OpenSAP Sbi1 Week 2 Sustainable Strategies

Week 2 Unit 1:
Crafting a Sustainable Strategy

Go for a Sustainable Strategy, Not a Sustainability Strategy
Sustainability Strategy
Sustainable Strategy
Optimize environmental and social aspects in

parallel to other, strategic business priorities.
Manage financial, environmental, and social

aspects across all strategic priorities.
Here, sustainability is often seen as in conflict

with short-term financial goals.
Here, sustainability is understood as a driver

of the long-term success of the business.
Financial
Financial
Social
Environmental
2014 SAP AG or an SAP affiliate company. All rights reserved
Triple
Win
Social
Environmental
Public

Focus Sustainability Toward the Core of How a Company Creates Value
Where to focus as a:
Utility
Consumer products company
Retailer
Manufacturer
Software company
Hint
Where is the biggest financial, economic,
and social impact?
Public

Its a Journey, Not an Event
Sustainable Strategy Journey
Materiality and feedback
Identify and recruit stakeholders
Assess materiality
Maintain ongoing dialogue
Report
Publish report
Localize reporting
Conduct outreach
Set
Targets
Assure
Analyze &
Benchmark
Materiality &
Feedback
Implement
Initiatives
Execute
Assure
Aggregate data, author report
Verify results with 3rd party
Assurance statement
Report
Adjust
Strategy
Measure
Performance
Operate Across
Business Networks
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Evolve, no Revolution
Analyze and benchmark
Analyze performance
Benchmark against peers
Determine risks and opportunities
Set targets
Set KPIs
Assign responsibilities
Cascade objectives
Assure
Set
Targets
Materiality &
Feedback
Implement
Initiatives
Analyze &
Benchmark
Execute
Adjust strategy
Set strategic priorities
Build the business case
When approved, plan execution
Report
Adjust
Strategy
Measure
Performance
Operate Across
Business Networks
Public

Execute Processes
Implement initiatives
Align resources
Manage change
Set controls
Measure performance
Collect data
(quantitative, qualitative)
Identify plan deviations
Create remediation activities
Adjust
Strategy
Set
Targets
Assure
Materiality &
Feedback
Analyze &
Benchmark
Implement
Initiatives
Execute
Operate across business networks

Share information with partners
Collaborate for better solutions
Report
Measure
Performance
Operate Across
Business Networks
Public

Tips and Tricks
No revolution
Catalyze, enhance, or complement existing
business strategy
Evolve over time

Learn how to write good business cases
Ongoing engagement
Build strong engagement mechanisms
Over-communicate
Corporate profile
Web presence
Strategy documents
Onboarding and education
Public
Thank you
Contact information:
open@sap.com
2014 SAP AG or an SAP affiliate company.

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Week 2 Unit 2:
Stakeholders and Materiality

Materiality
History in financial reporting

Cant leave material information out or
misstate it w/o influencing user decisions
Applied to sustainability
Who is the user?
Investors who broaden their scope
(International Integrated Reporting
Council: IIRC)
Regulators who broaden their view on
whats material (Sustainability
Accounting Standards Board: SASB)
All stakeholders
(Global Reporting Initiative: GRI)
Source: KPMG, Green to Gold, IIRC, GRI

Public

Materiality Assessment
Understand the relative importance
of specific economic, environmental,
social and governance issues.
Workshop with C-suite & board of directors
to develop an inventory of material issues
Step 2
Use inventory to formulate a set of questions
to survey external and internal stakeholders
Step 3
Analyze the data. Summarize in a matrix that
contrasts the stakeholders perspectives.
Importance to stakeholders
Step 1
Materiality Matrix
Step 4
Link reporting (ESG and financials) to
strategy and operations.
Importance to business
Source: KPMG, IIRC, GRI, SASB, BSR

Public

Spider Web Approach to Materiality The Best of All Worlds?
Deliver strategy
Deliver
Strategy
aka importance to business
Stakeholder expectations
aka importance to stakeholders
Create value
Impact on financial, manufactured,
human, social & relationship, intellectual,
and natural value creation
(IIRC inspired)
Stakeholder
Expectations
Create
Value
Disruption potential
Potential to deliver positive or negative
disruptions to society or environment
(GRI inspired)
Disruption
Potential
Source: KPMG, IIRC, GRI, SASB, BSR

Public

Stakeholder Groups and Their Relevance to Companies (1/2)
Management
Short and long term company success
Investors & risk assessors

