Sustainability for SMEs
Are small and mid-sized companies (SME) equally engaged as large multinationals in exploring opportunities in becoming sustainable? How does the SAP sustainability portfolio support SMEs? I was looking for these answers and when I joined a webinar from SAP titled “Sustainability Is the Next Digital Frontier”, I listened to Monique Ventura (sustainability expert, SAP partner ecosystem success) speaking passionately about sustainability and I thought that she can help to find answers for my questions. So I asked her for a chat. Read below what I learned from her.
Many Small and Medium Sized Enterprises (SME) sometimes don’t feel the pressure yet to make bigger investment in sustainability. What do you think about it?
The pressure is growing fast for SMEs from multiple angles:
- If they sell to end consumers, they face the expectation of the customers to have transparency into the environmental impact of the product, because consumers are growingly eco-conscious. We even see that eco-friendly brands perform better nowadays.
- If they sell to other businesses, then they are part of the supply chain of their customer. Big companies make commitments to become carbon neutral or even negative and in this race they have to make sure that their suppliers are sustainable too. Some big companies even request their suppliers to give emission data in their invoices.
- Regulators are introducing tougher controls. For example, in Germany or France the rules are already strict and we can surely expect it in other countries too. COP26 will certainly accelerate this process. SMEs can’t ignore this trend and they better get prepared. It’s a fundamental business risk which has to be managed. Good example for risks is climate change, which results in supply chain and production issues. The companies which manage these risks well, can have a competitive advantage from it.
- Young talents are each time more conscious about sustainability, which means for SMEs that their approach for sustainability has a big impact on their recruitment potential too.
- Investors put growing emphasis on sustainability practices.
Which part of SAP’s Sustainability Portfolio would you recommend for SMEs?
SAP has a comprehensive portfolio, an End to End portfolio that enables customers from different industries to set their priorities and start their sustainability journey as they decide to. SAP helps companies to become good corporate organizations. But sustainability should not be only handled as a CSR (Corporate Social Responsibility) topic, but it should become part of their core business, becoming part of their DNA, directly embedded into their operational processes such as procurement, manufacturing, human resource management, facilities, sales etc.
SAP foresees the role for the partners to position the portfolio to customers and guide them on their journey based on industry specifics, strategy, upcoming challenges, expectations and business priorities.
What do you recommend for SMEs how to get started?
SAP’s portfolio is based on 3 pillars:
- Zero Emissions with Climate Action
- Zero Waste with Circular Economy
- Zero Inequality / Social Responsibility
As explained above, how to get started really depends on various factors, but there is certainly a logical starting point, which could work for many companies. From the 3 pillars SAP covers, tackling inequality is a good starting point. This means companies should ensure decent quality of work, respect gender, provide equal salaries, etc. SuccessFactors obviously can play a role here, but SAP Environment, Health, and Safety (EHS) Management too. In some industries climate change will need to reconsider workforce protection. Construction is a good example. At same level of priority, SAP considers that climate change is a collective priority we all need to face and commit to launch actions to reduce our footprint. SAP can support organizations in collecting, measuring and reduce our eCO2 emissions.
How big is the implementation effort?
It really depends on the angle customers take, but typically we are not talking about projects of many months if we manage priorities and set realistic goals in a time frame. Our advice is to start from the complete view, do an assessment and identify the area which is the best starting point. It’s a good idea to start with a couple of KPIs and extend it gradually.
Important to understand that SAP offers an integrated portfolio. There are of course niche players on the market, but they are ad-hoc solutions which does not embrace sustainability complexity that requires a holistic view. As you know in sustainability some might think they improve a specific subject/domain but in fact they just transfer the problem elsewhere. SAP portfolio offers the possibility to start small and go deeper and wider gradually.
Can companies benefit from the new sustainability solutions even before going to S/4HANA or shall they first implement S/4HANA?
Customers can definitely start even before going to S/4HANA. Most products in SAP’s sustainability portfolio work with non-SAP ERPs or SAP ECC too, such as SuccessFactors, EHSM, Ariba and many more. Even the upcoming SAP Sustainability Control Tower, which is the new steering and reporting sustainability tool which will be in GA in December 2021.
Sustainability offers new business opportunities too. Do you have a nice SME example from an SAP customer which proves this?
There are many companies which are busy improving themselves and transitioning to new business models as the circular economy. There are more and more companies which embrace sustainability to be part of their identity. Allbirds is a great example. Joey Zwillinger, Co-Founder, Co-CEO of Allbirds said in an interview that “Sustainability is why our customers love us.” Allbirds produces running shoes, and now even apparel and accessories, using planet-friendly natural materials instead of synthetic materials commonly used in competing products. The company went through incredible growth, over 1 million pairs sold in their first years and their success was supported by SAP S/4HANA.
This story shows that the goal for companies should not be “green washing”, but truly embracing sustainability to benefit from new business opportunities.
I would like to say many thanks for Monique Ventura for talking with me and sharing her knowledge which I could capture in this blog.