Introducing Carbon Accounting with SAP Sustainability Footprint Management
Last week at SAP Sapphire, we made the announcement to reinvent carbon accounting and lead companies to a green ledger. As a single solution to calculate and manage the full range of corporate, value chain, and product-level greenhouse gas emissions, we announced SAP Sustainability Footprint Management.
In this blog post, I’ll provide you an introduction into this new product, covering:
Sustainability is a top priority for executives, and accurate carbon accounting is vital in addressing climate change. Carbon accounting, however, is still primarily done with spreadsheets and semi-automated tools, providing limited visibility into emissions. SAP is introducing future-proof solutions for transactional carbon accounting to enable more precise and granular tracking of emissions across business operations and supply chains:
- SAP Sustainability Footprint Management: A solution to calculate and manage carbon flows across GHG Scope 1, 2, and 3 emissions, integrating with SAP S/4HANA for accurate and efficient emissions calculations.
- SAP Sustainability Data Exchange: An application for securely exchanging standardized sustainability data along the value chain using the Partnership for Carbon Transparency (PACT) standards.
- Green Ledger: Combining financial and environmental data for better decision-making and insights, embedded in RISE and GROW with SAP for SAP S/4HANA Cloud.
These solutions provide accurate, transparent, and auditable carbon data for improved decision-making, enabling companies to set accurate net-zero targets and maximize decarbonization impact. By embedding sustainability data into core business processes through ERP, executives can achieve a holistic, enterprise-wide performance capability.
SAP Sustainability Footprint Management is the first step in this pathway to move from average to actuals, towards transactional carbon accounting. It provides you with the full picture of your carbon footprint and enables you to Record, Report, and Act to decarbonize your value chain. The calculations integrate supplier data and existing ERP business data – dramatically improving the speed, accuracy, and efficiency of emissions calculation and management.
Here’s a summary of the key benefits:
- RECORD: Easily leverage existing data with seamless integration and automation – Seamlessly integrate data from SAP S/4HANA, 3rd party data, supplier data, and facility energy flows for data acquisition and footprint distribution.
- REPORT: Get auditable corporate and product carbon footprints at scale – Assess your sustainability footprint with granular cradle to gate carbon footprint calculations that consider materials, transportation, and production.
- ACT: Decarbonize along business processes through granular transparency – Act on your reduction targets with carbon accounting software that supports Scope 1, 2 and 3 transparency and generates analytical insights from footprint data.
The capabilities of SAP Sustainability Footprint Management can be broken down into five major steps along your footprint journey: You start with acquiring master and transactional data from your connected business system, then you combine those data with emission factors to evaluate the environmental impact. Based on that, the application is calculating the sustainability footprints. Afterwards the calculated footprints can be analyzed in detail, and they can be integrated back into connected business systems. The capabilities and footprint journey, and what is already available with the current release, are visualized in this metro map:
In the following, I’ll give a brief overview of the product capabilities. For more details and all insights, I recommend you to check out my deep dive blog series.
SAP Sustainability Footprint Management offers various options to reuse ERP data, including master data and transactional activity data (material movements). It integrates with SAP S/4HANA Cloud and SAP S/4HANA (2021 and later) out-of-the-box, while other ERP systems can be connected via Public APIs. An IT project is needed for this integration, with SAP Services support available. Additionally, data can be imported via flat-file uploads using templates. Freight-transport specific master data entities like plant or supplier locations can be imported via file upload. The system further offers a starter package, including location information for various transportation hubs and vehicle data for different transport modes.
We plan to enhance the SAP S/4HANA integration in future releases, including replicating product cost estimates for footprint calculations and reusing master data in freight transport calculations. Further, we plan an integration with SAP EHS Environment Management for incorporating GHG emissions calculations, and connections to Business Networks like SAP Ariba and Catena-X for data collection and sharing, supporting the PACT-Standard.