Stock price
Consumers and customers

Secure revenue and growth
Suppliers and partners

Risk and cost reduction
Employees
Engagement, change management
Legislators
License to operate
Public

Stakeholder Groups and Their Relevance to Companies (2/2)
Communities
Social license to operate
Opinion leaders, NGOs

Reputation
Academics, thought leaders

Innovation
Public

Stakeholder Prioritization
Relevance to the organization
Ability to engage
Willingness to engage
Existing relationship
Cultural context and perspectives
Capacity to engage
High
Ability to engage
Level of influence
Knowledge associated with the purpose
and scope
Necessity of involvement
Geographical scale
Legitimacy
Communicate
Engage
Inform
Communicate
Low
Low
Relevance to the organization
High
Source: KPMG, Green to Gold, IIRC, GRI

Public

AccountAbility's Stakeholder Engagement Standard (AA1000 SES)
Objective
Relationship of equals
Open and transparent dialogue
Better business, better triple bottom line
Key principles
Clearly define the scope

Agreed decision making process
Focus on material issues
Create opportunities for dialogue
Be integral to organizational governance
Transparency
Process appropriate to the stakeholders
engaged
Be timely; flexible and responsive.
Public
Thank you
open@sap.com

Public
10
Week 2 Unit 3:
Analysis and Target Setting

Achieving an Objective Requires SMART Target Setting
Specific
What exactly?
Measurable
How to measure?
Attainable
Can it be done?
Relevant
Does it matter?
Time-bound
By when?
Public

Specific Targets: Types of Targets
Relative target
Reduce emissions per
, $ revenue
m2, sq ft production space
employee
kWh electricity or kg
product produced
by 5% per year.
Absolute target
Cut emissions to the
level of 2000 by 2020.
Cut emissions to 336 kt
of CO2e by 2020.
Re-baseline
Source: SAP Integrated Report 2012
Public

Specific Targets: When to Chose Which Type of Target
Relative target
Absolute target
The low risk way to go

The credible way to go
May trend positively even if business growth Decouple business growth from negative
impacts environment or society negatively
environmental or social impact
50% reduction of emissions

per revenue since 2007
20% reduction of
emissions since 2007
Source: SAP Integrated Report, 2012

Public

Measurable Targets: Sustainability Performance Management
Note: More on measuring, cascading, aggregating, and reporting targets in week 6

Public

Attainable Targets: Elements to Consider in Simulations and Projections
Growth
SAPs carbon reduction target options (2008)
Macroeconomic and industry growth

Competitive position, M&A
Efficiency
Technology improvements
Alternative materials or suppliers
Business process improvements
Engagement
Management, employees, and customers
Alternatives to achieve the target

Carbon offsets and renewable energy
Business model changes

See unit 6 Examples of Transformational
Innovation
Public

Relevant Targets: Focus on the Past or the Future?
Relevant targets focus on material

issues. You need both:
Revenue Growth
Margin Expansion
Customer Success
Employee Engagement
1. Backward-looking indicators
Revenue*
Margin
Incidents
2. Forward-looking indicators
Customer success
Employee engagement
Diversity rates, e.g., women in
management
Brand value
* Unless revenue is subscription, maintenance,
leasing, long-term rental, or similar
Public

Time-Bound Targets
Most people overestimate what

they can do in one year and
underestimate what they can do
in ten years.
Bill Gates
Sustainability leaders set both

short- and long-term goals
4% reduction of emissions
year over year.
Reduce emissions to the
level of 2000 by 2020.
Public
Thank you
open@sap.com

Public
10
Week 2 Unit 4:
Examples of Environmentally
Driven Initiatives
Examples of Environmentally Driven Initiatives

Greenhouse Gas Protocol
Direct emissions (Scope 1)
Indirect emissions (Scopes 2 and 3)
Measure
Full operational control
Full responsibility for reduction
Calculation/estimate
Limited control
Shared responsibility for reduction
Source: GHG Protocol Corporate Standard

Public

SAP Carbon Target
Reduce emissions back to the level of

2000 by 2020
Corporate cars and jets
Printing
Building direct energy
Building electricity
Data center electricity
Employee commuting
Travel
SAP Target Relevant Emissions 2012
Public

Reduce Emissions from Cars: Counter the Effects of Workforce Growth
Transparency and engagement

Commuting survey, commuting dashboard
Efficiency
Emission cap
Eco-bonus
Company car without gas card
Transformation
EVs powered by renewables

