Complex supply chains make it difficult for companies to measure their emissions.
(Photo: dpa)
Dusseldorf Sustainability, measured by CO2 emissions, is becoming a key indicator in the economy. However, the calculation is difficult. Uniform methods for measuring CO2 and methane emissions do not yet exist, and the collection of data from production and the supply chain is mostly incomplete. Many companies have to balance something that they can only estimate – if at all.
SAP and the Boston Consulting Group are now promising “transparency at the push of a button”: The companies have agreed on a partnership in which they will jointly offer technology and services with which customers can record their emissions and use them as a basis for control.
The partnership is currently in a pilot phase, with a “broader rollout” planned for the third quarter. The companies have not yet named any specific projects or business expectations, but for both it is a matter of great strategic importance.
Because: According to estimates by the consulting firm Atlantic Ventures, spending on emissions management in Germany will increase to 2.5 billion euros by 2025 – for software, implementation and auditing. IT groups and consulting firms want to occupy this growth market.
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Right at the beginning of his term in office, SAP CEO Christian Klein put sustainability on the agenda with the “Climate 21” project, and the new BCG boss Christoph Schweizer, who has been in office since October, also sees great opportunities for his company.
Legislators in the EU and USA are increasing the pressure
In many companies, sustainability has long been considered a niche topic that is covered in a few pages of the CSR report once a year. Those times are over: The EU has issued a directive that thousands of companies in Europe will publish a sustainability balance sheet from 2023, while in the USA the SEC is currently formulating rules for the disclosure of climate risks. And green investments are a megatrend for institutional investors.
This has reached the board of directors and management. “I don’t know of any CEOs anymore who don’t have to consider sustainability as a third dimension in addition to growth and productivity,” reports SAP boss Christian Klein from discussions with customers.
However, what is missing for the preparation of a balance sheet of CO2 emissions is what is available in abundance for financial flows: data. Many companies are already struggling with their own emissions.
The manager put sustainability on the agenda at the software manufacturer with the “Climate 21” project.
(Photo: Bert Bostelmann / picture folio for Handelsblatt)
However, it is almost impossible to obtain information from all suppliers and end customers. According to a BCG survey of 1,300 companies worldwide, only nine percent are able to fully record their emissions.
And even if the data is there, managing the sheer volume of information is not trivial. In order to create a CO2 balance for a beverage manufacturer, you need 150,000 data points, reports BGC boss Schweizer from a customer project. Companies must therefore first learn how to deal with it.
This complexity makes it difficult to draw up a climate footprint. According to Schweizer, most customers have to deal with error rates of up to 50 percent in their calculations. “The climate goals are wasted if we can’t measure more precisely than before,” he says. “We will not reach 1.5 degrees as long as we do not know where we actually stand and can therefore make the right decisions.”
Software from SAP, consulting from BCG
In their cooperation, the two companies want to tackle the data problem. Roughly speaking: SAP supplies software to collect the data. “Many energy-intensive business processes, for example in factories, logistics and purchasing, are operated with SAP applications,” says Klein.
According to its own statement, 87 percent of the global trading volume is processed via the systems of the German group. This information serves as the basis for the calculations that take place in new modules.
Boston Consulting, in turn, takes care of the advice, for example on the introduction of CO2 management. Due to the regulation, companies are obliged to disclose and audit the data – in the event of violations, the penalties could be significant, says Schweizer.
The new head of the consulting group wants to significantly expand business with sustainability issues.
(Photo: dpa)
The management of CO2 emissions therefore belongs at board level. “We tell our customers which control points they need to establish in their processes and how they can increase data quality.”
The consulting company is also developing a system to record the emissions from business activities – including those that are not processed via SAP systems. A database from the Climate Disclosure Project (CDP) is used, as are customer reports, provided they agree. Over time, accurate figures should be available for more and more products and services.
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