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How SAP Uses Quarterly Reports to Push Its Sustainability Efforts

When it comes to sustainability, "short-termism" -- the idea that companies' focus on quarterly financial reports over longer-term improvements -- is often seen as an obstacle to true progress on reducing emissions and pollution.

But for SAP, taking the pulse of their sustainability efforts every three months has helped keep them on target, while refining the tools they use -- and which they sell to their customers -- to make for ever-greater results.

In addition to its annual sustainability report, the company has been reporting quarterly results since Q1 2010, and has lately been highlighting its progress in terms of cost savings to the business. And the results are impressive: Since 2008, SAP's sustainability initiatives have saved the company €185 million -- more than US$263 million -- in operating costs.

In the last quarter alone, that number has grown by more than $24 million (€15 million).

"Since 2010, on the whole we've become much more sophisticated in gathering the data using our own tools," Rami Branitzky, SAP's senior vice president of sustainability, explained in an interview yesterday. "[The evolution of the process has] been a reflection of what most companies go through on the journey. At the beginning, it's a pretty intense process to gather the data in Excel, then over time you develop the tools and methods to gather and track the data."

SAP is, of course, using its own software -- SAP Carbon Impact OnDemand 5.0 -- to measure and report the data. In addition to an "eating our own cooking" philosophy, the process has helped SAP refine and improve the tools that they're offering to companies around the world.

But at the same time, SAP faces a bit of a bind: In order to sell more sustainability (and other) software solutions, the company is largely dependent on air, rail and car travel. And travel is the single largest contributor to SAP's carbon footprint.

"We have a target of going back to 2000 levels [of emissions] by 2020," Branitzky said. "By that time we'll hopefully be 2x the size we're at right now. How do you accomplish that phenomenal growth while shrinking emissions?"

That is the question that every company is going to face in the coming years. When the economy picks up steam, companies that haven't decoupled growth from emissions will find their footprints swelling -- and potentially get in regulatory trouble as a result.

With travel and building energy use as the two prime sources of emissions, SAP has started to address their impacts in the ways you might expect from a software company.

The company bought several Cisco TelePresence systems, which Branitzky said "just takes away the need to fly." But at the same time, SAP employees' business travel is how SAP generates business: Cut business travel too much and you cut emissions, but you also cut growth opportunities.

So SAP has taken a "travel smarter" approach. Rather than send seven people on a sales call or client visit, can three go instead and relay details back to their office?

It goes both ways -- you can't just decree less travel, in part because maintaining customer relationships is key to sustaining growth. So Branitzky said the SAP sustainability team has to also be smart in how to ask people to travel less.

In addition to business travel, SAP recently launched a program to improve the efficiency of commutes to the office. SAP TwoGo, the commuting solution just launched in Germany, uses Microsoft Outlook and mobile devices to coordinate ride-sharing among employees at the same facilities. In its first two weeks, more than 2,600 employees have used TwoGo for more than 5,600 rides.

Quarterly data-reporting efforts only confirm where they need to focus their efforts.

"If you look at the numbers right now, we're looking at an increase in business flights specifically," Branitzky said. "On the other hand, we're encouraged by employee commuting, though this could be an area that could have more improvement."

Addressing facilities' energy use is the other big part of SAP's carbon strategy, and SAP is putting its own building management software to work on this project as well.

The company is gathering site-specific data for each of its facilities, and starting to share that information with facility managers as well as employees. As part of its quarterly reporting process, SAP can see where there are regions or facilities that are in need of improvement, and focus its efforts there.

And in some cases, they can use this data to get sites to compete on efficiency or sustainability metrics. Branitzky offered the example of SAP's offices in Vancouver and Palo Alto: Both sites are ahead of the curve on efficiency already, and have been informally competing for some time. But now that they have widely available site-specific data, teams at each facility are making a game of seeing who can make the biggest footprint reductions the fastest.

As SAP's reporting process advances, Branitzky said the company hopes to integrate it into financial reporting. And since sustainability is such a major focus of the company's sales as well as its operations, that's a logical progression.

Photo CC-licensed by Nic McPhee.

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