Carpooling
Bus, bike, walk
Work from home
Own production of offsets
(Livelihoods Fund)
Several pictures to illustrate projects

on the left
Public

Reduce Emissions from Printing: 30% in Three Years
Transparency and engagement

Story, targets, call to action, role models
Internal quarterly reporting
Efficiency
From 7 to 17 people per printer
Double-sided, black and white default
PIN to start printing
Transformation
100% recycled paper
Digital devices replace paper
SAP Printing Tracker, Corporate Intranet

Public

Why Becoming the Green Cloud Leader Addresses 82% of Emissions
SAP total 2012 GHG emissions by source (6.8 megatons CO2e)

Use of Sold Products
Downstream distribution
Waste generated and water consumed
Fuel- and Energy-Related Activities
Capital Goods
Scope 3 (96%)
Purchased Goods & Services

Employee commuting
Business travel
Electricity for facilities and data centers
Scope 2 (2%)
Corporate cars
Buildings direct energy (heating, )
Scope 1 (2%)
Corporate jets
Public

Reduce Emissions of Product in Use: Become the Green Cloud Leader
Efficiency
In-memory computing
(chips need less energy than disks)
Architecture simplification
Transformation
Cloud computing
(customer emissions become our
emissions)
100% renewable electricity in all SAP
facilities and data centers
Several pictures to illustrate projects

on the left
Public
Thank you
open@sap.com

Public
Week 2 Unit 5:
Examples of Socially Driven
Initiatives
Examples of Socially Driven Initiatives

Socially Driven = People Driven
People inside the organization

Traditionally focus of HR
Focus on health, diversity,
demographic change
Covered in week 4 of the course
People outside the organization
Often Social Responsibility
Align with corporate strategy
Must add to long term value creation
Measure impact?
Example: Software company
Focus on education, entrepreneurship
Leverage IT, talent, business
relationships and capital
Public

The Value of IT in Social Responsibility Initiatives
Drive sustainable growth

Apply best business practices to help GDP
Participate in global value chains
Information access and sharing

E-learning and education
People empowerment, e.g. social media
Transparency of political processes
Remote services
Consumption, e.g. tele-medicine
Provisioning, e.g. remote consulting
Orchestrate and support international

aid or disaster relief strategies
Manage logistics, optimize results
Source: BMZ, IKT - Schlsseltechnologien fr eine nachhaltige Entwicklung, BMZ Strategiepapier 2/2013
Public

Standard Chartered Inclusive Banking Initiative in South Africa
Business process transformation

Retailers and access agents offering
banking services to rural population
People affected
Market Access
10 Mio. people in South Africa who have

no access to basic banking services
Business impact
Open accounts anywhere in the country
in < 10 minutes using mobile phones
A safe place to put savings
7000 new bank accounts and new
customers in a day
Access to loans in a few minutes
Inclusion
Mobile
Cloud
Public

StarShea Ltd. in Ghana
Supply chain transformation

Connecting rural women to international
markets
IT, education, and microfinancing
Transparency
People affected
10,000+ women (plus families in Ghana)
65,000 SAP employees
Social
Responsibility
Business model
Social business vs. donation based

Self-sustaining vs. dependency
Education, micro-finance, and IT based
4th largest provider of handcrafted shea
butter (not 3rd largest!)
Mobile
Cloud
Public

eLife in Barranquilla, Columbia
Education transformation
Inspiring teenage girls to gain the financial
know-how, self-confidence, communication
skills, and entrepreneurial acumen
Activities-based learning
Scholarships
People affected
200 girls today, 5,000+ in the future
87% increased ideas and self-confidence
Improved grades and school attendance
Software training
Mentorship
Business model
Seed funding for a multi-year project
Online training
Public
Thank you
open@sap.com

Public
Week 2 Unit 6:
Examples of Transformational
Innovation
Examples of Transformational Innovation

How Industries Change
Tactical
Comply with legal or supply chain
requirements and reduce risk
IT: Automation through applications
Opportunistic
Minimize input or maximize output of
existing practices
IT: Efficiency through analytics
Strategic
Revolutionize practices and outcomes
IT: Transformation across industries
through big data, mobile, social, and cloud
Public

Laggards Get Lost on the Road to Transformational Innovation
From physical copies of music,

books, and movies to download
From film to digital photography
From flying to Telepresence
From downtown to online shopping
From selling goods to selling services
Public