Emission Factors Management
After importing business data from your ERP system, SAP Sustainability Footprint Management helps evaluate the environmental impact of this data by importing and managing emission factors. Today, we’re focusing on climate change impact through Global Warming Potential (GWP) in CO2-equivalents (CO2e). The plan is to extend to other impact categories, like water or land use in the future. Emission factors can be imported via Excel-file from primary sources, representing actual data directly from your suppliers, or secondary sources, such as lifecycle assessment (LCA) databases, representing industry averages. SAP partners with ecoinvent and Carbon Minds, to provide LCA content through the SAP Store, allowing easy import into the application. You can further utilize custom data from your operations or LCA software tools or use estimated proxies for specific materials or activities. To support the move from average to actual footprint calculation we plan to launch an API for sharing product footprints along the value chain, adhering to global standards like the World Business Council for Sustainable Development’s Partnership for Carbon Transparency (WBCSD PACT) and the Together for Sustainability (TfS) initiative. This will provide direct access to supplier footprints, simplifying the mapping process and improving data quality with primary data. We further plan to integrate with SAP Sustainability Data Exchange to leverage its carbon sharing capabilities.
The application further provides a functionality to map emission factors to your purchased products, based on your imported ERP data, at different granularity. It auto-generates a mapping template with prefilled information like products, commodity codes, and suppliers. You can edit this template in-app or via a CSV file, and associate emission factors to each item via filtering and searching your imported emission factor databases for the best match. For improving this process, we plan to introduce automated mapping recommendations, a mapping wizard with validation checks, and an API for external providers. These improvements aim to boost user experience and automation. Our goal is to achieve intelligent emission factor mapping using AI technology, allowing automatic and transparent mapping.
Our goal for SAP Sustainability Footprint Management is to address the entire product lifecycle – from cradle to grave. With the current release, we’re already covering cradle-to-gate, therefore including upstream emissions from material acquisition & pre-processing and transport, as well as direct emissions related to own production activities. We plan to include downstream emissions (product use and end-of-life) in future releases. Reflected on the corporate footprint, we’re covering the corresponding GHG Scope 1, 2, and 3 categories related to material, freight transport, and facilities. More Scope 3 categories associated to downstream emissions and people transport are planned for future releases.
You can maintain individual inventory scopes in the system to define the organizational boundaries of the footprint calculation, including companies, plants, and value chain steps. The application uses energy flow models to connect energy-related elements with the resources replicated from the ERP system. This includes energy carriers, energy sources, resources (e.g., assembly line or oven), and infrastructure (meters, process infrastructure, and facilities). These elements can be fully modeled and updated, allowing for the creation of models using a list display or a graphical flow modeler with drag-and-drop functionality:
When a direct energy flow connection is unavailable, you can set allocation rules to distribute emissions to products and GHG Scopes and Categories. Currently, fixed factors are used for distribution, but further automation – e.g., based on product mass – is planned for future releases.
SAP Sustainability Footprint Management calculates a company’s total carbon footprint and attributes emissions to products and corporate overhead, aiming to achieve a balanced emission level throughout all production stages. Two methods are provided: Calculating Organizational Footprint Inventories, which considers GHG Protocol Scope 1, 2, and 3 emissions and requires input data like energy bills, meter readings, and manual emissions. It’s leveraging the imported master and transactional activity data, the mapped emission factors, as well as the energy flow model and allocation rules that have been set up previously, to calculate the footprints. The second option is Calculating Product Footprints, which provides insights into a plant’s product footprints by uploading a Bill of Material (BOM)-like Excel file. The calculated footprints can be monitored in an easy-to-read graphical format with drill-down possibilities into main emission drivers. A Sankey Diagram is the core tool for investigating emission results, offering transparency on input factors, such as purchased energy. You can explore various levels of detail, including calculation data and formulas, to understand the carbon footprint emissions. The app allows publishing results to connected SAP S/4HANA Cloud or SAP S/4HANA systems.
The calculation of inbound and outbound transport footprints is done by uploading CSV files, containing transport information. The application uses client-specific routes or automated calculation logic based on distances to determine emissions. Data is validated, and feedback is provided for any issues. We plan to include calculated transport footprints in organizational footprint inventories and overall product footprints in future releases, and further plan to reuse the replicated ERP data for the calculation itself. The Calculate Transport Footprints – Lite app enables quick calculations and assessments for single shipments without importing data, with results visualized in charts, tables, and maps. This allows you to quickly compare emissions related to different transport mode choices (e.g. plane vs. train) and helps your company to make informed decisions on how to reduce your transport related carbon footprint.
