OpenSAP Sustainability Week 1 the Business Case for Sustainability

7/24/2019 OpenSAP Sustainability Week 1 the Business Case for Sustainability

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Week 1 Unit 1:

Welcome


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2014 SAP AG or an SAP affiliate company. All rights reserved 2Public

WelcomeObjective

We want to give you the tools to:

Articulate a sustainable strategy

for an organization.

Make the business case

for sustainability. Embed sustainable principles

in an organization.

Leverage IT to execute them.


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WelcomeWhy Does SAP Do This?

Were passionate about it.

Just like you.

Weve avoided260 million in

energy-related cost over five years.

Sustainability software has become

an important part of our business.

Weve had great successes and we

struggled.

Its time to share our learnings.


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WelcomeDefinitions of Sustainable Development (1/4)

Hans Carl von Carlowitz (1713)

Long-term, responsible use of

resources


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Brundtland Commission, UN (1987)

Meet the needs of the present without

compromising the ability of future

generations to meet their own needs.


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Hasna Vancock (2007)

A continually evolving process that

resolves the conflict between the

competing goals of economic

prosperity, environmental quality, and

social equity (paraphrased)

Profit

People Planet

Competing Goals?


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SAP (2009)

Balance short and long-term

profitability by holistically managing

economic, social, and environmental

risks and opportunities.

Profit

People Planetriple

Win

Triple bottom line



WelcomeWhy sustainability and innovation are connected

"We can't solve problems by using

the same kind of thinking we used

when we created them.

Albert Einstein



WelcomeThe Sustainability Challenge Inspires Innovation

Sustainability can help organizations:

Reduce risk

Enhance brand value

Reduce cost

Attract the best talent

Create competitive advantage

Tap into new markets

Remain relevant to investors

Launch new business models

Design Thinking



WelcomeCourse Structure

Weeks 1 through 6

Several videos and self-tests

One weekly assignment

( online test)

Online forum(collaborate, ask questions)

day of effort each week

Week 7

Final exam ( online test)

Record of Achievement Collect at least 50% of the total points

available in all online tests during the

course

Week 1

Business

Case for

Sustainability

Video 1

Video 2

Video n

Weekly assignment

Self test 1

Self test 2

Self test n

Week 7 Final Exam

Week 2 Sustainable Strategies

Week 3 Sustainable Processes

Week 4 Sustainable Processes

Week 5 Stakeholder Engagement

Week 2 Sustainable StrategiesWeek 6 Sustainability Reporting


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Thank you

Contact information:

[email protected]



2014 SAP AG or an SAP affiliate company.

All rights reserved.

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG or an

SAP affiliate company.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG

(or an SAP affiliate company) in Germany and other countries. Please see http://global12.sap.com/corporate-en/legal/copyright/index.epxfor additional

trademark information and notices.

Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.

National product specifications may vary.

These materials are provided by SAP AG or an SAP affiliate company for informational purposes only, without representation or warranty of any kind,

and SAP AG or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP AG or

SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and

services, if any. Nothing herein should be construed as constituting an additional warranty.

In particular, SAP AG or its aff iliated companies have no obligation to pursue any course of business outlined in this document or any related

presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAPAGs or its affiliated

companies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be

changed by SAP AG or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment,

promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertaintiesthat could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking

statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.
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Week 1 Unit 2:Root Causes



Root CausesIntroduction

Why such focus on sustainability?

Whats different now?

How does it impact business?



Root CausesPopulation Growth

Nine billion people by 2050

Size of the middle class triples

Impact

Urbanization Consumption catch-up

Resource scarcity

Geopolitical tensions over water, rareearths, oil, gas, and so on



Root CausesEconomic Growth

50% increase in energy consumption

by 2030

40% increase in price volatility of

commodities since 1990s

Impact

Economies grow faster than energyand resource efficiency gains

New energy technologies(fracking, solar, wind, biogas)

More conventional power plants

Climate change



Root CausesLinear Value Chains

From 1.3b tons today to 2.2b tons of

municipal solid waste by 2025

Only ~30% of resources are recycled

Impact

Supply at risk

Increased land use by landfills

Cost of $375 billion to manage wasteby 2025 (almost double from 2010)

5% of global greenhouse gasemissions caused by wastedecomposition


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Root CausesIncreased Risk Through Complexity

To satisfy demand, increasingly

risky practices are applied

Impact

Catastrophic events happen

Thousands of new environmentaland safety-related governmentregulations per annum (p.a.)