Example: From Selling Cars to Selling Mobility
Situation
60% better consumption per car than 1970
Complication
Four times more cars than 1970
Less car sales to young people in saturated
car markets
Sensoring, maps
Machine-to-machine
connectivity
Transformation
New business model: Sell mobility, not cars
Cross-industry collaboration: OEMs, rental,
oil and gas, utilities, retail, insurance
Competitiveness, customer loyalty
Fewer cars and less emissions (EVs)
Transactions
Cloud, big data,
mobile
Public

Example: From Selling Agro-Chemicals to Selling Sustainable Farming
Situation
Over-fertilized farmland
Shrinking fertile farmland
Water scarcity issues
Prognosis
Complication
Population growth
Changing dietary habits
Must double food production by 2030
Connectivity
Maps
Transformation
One-stop-shop services for farmers

How to fertilize, irrigate and protect crops
Form agro-platforms (tight engagement)
Report and sell value chain
environmental footprint to consumers
Compliance
Source: Emmott, 10 Billion, 2013

Public

Example: From Producing Energy to Orchestrating Energy Consumption
Situation
Deregulation of energy markets
Significant investment in conventional
power plants
Simulation
Complication
Distributed, renewable power generation
Stricter regulation
Growing energy demand and volatile prices
for fossil fuel
Connectivity
Demand Supply
Match
Transformation
Real-time energy demand and supply
matching (smart grid)
Expand into new energy services (EVs,
storage, remote on/off) or micro-grids
Less expensive stand-by power for peaks
Compliance
Public

Example: From Serving Citizens to Orchestrating Innovation
Situation
Air pollution
Congestion
Energy cost
Transparency
Complication
Accelerating urbanization
Innovation without disruption
Transformation(s)
Intelligent traffic and mobility concepts
(multi-model transport)
Public safety through citizen participation
(via devices connected to central office)
Smart garbage collection (machine-tomachine connectivity, which bin is full?),
Connectivity
Digital Innovation
Compliance
Public

Tips and Tricks
Transformation is often driven by

adjacent industries or startups.
Business model innovation is at its
core. Technology alone doesnt do it.
Understand the needs of the next
generation(s), millennials.
Public
Thank you
open@sap.com

Public
10

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Week 2 Unit 1:

Crafting a Sustainable Strategy

Crafting a Sustainable Strategy

Optimize environmental and social aspects in

Manage financial, environmental, and social

Here, sustainability is often seen as in conflict

Here, sustainability is understood as a driver

2014 SAP AG or an SAP affiliate company. All rights reserved

Crafting a Sustainable Strategy

2014 SAP AG or an SAP affiliate company. All rights reserved

Crafting a Sustainable Strategy

2014 SAP AG or an SAP affiliate company. All rights reserved

Crafting a Sustainable Strategy

2014 SAP AG or an SAP affiliate company. All rights reserved

Crafting a Sustainable Strategy

2014 SAP AG or an SAP affiliate company. All rights reserved

Operate across business networks

Crafting a Sustainable Strategy

Evolve over time

2014 SAP AG or an SAP affiliate company. All rights reserved

2014 SAP AG or an SAP affiliate company.

2014 SAP AG or an SAP affiliate company. All rights reserved

Stakeholders and Materiality

History in financial reporting

Source: KPMG, Green to Gold, IIRC, GRI

Stakeholders and Materiality

Source: KPMG, IIRC, GRI, SASB, BSR

Stakeholders and Materiality

aka importance to business

Source: KPMG, IIRC, GRI, SASB, BSR

Stakeholders and Materiality

Investors & risk assessors

Consumers and customers

Suppliers and partners

2014 SAP AG or an SAP affiliate company. All rights reserved

Stakeholders and Materiality

Opinion leaders, NGOs

Academics, thought leaders

2014 SAP AG or an SAP affiliate company. All rights reserved

Stakeholders and Materiality

Relevance to the organization

Relevance to the organization

Source: KPMG, Green to Gold, IIRC, GRI

Stakeholders and Materiality

Clearly define the scope

2014 SAP AG or an SAP affiliate company. All rights reserved

2014 SAP AG or an SAP affiliate company.

2014 SAP AG or an SAP affiliate company. All rights reserved

Analysis and Target Setting

2014 SAP AG or an SAP affiliate company. All rights reserved

Analysis and Target Setting

Analysis and Target Setting

The low risk way to go

50% reduction of emissions

Source: SAP Integrated Report, 2012

Analysis and Target Setting

Note: More on measuring, cascading, aggregating, and reporting targets in week 6

Analysis and Target Setting

SAPs carbon reduction target options (2008)

Macroeconomic and industry growth

Alternatives to achieve the target

Business model changes

Analysis and Target Setting

Relevant targets focus on material