Practical Magic

SAP’s simple, sensible contribution to sustainability

This article is adapted from GreenBiz's newsletter, VERGE Weekly, running Wednesdays. Subscribe here.

When it comes to technology innovation, mystery makes for great headlines but practicality wins for potentially profound, real-world impact.

Consider the ongoing evolution of SAP Ariba, a procurement and supply chain management platform that underlies more than $2.9 trillion in commerce annually.

SAP, an enterprise software company not exactly known for flash or sass, is quietly adapting that service to aid its customers with achieving their sustainability goals — specifically, their quest to rethink plastics consumption and their interest in rewarding suppliers and partners that have embedded sustainability into their own operations.

Exhibit A is Plastics Cloud, the company’s dream to create a global marketplace for recycled plastics and plastic alternatives. The idea is to connect major consumer product companies — the likes of Procter & Gamble, Coca-Cola Co. or Nestle (all SAP customers) — with suppliers that are enabling plastics reuse at scale, such as Bantam Materials in the United Kingdom. Bantam, certified by OceanCycle, recycled more than 1.3 billion ocean-bound plastic bottles last year into materials that are available at "industry-required volumes."

To be clear, this marketplace isn’t live yet, but SAP is piloting the idea in the United Kingdom, using a feature of its service called Spot Buy, which allows companies to find new suppliers that meet certain buying criteria — such as their ability to produce recycled materials or certified for upholding strict ethics practices, such as ensuring their factories don't employ child labor. Contracts for more than $10 billion worth of packaging already flow through the Ariba network every year, and SAP is seeking ways to make it simpler for its customers to find more sustainable sources.

"We have the ability to call them out and connect them" to potential buyers, SAP Ariba’s chief marketing officer, Tifenn Dano Kwan, told me when we chatted earlier this fall.

In this way, SAP could help make the financial implications of sourcing recycled plastic make more sense fiscally. "At the core of the plastic problem is the economic value of plastic waste," said Jens Amail, managing director for SAP UK and Ireland. "For long-lasting change to be effective, we need to both innovate in new materials as well as increase the value of our existing plastic waste to divert waste streams from the natural environment."

Circular packaging and recycled plastics suppliers aren’t the only ones who stand to benefit from innovations coming to the SAP Ariba platform. This week, SAP announced a partnership designed to turn its service into a tool for embedding environmental, social and governance considerations into the corporate procurement process.

What's the big deal? The initiative is a collaboration with Givewith, a "social technology" company that helps large organizations find (and fund) nonprofits aligned with their core ESG sensibilities, kind of like a dating app. So, if your organization is really focused on eradicating plastic waste or on water stewardship, it would receive a list of programs that it might be interested in supporting.

From there, a buyer can disclose its preferred nonprofit partners as part of any requests for proposals it might issue — say, if it’s looking for a new supplier. The idea is to encourage any firm bidding on a project to consider designating a portion of its potential proceeds to the buyer’s chosen cause. This sort of information potentially could help differentiate one incoming proposal from another on a metric other than price.

It’s a way to scale corporate giving and make it systemic. Some organizations Givewith works with already: Allstate, Dell, HP, Lexus, UnitedHealthcare and WellsFargo.

"If just 8 percent of the nearly $3 trillion transacted by buyers and suppliers across the Ariba network included Givewith, we could generate over $3 billion in funding for nonprofits," noted Givewith founder and CEO Paul Polizzotto. That’s profound.