Cost and risk of compliance

Forced supplier transparency


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Root CausesUbiquitous Information Exchange

1+ billion people in social networks

1 billion smart phones by 2017

Impact

Everyones a news reporter News travels everywhere, instantly

Brands at risk

Consumer behavior changes(Lifestyle of Health and Sustainability)

Public awareness/NGO pressure

Employability


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Thank you


[email protected]


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No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG or anSAP affiliate company.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG(or an SAP affiliate company) in Germany and other countries. Please see http://global12.sap.com/corporate-en/legal/copyright/index.epxfor additionaltrademark information and notices.



These materials are provided by SAP AG or an SAP affiliate company for informational purposes only, without representation or warranty of any kind,and SAP AG or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP AG orSAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products andservices, if any. Nothing herein should be construed as constituting an additional warranty.

In particular, SAP AG or its aff iliated companies have no obligation to pursue any course of business outlined in this document or any relatedpresentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAPAGs or its affiliatedcompanies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may bechanged by SAP AG or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment,

promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertaintiesthat could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-lookingstatements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.


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Week 1 Unit 3:Sustainable Value Creation


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Sustainable Value CreationWhy CEOs Care About Sustainability

12%

15%

27%

38%

41%

47%

49%

69%

Investor/shareholder pressure

Impact on business (e.g., water, food,poverty, infrastructure)

Governmental/regulatory environment

Employee engagement and recruiting

Personal motivation

Consumer/customer demand

Potential for revenue growth/costreduction

Brand, trust, and reputation

Source: The UN Global Compact-Accenture CEO Study on Sustainability 2013


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Sustainable Value CreationNike

Early 1990s

Global negative TV footage on sweatshopsand child labor

Significant revenue loss

Company valuation cut in half

From compliance and risk focus to

opportunity for innovation

Established CSO

Seven principles Designs for the

Environment

Sustainable supply chain/waste reduction

Result

Back to No.1 athletic footwear maker

Highly ranked in sustainability indices

Frontrunner for sustainability initiatives


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Sustainability at the core of value creationWalmart

Early 2000s

30% stock price drop with new CEO

Growth falling behind competitors

Discrimination lawsuits

Cost of compliance violations

The turning point

Convinced member of founder family

Convergence with strategy analysis

Result

Global impact on billions of shoppers Democratized whole sustainability idea

Sustainability standard for suppliers

Big numbers with small measures

Significant margin contribution


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Sustainability at the core of value creationGeneral Electric

2004

Strong customer demand to considerenergy and ecology in six GE corebusinesses

Reduced innovation speed

GE research confirmed external trends

The difference: Jeff Immelt (CEO)

Understands dramatic change is required

Clear targets on growth and innovation

Result $20+ billion annual revenues from highly

profitable ecomagination products

Program catalyzes sustainable productdesign across all product lines

Staying ahead and influencing regulations


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Sustainable Value CreationBP

Early start

Beyond Petroleum rebranding in 2000

Increase in brand value and employability

NGO criticism (greenwashing) in 2005

Deepwater Horizon accident Damage to brand and revenue streams

Loss of 50% stock value in three months

Sales of parts of the business to pay forlegal consequences and cleanup

Implications Renewed focus on business risk and the

cost of compliance

Ongoing quest to increase resourceproductivity and value chain efficiency


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Sustainable Value CreationFive Leading Questions That Help Articulate Your Sustainable Strategy

What are our broad aspirationsand theconcrete goalsagainst which we canmeasure our progress?

Across the potential field available to us,

where will we playand not play?

In our chosen place to play, how will wewinagainst the competitors there?

What capabilitiesneed to be built andmaintainedto win in our chosen

manner?

What management systems arenecessary to operate, build, andmaintain the key capabilities?

