Demystifying ESG Reporting with SAP’s Power Solution – Sustainability Control Tower!
Have you ever wondered how a mountaineer treks on to a wrecking mountain? Or how a sailor manages to maneuver through rough, harsh seas on stormy nights? Steering through difficult, cluttered, unstructured, and highly dynamic spaces that are evolving at lightening speeds – is probably one of the fiercest challenges we face in all spheres of life – and businesses!
ESG reporting is one such avalanche hitting the modern business world with full force and velocity. The rising global consciousness of Environment, Social, Governance compliance validates the same and is driving ESG goals for companies like never before1.
More than ~90% of organizations either already have or are looking to build a formal strategy to manage and report corporate environmental, social, and governance practices globally2.
While the global focus on ESG reporting is exploding, the market stays extremely fragmented and complex as several reporting standards and metrices emerge, crisscrossing geos, locations, people, processes, etc., magnifying intricacies. As an organization, no matter how big or small you are, things tend to get extremely crazy when you try to demystify and comprehend sense out of innumerable jargons like the GRI, CSRD, TCFD, doing rounds with multiple updates hitting regularly and irregularly. Companies are trapped in the ‘Whats,’ ‘Hows’, ‘Where’, ‘When’, and ‘Whys’ of reporting, struggling to figure out what to track, quantify, report, how much, and when, often ending up in bizarre state.
The GRI, for example, one of the most widely reported ESG standard by organizations globally, has universal standard reporting requirements under economy, environment, and people, updated regularly. In addition, there are sector specific GRI standards with the recent release for oil and gas, coal, agriculture sectors and another 40+ sector standards under way! This alone looks nerve-wrecking for sure….
TCFD on the other hand sets out Climate-related Financial Disclosures requirements that mandates organizations to improve reporting of climate-related financial information. Regional focused reporting requirements and mandates have also been emerging.
The EU taxonomy, The SFDR, The CSRD, and the German Supply Chain Due Diligence Act are specific reporting mandates that have emerged for EU countries and Germany respectively with differing implementation dates. While the CSRD will come into force from Jan 2023, the German supply chain act will be mandatory for small firms not before 2024!
The complications do not end here. With new reporting metrices expected to emerge in 2023 and 2024 in varied categories like biodiversity, equity, greenhouse gas (GHG) emissions, financial disclosures, etc. the market is sure to stay highly dynamic and complex going forward keeping you on the run always….
Tech solutions that have the capability to stitch this madness together – such hanging pieces of ESG reporting requirements, giving a universal coverage across the breadth and depth of reporting requirements, and mapping with the updates in real-time are surely next-generational. However, majority of organizations are still grappling with legacy systems and feel they do not have the systems and technology necessary to provide the desired systems for ESG reporting.3
SAP’s Power Solution – Sustainability Control Tower….
SAP’s Sustainability Control Tower (SCT) is a holistic ESG reporting solution that helps organizations stay in control of their reporting requirements and evolve from reporting to steering the ESG landscape by bringing sustainability insights back into their businesses!
While SCT ensures an all-inclusive and reliable data sourcing of a company’s ESG performance across its functions and seamlessly integrates with the SAP data sources, it also ensures data enrichment and performs calculations to align with the ESG metrics across varied ESG reporting standards. The solution has pre-defined data models for metric management and reporting across key ESG frameworks like GRI, CSRD, TCFD, and is constantly updating to ensure that it is all-encompassing.
For e.g., SCT enables a holistic ESG metric reporting for organizations in accordance with the reporting requirements of the global GRI standard:
SAP’s solution also provides great visualization and insight capabilities that help organizations track their ESG actions and initiatives, compare business units, locations, and competitors, undergo an in-depth gap analysis, and finally understand, visit, and revisit their sustainability targets strategically!
SCT – A constantly evolving tool with recent upgrades, and planned features in line…….
SCT has been evolving continuously to include many reporting features. Most recently the solution has included the EU Taxonomy in the performance insights group as a preview version of EU Taxonomy with sample content.
In addition, the latest 2023.02 version of the solution enables calculation and metric reporting across newer categories like biodiversity, legal compliance, value chain stages, people injury severity, injury type, corruption incident type, prosperity categories like prosperity figure, and many more.
The solution also plans to roll out a GHG analytical application. This feature is expected to give users a detailed understanding of their emissions following the recent GHG Protocol’s reporting principles.
ESG reporting for sure is here to stay, much longer than one could anticipate or futurists could predict. It is high time that organizations treat ESG reporting as a value creator and not as a cost center. The right technology is extremely imperative for organizations for mapping their disclosures to regulations and standards. And a top-notch ESG reporting solution unfailingly reflects results in the form of a marked increase in revenue, boosting profits and shareholder value like never before – promised by the first movers!
(7 in 10 top leaders report that heir organizations’ effective ESG reporting strategy has already generated heightened revenue and margins)12
You can read more about SCT solution and latest updates and versions here. For recent features added in the SCT solution visit the SCT page. Feel free to share your feedback or thoughts in the comments section. You can also follow the SAP Sustainability community for more info and join as a follower by clicking on the “Follow” button. Kindly follow my profile for more sustainability blogs and articles. Thanks.
- Infosys ESG Radar 2023
- Morningstar Sustainalytics survey, May 2022
- ESG Reporting Global Survey by Workiva, Dec 2022
- SAP SCT solution page
- GRI reporting.org
- Supply Chain Act – CSR
- CDP Worldwide
- SAP Sustainability Control Tower
- SAP SCT Help Documents
- Infosys SAP Sustainability Offering
- Workiva ESG Survey, 2022
List of abbreviations:
- GRI – Global Reporting Initiative
- CSDR – Corporate Sustainability Reporting Directive
- TCFD – Task Force on Climate-Related Financial Disclosures
- CDP – Carbon Disclosure Project
- SFDR – Sustainable Finance Disclosure Regulation