With COP29 coming up November 11-22, 2024 in Baku, Azerbaijan, this is a good opportunity to review progress toward climate goals and to update new developments in SAP's ongoing focus on delivering end-to-end carbon management and ESG reporting solutions.
COP29 Overview
COP29 is the 29th annual meeting of the Conference of Parties (COP), which is the primary decision-making body of the United Nations Framework Convention on Climate Change (UNFCCC). The COP has met annually since initial adoption of the UNFCCC treaty in 1994. In addition, the UNFCCC mandates that every five years the COP meeting be expanded to provide a "global stocktaking" review of progress toward meeting overall climate goals.
Stated goals for COP29 and beyond include:
- Delivering deep, rapid and sustained emission reductions now to keep temperatures under control and stay below 1.5°C, while leaving no one behind.
- “Enhancing ambition” by promoting key elements to ensure all parties commit to ambitious national plans and transparency.
- "Enabling action” through the critical role of finance to turn ambition into action and reduce emissions, adapt to climate change and address loss and damage.
According to Simon Stiell, UNFCCC Executive Secretary, "We can only prevent the climate crisis from decimating all economies if every country has the means to take much stronger climate actions, slashing emissions and building resilient communities and supply chains. That's why an ambitious new climate finance goal at COP29 must be core business for every government. The world will be watching, and expecting governments to stand and deliver at COP29."
SAP's Commitment
In the lead up to COP29, during the UN General Assembly's 79th session in New York during September, SAP announced a commitment to three over-arching principles.
- The Benefits of Ecosystem Building: To bring together top minds and leaders in government, private, social, and academic sectors together to discuss collaborative solutions. Multilateral partner ecosystems offer an opportunity to play to each other’s strengths. For example, SAP is not the expert in creating social and environmental impact; that expertise resides within the social sector. However, SAP understands the critical role technology can play in creating promising results in addressing issues like climate change and creating a more circular economy.
- The Importance of Education: Education is a fundamental human right and a key driver in economic development. Prioritizing education and skills development is necessary to remain resilient in a rapidly changing world and help bridge the digital divide in under-resourced communities. By building cross-sector collaboration in areas like education, we gain access to new perspectives in social innovation and a wider talent pool as we work toward a more fair, sustainable world.
- Opportunities for Intergenerational Leadership: Young people are at the frontline of issues like climate change, but often fail to appear in key decision-making spaces. SAP embraces the idea of intergenerational collaboration, bringing together diverse perspectives across the business. For example, We Are Family Foundation, with support in part from SAP, conducted a study in which 96% of respondents believed intergenerational collaboration holds significant value and can generate positive change when faced with global challenges.
SAP-based End-to-End Climate Change and ESG Solutions
Chief Financial Officers and Chief Sustainability Officers are pivotal in achieving ESG targets, as the credibility of these targets and quality of the underlying data directly influences enterprise value, brand reputation, employee morale, and shareholder trust in management, especially concerning greenwashing. Additionally, sustainability regulations are becoming more stringent worldwide, with over 600 voluntary and mandatory sustainability-related regulations. These include carbon taxes and ETF trading schemes, emphasizing the urgency to meet data and compliance standards.
However, many companies struggle to gather all the necessary data due to error-prone manual processes and incomplete audit trails that jeopardize internal compliance and external assurance. Many businesses rely on emissions estimates across their value chains, which are often the largest source of emissions. These estimates can be inaccurate, varying by 30-40% or more from actual values. Given these challenges, navigating the path forward is complex, and businesses will need reliable strategic partners like SAP to address these issues.
This is why SAP is championing the transformative green ledger initiative to achieve corporate climate accountability. A green ledger adapts financial practices, processes, and disciplines to account for Green House Gas (GHG) the same way companies account for financials today. This approach enables combined financial and environmental decision-making at different points across the business process.
SAP green ledger builds on and brings together all of the previous SAP-driven carbon accounting and ESG solutions that have led the industry over recent years, including SAP Sustainability Footprint Management, SAP Circular Economy, and SAP Sustainability Control Tower. SAP green ledger provides bottom-up, audit-ready sustainability values that are managed with the same precision as corporate financial data. By handling actual sustainability data at a transactional level instead of relying on estimates or averages, businesses can comprehensively view their value chains to pinpoint where emissions are occurring. This allows them to set precise net-zero targets and identify specific areas for decarbonization. With transactional carbon accounting in a green ledger, companies can make detailed, accurate, and timely decisions that are both financially and environmentally responsible.
Business and Societal Benefits of ESG and Climate Impact Management
Reflecting on the global adoption of ESG management processes, it is evident that new regulations have significantly driven initial implementation. However, companies are now recognizing substantial benefits beyond mere compliance with ESG mandates. By prioritizing ESG and adopting proactive strategies, large enterprises can bolster their reputation, resilience, and value in an increasingly ESG-centric business environment.
Some of the concrete benefits of a strong sustainability program include:
- Top-line Revenue Growth - by attracting customers and partners with more sustainable products and services that cater to the growing demand for environmentally responsible corporate offerings.
- Cost Reduction - by lowering energy, water, and material costs and avoiding wasteful manufacturing, packaging, and shipping practices.
- Employee Commitment and Productivity - by enhancing motivation, attracting talent, and fostering a corporate culture centered around a shared commitment to environmental excellence.
- Leveraging Regulatory Compliance - by drawing investment from funds and individuals who prioritize ESG values and by avoiding fines and sanctions.
By leveraging SAP's comprehensive set of sustainability solutions, companies can not only reduce the cost of meeting ESG requirements; more importantly they can discover additional sustainability related cost savings throughout their enterprise-wide operations.
Summary
In our extensive collaboration with companies on implementing subscription-based Digital Solutions Economy (DSE) business initiatives, the Bramasol team has observed a growing necessity for quantifying and managing comprehensive sustainability requirements across complex, multi-layered scenarios involving bundling, partnerships, licensing, and delivery. ESG considerations have become a crucial element of nearly every digital transformation project as we assist companies with their transitions to implementing SAP S/4HANA.
Also, as a leading partner in the implementation of SAP S/4HANA Cloud Public and Private Editions, Bramasol is able to help clients seamlessly integrate enterprise-wide carbon accounting and ESG reporting as part of their core ERP and Finance systems. For example, we can bring companies that are new to SAP up and running in S/4HANA Cloud Public Edition in less than three months for full core functionality. Public Cloud then provides the structure for also integrating SAP end-to-end sustainability solutions.
With all the pieces of the SAP ESG ecosystem now coming together, companies have access to vast amounts of relevant, integrated data across numerous internal and external operations. The most crucial aspect is how you leverage the data and insights available. You can integrate new sustainability practices directly into your key business processes and functions on a large scale.