Source: Roger Martin, HBR Blog Network, 2010

Transform SAP into

a sustainability

role model

Lead the market of

sustainabilitysoftware

For our

customers

In our own

company

Innovate

Sustainability

Help the world run better

and improve peoples life

Source: SAP, 2009


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Thank you


[email protected]


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In particular, SAP AG or its aff iliated companies have no obligation to pursue any course of business outlined in this document or any relatedpresentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAPAGs or its affiliatedcompanies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may bechanged by SAP AG or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment,

promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertaintiesthat could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-lookingstatements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.


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Week 1 Unit 4:

Engaging Top Management


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Engaging Top ManagementWhats the Trigger Point forAction?

Perception (intangibles)

Issues with PR, disasters or accidents,

talent acquisition, employee engagement

Purpose, policies, NGO dialogue, reporting

Profitability (revenue, cost) Declining revenues, lack of innovation,

shareholder pressure, compliance req.

Drive efficiency, invest in product or

process innovation

Prosperity (survival, long term risk)

Systemic industry challenges

Business model change, new markets


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Engaging Top ManagementYour To-Do-List Before Going for Management Approval (1/2)

1. Establish a sense of urgency

Perception, profitability, prosperity?

Analyze the status quo and future

implications on products, markets,

competitors, risks, trends, externalities,

stakeholder expectations Explain the consequences

(also of non-action)

2. Create the guiding coalition

Educatefact based

Include CEO influencers

Use existing movements and expertise

Source: Leading change, J.P. Kotter


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Engaging Top ManagementYour To-Do-List Before Going for Management Approval (2/2)

3. Develop a vision and strategy

A bigger purpose

Size the opportunity

Outline the risks

Project impact on

business model

product portfolio

triple bottom line

shareholder value

brand,

4. Empower broad-based action Organizational set up, skills

Financial needs (budgets, M&A)

Milestones, targets, communication plan



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Engaging Top ManagementTips and Tricks

Once you have approval

Communicate the change vision

Generate short-term wins

Use wins to produce more change

Anchor new approaches in the culture

Timing is everything

New CEO

Company crisis

Compelling industry event

Document decisions thoroughly Management changes over time



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Thank you


[email protected]


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No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG or an

SAP affiliate company.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG

(or an SAP affiliate company) in Germany and other countries. Please see http://global12.sap.com/corporate-en/legal/copyright/index.epxfor additional

trademark information and notices.



These materials are provided by SAP AG or an SAP affiliate company for informational purposes only, without representation or warranty of any kind,

and SAP AG or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP AG or

SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and

services, if any. Nothing herein should be construed as constituting an additional warranty.

In particular, SAP AG or its aff iliated companies have no obligation to pursue any course of business outlined in this document or any related

presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAPAGs or its affiliated

companies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be

changed by SAP AG or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment,

promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertaintiesthat could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking

statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.


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Week 1 Unit 5:Organizational Setup for

Sustainability


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Organizational Setup for SustainabilityOrganizational Structures Usually Change Over Time

Line or staff organization

Central decisions

Influence from the top

Lack of reach in big company

Matrix organization Bilateral decisions

Embed sustainability in company

Potential conflict, misalignment

Networked organization

Collaborative decisions

Great reach even in big company

Hard to gain traction


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Organizational Setup for SustainabilityThe Sustainability Organization

Build the business case for

sustainability (initiatives).

Engage stakeholders within and

outside the company.

Embed sustainability into the corebusiness.

Withstand short-term business

pressure and perceived conflicts.

Stay lean and evolve over time.


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Organizational Setup for SustainabilityYou Will Also Need

Champions network

Dedicated internal multipliers

Embrace grassroots efforts

Advisory council

Investors, customers, academia,NGOs, partners, regulators,employees

New talent

Attract newly required expertise


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Organizational Setup for SustainabilityBudgets

Biggest sustainability core team budget needs

Personnel (core team < 20 people)

Strategic initiatives(renewable energy, electric vehicles (EVs), telepresence, education, )

Donations (0.6% - 1% of earnings before interest and tax (EBIT))

Report creation, publication (+/- $500k)

Earmark budget in other teams

Research, development, design

Procurement

Production and logistics Marketing, communication and

sales/service

...


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Organizational Setup for SustainabilityMost Common Mistakes

Lack of management support

CEO committed, management engaged?