For analyzing the calculated footprints and gaining new insights, SAP Sustainability Footprint Management offers built-in analytics. With various dashboards you can analyze your corporate balance with all emission inflows and outflows, as well as your emissions per purchased and sold products and energy consumers. You can also drill down into emissions by GHG scope, category, and energy source, and view trends.
For transport footprints, there are own dynamic dashboards available with highly customizable charts and detailed reports on various transport relevant KPIs. You can also visualize and analyze inbound & outbound transport flows and emissions on a world map, including a heatmap to display emission hotspots.
To incorporate calculated footprints into your preferred analytical application, such as SAP Analytics Cloud or non-SAP solutions, an updated version of the OData API on SAP Business Accelerator Hub will be available soon. For future releases, we plan to provide simulation capabilities for various footprint scenarios and what-if analyses, enabling sensitivity analysis and comparison of product carbon footprints. This assists in sustainable decision-making regarding product design, production efficiency, and supply sourcing.
Last, but certainly not the least capability is integrating the calculated footprints into the end-to-end business processes, providing transparency and insights into sustainability metrics for not only sustainability experts in central sustainability departments but all business users in the company and its respective lines of business. From SAP Sustainability Footprint Management, the footprints can be published into the connected SAP S/4HANA Cloud or SAP S/4HANA (2021 and later) system to make the information accessible to users, enabling them to incorporate these criteria into their decision-making processes. To integrate footprints into business processes, Key User Extensibility can be used. Over time, we plan to integrate footprints natively into more SAP S/4HANA applications and processes, with first scenarios already available: In Purchasing, product footprints are integrated into Purchase Requisitions (PR). This allows approvers and operational purchasers to assess the environmental impact of PRs. The Monitor Purchase Requisition Items app provides insights into current and future emissions, enabling proactive optimization of the environmental footprint. Future releases plan to integrate footprints into Purchase Orders as well. Another integration of footprints is available in Inventory Management, starting with the Stock – Multiple Materials app to provide insights into the environmental impact of stocks. Previously used for stock quantities and financial values, the app now allows for sustainability criteria in decision-making processes.
Carbon footprints are also available in SAP Integrated Business Planning (IBP), enabling users to track greenhouse gas emissions according to supply planning heuristic results. Furthermore, we delivered the first data exchange use case leveraging the SAP Business Network, by integrating footprints into Logistic Business Network – Material Traceability (LBN-MT). Much more is planned to publish product footprints into networks and portals, for improved customer relationships, streamlined processes, and better information transparency. Additionally, an integration with SAP Sustainability Control Tower is planned as well, allowing holistic steering and reporting of emissions data linked to specific business operations.
SAP Sustainability Footprint Management is a cloud application that is built on the SAP Business Technology Platform. In the application, you manage the import of data to call the Data Extractor in the Sustainability Integration Component in ABAP. This reuse component is included in SAP S/4HANA and pulls the relevant business and master data from your SAP S/4HANA Cloud or SAP S/4HANA system and sends the aggregated data back. Alternatively, APIs can be leveraged to import data from ECC or other ERP sources, and data can further be imported via file upload. Emission Factors from own or third-party databases can be imported via file upload as well. For future releases, we further plan an integration with SAP S/4HANA EHS Environment Management for leveraging GHG Scope 1 & 2 emission as well as waste data. We also plan an integration with the Business Networks and SAP Sustainability Data Exchange for collecting primary and actual footprint data from suppliers.
Based on the extracted and imported data, you define the inventory scope, mappings, energy flow models, allocations, and derivations. Consequently, the footprint calculation can be initiated. The calculated footprints are stored in the Footprint Inventory and can be viewed and monitored.
Via the Sustainability Integration Component, the Footprint Inventory is also connected back to your SAP S/4HANA Cloud and SAP S/4HANA system, so that your business users can access the footprints directly in their end-to-end processes and applications. In the future, we plan to deliver holistic steering and analytics capabilities by connecting SAP Sustainability Footprint Management and its Footprint Inventory to SAP Sustainability Control Tower. Further, an integration of the footprints into the Business Networks and SAP Sustainability Data Exchange is planned, as well as Public APIs to connect to third-party applications for analytics, disclosure, or other purposes. In the next days, an updated version of the existing Analytical API will be available to integrate the calculated footprints into any analytical application of your choice.
