reflective of official SAP messaging or strategy.

I don’t post much in these forums, but I think there has been a convergence of factors that kind of compelled me to do so at this time. I have been personally focused on the environmental and sustainability topics since I was 11 years old, after seeing the effects of a housing development on a wooded area behind our house. It is why I studied earth science and just finished an MBA in Sustainability. It is one reason why I have remained at SAP because I believe this company can affect the right kind of changes in the world.

As solution manager for the SAP Environment Health and Safety portfolio, part of my job is to keep track of what is going on in the relevant markets. Over many economic cycles, COVID, political changes, and the onslaught of examples of environment degradation, certain patterns emerge. The demand for change is not constant. After a few years of ramping up scrutiny and stakeholder pressure on companies to just do better, it is clear that some minor backsliding is occurring right now, slowing progress towards a more sustainable future. SAP’s three goals for product strategy of zero carbon, zero waste, and zero inequality seem a bit harder for companies to achieve right now. It is easy to commit to improving sustainability performance when times are good. The real test is when times get tough and economic conditions deteriorate, economic risks increase, geopolitical risks increase, and uncertainty reigns. It is in those times that you will see who is truly committed to a greener future. Besides the relative increases in renewable energy in Europe as a response to oil supply and the war in Ukraine, most trends point in the wrong direction – more carbon emissions, more e-waste, more plastic pollution, less accountability, less equality. These articles, pulled from recent headlines, illustrate this trend:

Ikea’s Race for the Last of Europe’s Old-Growth Forest

Risk of Recession: CEOs Preparing to Cut ESG Spending, Lay Off Staff (businessinsider.com)

Bankers Told They Can Ignore Binding Fossil-Finance Restrictions

China Won’t Rush Its Clean Energy Transformation, Xi Says

Alaska’s Snow Crab Collapse Is Likely Tied to Climate Change

UN weather agency: Greenhouse gases reach new record in 2021

These articles should serve as a reminder of what is at stake – not only for our world, but the risk that market potential for sustainability software solutions may actually decrease a bit. Anyone who was focused on this topic going back 20 years will tell you that the 2001 recession and the 2008 recession had a strong chilling effect on efforts [and software investments] to push sustainability and solve environmental problems. They became much less important compared to the major economic and geopolitical issues at that time. This may happen again.

If we want to help save the world and sell software to enable the same, we need to leverage the current investment and development as a strong base for much more interesting, effective, and embedded applications. All of the basic collection and reporting tools out there only help to quantify the complex issues the human race has to deal with; effects from global warming, plastic pollution, exposure to chemicals like PFOA and BPA, species extinction, water issues, and environmental justice, etc. The process of (1) pulling transactional data, (2) running analysis and calculations, and (3) creating a report, is essential in understanding impact. But it is old news. Keep in mind that the framework for the GRI reporting was created in the late 1990’s. Since then, the objective of EHS/sustainability software was to make it easier to collect data and send it to entities like GRI. Pretty much all of the reporting metrics are lagging indicators that can only go so far in affecting positive change. Newsflash: The basic reporting tools like Salesforce are not going to save the world.

Commercial success in this space is not guaranteed, regardless of the investment and focus we have put into it. We need to leverage the technical and organizational advantages we have (there are many) and be the innovation leader our customer base needs SAP to be as the preeminent business software platform in the world. Consider this post a call for urgency in innovation. In this passage, I’ve highlighted the unique position that SAP is in to help drive real change, and recent evidence that real change is still needed.

Twenty years ago, we joked about how SAP wanted to take over the world with its software – now we need to figure out how SAP can help save the world with its software…

In my next post, I will try to give some ideas on the necessary solution approach to help companies achieve demonstrable progress stakeholder are pushing for now in the near-term, as broader (and more nebulous) commitments take shape in the long-term.