Corporate Practices, Customers, Products: Fostering the Sustainability of Each
In 2009 I visited SAPâ€™s Walldorf-Germany headquarters and learned about the companyâ€™s 3-legged stool of sustainability:Â SAPâ€™s own corporate operations (programs ranging from rooftop rainwater collection to halving employee travel), customersâ€™ operations (enabling them to track and reduce negative impacts), and product design (efficient coding that reduces data center emissions). Since then, Iâ€™ve shared this broad-based profitable sustainability strategy with other TFI clients to inspire their Lean and Green approaches. But it was time for an update. So, I asked CSO Peter Graf if that â€ś3-legged stoolâ€ť still stands. It does.
First leg of stool: In-house environmental and monetary savings SAP has been on a long journey to show the connections between positive environmental and financial impact. I remember participating in SAPâ€™s 2009 Sustainability Reportâ€™s interactivity features, designed to engage stakeholders in meaningful sustainability discussion and analysis. The 2010 report received an â€śA+â€ť GRI rating by adding sustainability indicators and metrics (Renewable Energy, Business Health and Culture Index, and Employee Satisfaction). â€śThis year,â€ť says Graf, â€śSAP reached out to the financial community by combining its Annual Report and Sustainability Report in single document â€” highlighting the connections between non-financial performance like Employee Retention with financial performance. This details the business case of the financial benefits of sustainability.â€ť
Since 2007, SAP reduced carbon emissions in absolute terms by 20% even though the company grew by 20,000 employees. Per person, carbon was reduced by 30%; by Euro of revenue, by 50%. Today, 62% of SAPâ€™s global electricity purchases are from renewable sources: 100% in North America, 60% in Europe, less in Asia. Overall, these and others of SAPâ€™s sustainability moves have avoided operational costs of US$285 million since Dec. 31, 2007.
Graf shares some interesting new projects, yielding financial and environmental savings:
– Reducing the environmental impact and cost of air conditioning: Investments in LED fixtures and intelligent lighting in the Palo Alto facility dims windows when the sun pours in. – Facilitating use of electric vehicles: In June 2013, the Bay Area Climate Collaborative recognized SAP and Google with the top award for â€śEV-Ready Business.â€ť As an example, SAP provides wired and wireless chargers for employeesâ€™ and visitorsâ€™ electric cars. – Reducing commute impacts and costs. In 22 months of SAP employees using TwoGo, employees drove 625,000 fewer kilometers, emitted 88 fewer tons of carbon, saved on fuel and maintenance, and enhanced resale value â€” all valued at US$55M. TwoGo is an SAP software tool that uses algorithms to match commuters into carpools in an entirely automated fashion using iPhones, the Internet, or employeesâ€™ corporate calendars. Graf says that TwoGo (now available to organizations for purchase) creates so much interest because of the triple bottom line: profit, environment, and social. â€śEmployees want to get to know each other, and doing so in the casual setting of carpooling is very effective,â€ť said Graf. SAPâ€™s incentives for employees using TwoGo include reserved parking, a dollar donated for every mile shared, and the chance to ride with the CEO (who uses TwoGo).
Second leg of stool: customersâ€™ measurable and profitable sustainability gains SAP customers in diverse industries have used SAP sustainability solutions to measurably reduce environmental impact and operational costs. I asked Graf to talk a bit about some of the industries.
â€śCustomers of tech, retail, and consumer-goods companies demand transparency and accountability â€” forcing suppliers to do the right thing with their buying power so that customers can consume more responsibly.â€ť Danone Groupâ€™s management wanted both to be more responsible and to reduce costs. The company uses SAP to reduce the carbon footprint of 35,000 products each month. Over the years the company achieved a 30% reduction in greenhouse gas emissions (including embedded energy). â€śWhen you ask suppliers about their environmental footprint,â€ť says Graf, â€śyou find inefficiencies that you wouldnâ€™t find just through price negotiations.â€ť Now Danone has not only a more efficient supply chain, but also the ability to put environmental information on product labels read by its environmentally-aware customers.
Now, turning to the oil-and-gas industry: â€śExtracting industries have very different problem. Refining oil is very energy intensive,â€ť explains Graf. One customer used to process all grades of petroleum at same high-energy intensiveness. SAPâ€™s solution helps management process crude in more energy-effective ways, considering the quality of crude, temperature around the plant, and desired output characteristics, translating to US$200M savings/year for that customer. Plus, the system yields data that â€” shown to corporate executives â€” proves the financial case for specific upgrades here or a change there.
Third leg of stool: coding
The term â€śsoftware bloatâ€ť is associated with wasteful demand for electricity to power and cool electronic hardware (including data centers) owing to inefficient software coding. Itâ€™s essential for cost savings and societal benefit for hefty ERP systems, such as created by SAP and Oracle, to be as efficient as possible. Graf explains that SAPâ€™s HANA technology is speeding transactions while reducing data-center impacts for customers running SAP.
Graf walks us through three environmental and cost-savings benefits of the HANA concept: â€śERP systems range from 1 gigabyte to 100 terabytes of information, and customers are amassing increasing amounts of data (more from sensors, etc.). In the past, data was stored on rotating disks, which was so much more expensive than storage on chip. This has fundamentally changed owing to memory coming down in price. Now you can take all the data that was on the rotating disk and put it on the chip.â€ť Graf says that in a user ERP system, storing the data is 5X more energy intensive than computing the data. Now with HANA, â€śwe reduce the use of disks, which can result in energy savings.â€ť
Second, pushing everything at SAP into the cloud allows many different customers to share hardware â€” increasing the utilization of the hardware over its lifetime. Third, SAP has set high internal standards for more efficient programming â€” measuring kilowatt hours of energy needed per computation requirement. SAP designers must meet this energy-per-software standard in order to ship products.
Advice for other CSOs (and CSOs in training)
I asked Graf how CSOs can follow SAPâ€™s lead in the 3-legged stool of sustainability. â€śThe key,â€ť he says, â€śis to recognize what is material for long-term success. What do you need to pay attention to in order to lead your industry in 5-10 years? Itâ€™s different in every industry. For SAP, our life-blood is innovation, which means that biggest factor for success is employee engagement. That includes work-life balance, inspiring people, encouraging and supporting diversity, and other factors not traditionally associated with immediate value creation. The right thing to do is to motivate people to think outside of the box.â€ť
Graf concludes: â€śSustainability cannot just create a good business case; sustainability needs to create a better business case. For sustainability to matter, it needs to be at the core of how the company creates value. For retailer companies, thatâ€™s the supply chain. For oil and gas, refineries need to be more efficient. For software companies, research and development is key. Help your leadership team understand that a holistic sustainability strategy will help your business reduce risk, increase revenue, reduce costs, and improve the brand.”
Keynoter, author, and thought-leader Pamela J. Gordon wrote the book on Lean and Green for the tech industry, co-developed DfE Online ? the worldâ€™s foremost design-for-environment training, and formed the Executive Think Tank on Supply Chain for mapping a successful, responsible future for the tech industry.Â Since 1987, she has been CEO of Technology Forecasters Inc. (TFI), a strategic consulting firm helping tech companies thrive through best-practice supply chains and profitable sustainability.Â She was recently named among the Top 10 Women of Sustainability and appointed judge for CleanTech Open.Â Ms. Gordon is a prolific author (nearly 1,000 articles to date), popular keynoter, instructor at the University of California Berkeley Extension, and guest expert on radio/TV.
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