Reducing its greenhouse gas emissions by a mere 1 percent would have a positive impact of €5 million ($5.3 million) for SAP’s operating profit, according to the German software giant’s Integrated Report 2016.
Since 2014, SAP says it has documented the financial impact of four non-financial indicators. In its annual report, the company assess each indicator to see what a change of 1 percent would mean for its operating profit. For 2016, the non-financial indicators and their corresponding increase in operating profits are: Business Health Culture Index ($85 million to $95 million increase in operating profits), employee engagement ($48 million to 58 million), employee retention ($53 million to $64 million) and carbon emissions ($5 million)
“Documenting the financial impact of non-financial indicators helps us move closer to achieving our sustainability goals,” the report says. “Rather than simply stating the business case for social or environmental change, we now have the numbers to back it up.
“Moving forward, we are promoting the use of sustainability measures as a way to improve financial performance, both inside and outside of SAP. By embedding this approach into our decision making and quarterly business reviews, our sustainability performance steers our business along with factors such as revenue and cost.”
SAP’s Integrated Report discusses the company’s social, environmental and financial performance.
The enterprise software firm is among the 1,500 companies globally that publish integrated reports, linking financial and non-financial indicators and how they impact corporate performance, according to International Integrated Reporting Council (IIRC) chief executive Richard Howitt. Publishing an integrated report — as opposed to an annual report that only focuses on financial performance or a sustainability report that doesn’t link things like GHG emissions to profits — provides a more forward-looking, long-term view of a company’s performance, the IIRC says.
And while integrated reporting has been slow to take hold in the US, the IIRC has been collaborating with other reporting organizations to streamline the various corporate reporting frameworks and guidelines.
In January, the Global Reporting Initiative and the IIRC began working together to clarify how companies can use both the GRI Standards and the International <IR> Framework in their integrated reporting.
Through the 2017 GRI Corporate Leadership Group on integrated reporting, the two reporting organizations are working with reporting companies to show how their respective standards and framework can be used together “to provide insights into value creation across the six capitals and drive transparency.” These six capitals are: financial, manufactured, intellectual, human, social and relationship and natural.
It’s a much-needed collaboration as many companies struggle to navigate the sometimes confusing and duplicative disclosure landscape whereby numerous frameworks and standards exist.
But as corporations increasingly realize link between non-financial indicators like carbon footprint and financial performance, we expect to see more collaboration in reporting bodies’ futures and more companies embracing integrated reporting as the norm.