This is, in fact, the conclusion of my blog series “Integration aspects in Sustainability Reporting” series. I even thought of naming it as “Integration aspects in Sustainability Reporting – Conclusion”.
But by naming it that way, will mandate people to read all the previous blogs, which is time consuming, and which is not a prerequisite; and hence I have named it this way. But for getting more clarity, it would be highly recommended to read the same, which is given in the reference section here.
In this blog, I just want to analyze the KPIs and the key modules required to report them. There is a total of 79 KPIs in GRI framework, with 30 KPIs in Environment, 14 in Labor practice, 9 in Economic, Product Responsibility and Human rights each; and 8 in Society KPI.
I have left the 30 KPIs in Environment, which has major integration to EHS module, on which I hope somebody else, with proper expertise, will come up with blogs. This leaves 49 KPIs, which has been analyzed in the “Integration Aspects of Sustainability Reporting”. In “Integration Aspects of Sustainability Reporting”, each and every KPI is taken and analyzed as to how this can be reported from the existing SAP modules. An analysis of the SAP modules and the list of KPIs that can be reported from them, grouped together, are presented here.
Out of these 49 KPIs, nearly 16 KPIs can be reported from the SAP HCM module. How this can be achieved is explained in “Integration Aspects of Sustainability Reporting”. They are the following:
EC3 Coverage of the organization’s defined benefit plan obligations.
LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.
LA1 Total workforce by employment type, employment contract, and region.
LA2 Total number and rate of employee turnover by age group, gender, and region.
LA12 Percentage of employees receiving regular performance and career development reviews.
LA14 Ratio of basic salary of men to women by employee category.
EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.
LA4 Percentage of employees covered by collective bargaining agreements.
LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.
HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.
LA10 Average hours of training per year per employee by employee category.
HR4 Total number of incidents of discrimination and actions taken.
SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures.
HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.
EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.
HR9 Total number of incidents of violations involving rights of indigenous people and actions taken.
Next in Significance is the 12 Qualitative KPIs, which is a sort of disclosures on the programs, policies and procedures in place to safeguard the interest of the labour and the community near the Industry. Even in this 12, there are some, which has integration point to HCM Module. These KPIs are given below:
LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.
LA5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.
PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.
EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.
EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts.
LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.
LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.
HR6 Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.
HR7 Operations identified as having significant risk for incidents of forced or compulsory labor, and measures taken to contribute to the elimination of forced or compulsory labor.
SO5 Public policy positions and participation in public policy development and lobbying.
SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.
HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.
SAP Finance (FI) module comes next in importance with 8 KPIs belonging to it. These are given below:
EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.
PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services
HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening.
EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change.
SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.
SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.
EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.
EC4 Significant financial assistance received from government.
6 KPIs can be reported using Records and Case Management (RCM) or perhaps by using Solution Manager – Incidence Management in combination with manual data collection. The important fact to be noted here is, Solution manager comes free bundled with ECC license cost. Hence the suggestion for the Solution manager based approach. The KPI’s are as follows:
SO4 Actions taken in responseto incidents of corruption.
SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.
LA9 Health and safety topics covered in formal agreements with trade unions.Health and safety topics covered in formal agreements with trade unions.
PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services, by type of outcomes.
PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.
PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes.
3 KPI can be reported by enhancing the master data in MM and PP module. Vendor, Product and service master data needs to be enhanced. These KPI are,
HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken.
PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.
PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.
We are now left with 4 more KPIs.
PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.
PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.
LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities by region.
SO2 Percentage and total number of business units analyzed for risks related to corruption.
First one, PR5 can be reported through standard BW query; 2nd one PR8 from CRM sub-module Agency Complaint; 3rd one LA7 by EHS module; and last one SO2 through Risk Management or perhaps manually.
The following Pie-chart illustrates the discussion pictorially.
Note: 30 Environmental KPIs have not been included in the analysis.
From the Pie chart, we can easily see that more than 50% KPIs are covered by HCM and Qualitative KPI. If we include FI module also, it comes to nearly 75%. Leaving the Environment KPIs, nearly 75% of KPIs are covered by just 2 modules namely HCM and FI; and of course another 12 are qualitative one.
So the point I want to convey is, by properly leveraging the SAP delivered reports, and if required, going for enhancements and customization, any small or mid-sized organization can come up with its own Sustainability Report. This of course needs to be planned and implemented, when the organization is going for a functional upgrade to ECC 6 or for any green field implementation. This is especially true for small and mid-sized organizations, where they can leverages HCM and FI module extensively for its Sustainability Reporting, in addition to their day-to-day operation. For automation or semi-automation of the data collection, especially in qualitative KPI’s, and few other KPIs in Environment, SuPM module could very well be employed.
I am not sure but guess that with 49 KPIs being reported, an organization must be in a position to get A or A+ certified.
While Sustainability Reporting is possible using the existing modules, this does not mean that Sustainability Solution is not required. For large organizations spread across the globe, which is trying to track its KPIs, improve and optimize the processes, Sustainability Solution is a must. As an example, a large organization trying to reduce its carbon emissions in its supply chain definitely needs Supply Chain Performance Management (SCPM) module. First, they need to figure out where there is major emission, whether, it is in the production, personal foot print, recycling process, travel etc. This is where SAP Sustainability Solution pitches in. SAP Sustainability Solution gives a detailed, holistic view on the Sustainability related footprints.
Well, with this I conclude my blogging activity in Sustainability Area. If time permits, I plan to come back with some blogs in SAP BI, BO Area.
Please refer all my blogs on the “Integration Aspects of Sustainability Reporting”.
Acknowledgement: Author would like to thank his previous employer ITC Infotech, where he wrote the majority of the blogs on which the present blog is based upon.
Disclaimer: The opinions expressed in this blog are purely my personal opinions and has no legal liability on my previous or present employer, their subsidiaries, affiliates or parent organization.