Not placed at the core of value creation

Into which organization do you report?

Unclear objectives

Targets for your team?

Targets for other lines of business?

Unclear competencies

Which decisions and policies do you own?

Missing budgets

Youll need to increase investmentto capture the full returns over time


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Thank you


[email protected]


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In particular, SAP AG or its aff iliated companies have no obligation to pursue any course of business outlined in this document or any relatedpresentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAPAGs or its affiliatedcompanies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may bechanged by SAP AG or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment,promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertaintiesthat could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-lookingstatements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.


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Week 1 Unit 6:The Role of IT


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The Role of ITTwo Perspectives

IT = problem

Energy (2.3% of global consumption)

Rare earth elements

Recycling, e-waste

Digital divide

IT = solution

Global platform for awareness, action

More transparent, efficient, andtransformed business practices

More inclusive business models(shared value)

Reduced environmental impact ($1.86trillion global savings [today-2020])

Example: Emissions in 2020 [GtCO2e]

Globalemissions

55

IT causedemissions

1.3

Global ITabatement

potential9.1

Source: Global e-Sustainability Initiative (GeSI), Smarter 2020


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The Role of ITThe Problems

Energy consumption

+3.8% per annum (2011-2020)

30 Petawatt hours in 2020 (2.3% total)

Rare earth elements

IT sector growth > 8% p.a. Price volatility due to lack of supply

E-waste, toxicity

20-50 million tons e-waste (global 2011)

80% of electronics go to landfill/incineration

2% of US trash, but 70% of toxic waste

Digital divide

Increasing economic inequality

Exclusive information access

Source: Gartner, IDC, GeSI, EPA, Electronics TakeBack Coalition


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The Role of ITEconomics: Enterprise Resource Planning (ERP)

Software system to manage

all resources, information,

and functions of a business

Process automation

Real-time transparency

Efficient cash management Optimized inventories and

logistics

More seamless operations

Inherent compliance

Works with other systems Customer relationship

management

Supplier networks

Analytics,

Team 007

Team 38

Team 19

Team 44

Team 23

Team 73

Team 31

Team 15

Team 34

Team 47

LoB 1 Org Unit ...

Source: Wikipedia


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The Role of ITEnvironmental: Emission Abatement Potential of IT

Transformation

Substitute a product or process by a lessresource intense alternative

E.g. dematerialization (vinyl, CD, iTunes)

Efficiency

Optimize an existing process to achievebetter results with fewer resources.

E.g. route optimization, simulation,analysis,

Transparency

Data collection and communication

E.g. usage reports

AbatementPotential[GtC

O2e]

Transparency 2.3

Efficiency 4.1

Transformation 2.8

Total (2020) 9,1

Courtesy: GeSI Smarter2020
http://gesi.org/SMARTer2020http://gesi.org/SMARTer2020http://gesi.org/SMARTer2020http://gesi.org/SMARTer2020


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The Role of ITSocial: IT Empowers Local Communities

Shea nuts

Resource of food and cosmetics industries

Source of family income

No demand and price transparency

Involved parties 10,000+ Nut-collecting women

Wholesale, consumer products

StarShea Inc. (Social business)

Impact

Income increase of rural women Fair price through demand transparency

Reliable , fair trade nut supply

Source: www.starshea.com

Connectivity

Transactions


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The Role of ITSolutions for Sustainable Business

Sustainable Design

Sustainable Sourcing and

Procurement

Sustainable Manufacturing

Sustainable Logistics

Sustainable Consumption

Sustainable End-of-Life Processes

powered by

big data, cloud, mobile and social

innovations

Design

Source

ProduceStore

& Ship

Sell &Use

Recycle

All resources

All people

Across the

value chain

Source: McKinsey, 2011: Big data: The next frontier for innovation, competition, and productivity


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Thank you


[email protected]

2014 SAP AG SAP ffili t


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In particular, SAP AG or its aff iliated companies have no obligation to pursue any course of business outlined in this document or any relatedpresentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAPAGs or its affiliatedcompanies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may bechanged by SAP AG or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment,promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties

that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-lookingstatements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.

Documents

OpenSAP Sustainability Week 1 the Business Case for Sustainability