The business roadmap to sustainability: The role of information technology

Doing the work associated with the next loop of the sustainability roadmap helps organizations expose weaknesses in their data quality and processes and establish a strong foundation for sustainability performance moving forward. Analyze and Benchmark Once the sustainability initiative has been modeled, analyzed, and vetted, the current state of the company’s execution must be benchmarked against its priorities. If the priority is carbon reduction, for example, the organization would establish its current carbon emissions rate.

This process involves four steps: 1. Review of systems, processes, and internal controls for the collection and aggregation of the qualitative and quantitative information needed to establish the benchmark. One needs to know the quality of data to be confident in one’s calculation. 2. Collection of the information from enterprise systems. Most of the benchmarking information needed to establish SAP’s carbon benchmark, for example—with the exception of employee commuting information, which were the object of a specific survey—resided within the company’s enterprise software systems.

With strong business applications, an organization should have data such as utility bills, flight information, and even company car fuel expenditures down to the employee level. In addition, business applications can help integrate this information to make it more useful.Although spreadsheets on utility bills and car fleets may provide a reasonable rate of carbon emission, they would convey nothing about the opportunities for cost reduction and optimization.

To get that information, one needs integration of data—to be able to mine it and see, for example, that 10 percent of employees are producing 80 percent of carbon emissions.Although this stage is benchmarking, to optimize performance later on, a high level of granularity of data will be needed. 3. When measuring carbon, one would have to provide data at the granularity of the three agreed-upon scopes of emissions. Scope 1 measures how much emissions a company produces in its own assets, such as in the corporate car fleet. Scope 2 relates to energy the company consumes, for example from a utility. Scope 3 relates to supply chain emissions.

At SAP, Scope 3 includes business travel and employee commuting other than with a company car.An important design principle for Scope 3 is deciding what emissions sources to report.The dialogue involves understanding the impact in one’s value chain. 4. Finally, knowing peers’ benchmarks will help an organization inform its targets. Initiatives exposing data can help. One such initiative is the consortium of Accenture, Microsoft, and SAP that was formed to support the Carbon Disclosure Project expose its wealth of voluntarily reported carbon data along multiple dimensions, including geography, industry, and even carbon intensity per dollar of revenue.

The process of mining information and analyzing processes provides another opportunity as well, by revealing areas in which processes are weak and there is potential for improvement. A recent study conducted by a leading beverage company examined the carbon footprint, grove to glass, of its orange juice production.1

The survey revealed that the biggest element affecting the total carbon footprint of the juice over its production life cycle was not distribution, cooling, or packaging, but fertilizer. Fertilizer production and application accounted for 58 percent of the greenhouse gas emissions in the product’s life cycle. The company found that if it helped farmers use fertilizer more responsibly, it could reduce both its product carbon footprint and production cost. Clearly, analysis is critical and the resulting insight can be very fruitful, and yet this is the step in which most organizations fumble.

Finally

Many companies miss the opportunity to create an overarching management system to identify risks and opportunities and maximize sustainability investment. Others are hampered by information and data spread across many people and systems.The result is a proliferation of manually intensive and errorprone spreadsheets. One role that business applications can play is to help organizations set up a system to automate processes that drive sustainability, extract operational data from these processes, translate the information into financial impact for the organization, and use this insight to fine-tune operations.

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