Our sustainability footprint journey has just started – over the next months and years we plan to add many more features and functions, widely expanding the scope of SAP Sustainability Footprint Management. I already touched on some of the highlights that we plan to release in the upcoming months when talking about the product capabilities previously: For bringing SAP’s sustainability portfolio closer together, we plan an integration into SAP Sustainability Control Tower for including product and corporate footprints in companywide holistic steering and reporting. The planned integration with EHS Environment Management enables the incorporation and allocation of calculated GHG Scope 1 & 2 emissions into the footprint calculation. For collecting and managing Emission Factors, we plan enhancements and further automation of the current mapping. To support the next steps in transactional carbon accounting, we plan inbound and outbound integration options for collecting supplier-specific product footprint data and for sharing calculated footprints with customers – supporting common standards like PACT. This also includes the integration with SAP Sustainability Data Exchange. For extending the product and value chain calculations to the entire lifecycle – from Cradle-to-Grave – we plan to include the calculation of downstream emissions (product use and end-of-life). Further, we plan to extend the GHG Scope 3 to also cover people transportation (business travel and employee commuting). For simulating and modeling alternative scenarios we plan to provide simulation capabilities, such as what-if analyses.
And there’s much more to come – for an overview of all planned features have a look into SAP Road Map Explorer. There you find all our delivered and planned innovations, as well as their benefits for you and your company.
Deep Dive Blog Series
For a deep dive into each of SAP Sustainability Footprint Management’s core capabilities I’ll start a new blog series and publish separate blog posts on a weekly basis in the SAP Community:
- Data Acquisition
- Emission Factors Management
- Footprint Calculation
- Footprint Analytics
- Footprint Integration
Follow me here to receive notifications, I’ll also update the above list with the respective links once published.
Free Trial and Learning Journey
For exploring and experimenting in a live system, register for the free SAP Sustainability Footprint Management Trial. You will receive an e-mail with access information within seconds after your registration and can then test the solution at your own convenience within a 30-days trial period. It also includes a wide range of guided tours designed to help users navigate through all the features and functions comprehensively. Our aim is to provide an enriching hands-on experience to better understand the capabilities of SAP Sustainability Footprint Management and how it can be used effectively for sustainable business practices.
Furthermore, we’re also creating a new Learning Journey on the free SAP Learning platform, the release is planned soon, so stay tuned. This training will feature three courses with various units providing you with an overview & introduction, details on system setup & configuration, as well as trainings on all apps for calculating, monitoring, and analyzing sustainability footprints. This will also include many hands-on simulations and exercises. After successful completion, you’ll receive a Record of Achievement with a digital badge.
SAP Community Call
If you’re interested in gaining deeper insights into the new product and want to see the system live, I strongly encourage you to join the SAP Community Call Start your Carbon Accounting Journey with SAP Sustainability Footprint Management on June 14th, 14.00 CET. In this call Gunther Rothermel, Senior Vice President and Head of SAP Sustainability Engineering, and myself will provide you with the overall context of SAP’s sustainability and climate action solutions and deep dive into SAP Sustainability Footprint Management, including a system demo. For sure there’s also the possibility to ask your questions.
You can watch the session live or later the replay on YouTube: Start your Carbon Accounting Journey with SAP Sustainability Footprint Management.
For in-depth details on SAP Sustainability Footprint Management, including concepts, setup, and the application help, I recommend you browsing through the SAP Help Portal. For an overview of all new features and functions that have been released, check the What’s New section, which is updated with every new software release.
To stay up to date on SAP Sustainability Footprint Management, follow me here in the SAP Community. In regular cadence, I will publish blog posts giving you updates on all the product’s new features and functions as well as deep dives into the product capabilities. I’m also looking forward to engaging with you directly, feel free to leave your feedback in the comment section. For questions, see the Q&A here in the SAP for Sustainability Community. Of course, you can also reach out to me directly.