Feedback from Advisors
Independent Opinion Letter
Introduction
As members of SAP’s independent Sustainability Advisory Panel, we were invited to review and comment on the company’s sustainability strategy. With this letter, we offer our perspectives on the soundness of SAP’s strategy, and its efforts to implement it over the past year. Our comments are based on the regular interaction we had during 2010 with SAP staff responsible for sustainability strategy, performance and reporting, as well as two meetings (one in-person and one by videoconference) with co-CEO Jim Hagemann Snabe.
Overall, we applaud SAP for continuing to pursue a clear, twin-track strategy for sustainability. SAP’s vision of itself as both an “Enabler” and an “Exemplar” is very well-suited to its core business activities, and provides a clear leadership path for the company. We are also pleased to see that SAP has increased its focus on sustainability as a means of making positive improvements in peoples’ lives and the environment, rather than simply focusing on a reduction of harm.
We also applaud SAP for investing time and thought into measuring the extent to which its products drive improvements in the sustainability performance of its customers – a clear demonstration of its efforts to track the effectiveness of its Enabler strategy. While we see the need for additional effort in this complex area, the company has made a serious start towards understanding the potentially enormous indirect impacts of its products. We see opportunities for SAP to continue—and accelerate—its progress. We have found the company to be very responsive to our comments to date, and look forward to continuing to offer suggestions about how further improvements can be made.
Strong Points
- SAP’s sustainability strategy reflects the fact that that as an “Enabler” of more sustainable behavior through its customers’ use of its core products, it can achieve far more through its indirect influence than by managing and minimizing its own immediate footprint. This also responds well to our call in last year’s report for SAP to identify, measure, drive improvements in and report on these ‘enabling’ activities. SAP has articulated a clear commitment to driving more positive behaviour by its customers, and has made this possible by offering them tools that enable them to measure their positive business impacts.
- We are impressed with SAP’s effort to explain how its products enable better sustainability performance by its customers. This puts into practice its commitment to transparency and is a testament to its overall business strategy, which also promotes transparency as an enabler of business success. SAP has done an excellent job of assessing what issues are most material to its business and its stakeholders. The materiality matrix contained in the 2010 Sustainability Report is a simple and elegant way for readers to understand SAP’s thinking on what is most important, and better yet, interact with the company to contribute their views.
- SAP has also done an impressive job of assessing the most material sustainability issues – and opportunities – it has. In its Report, this is presented in a uniquely valuable way, enabling readers to look at a multi-year picture of SAP’s materiality analysis. This is a great idea, well-implemented.
- Regarding its own performance, SAP also deserves credit for achieving reductions in its emissions in 2010. This reduction is especially noteworthy in that it came during a year when the company’s revenues and activities increased. We observed SAP making a substantial effort internally to achieve this result, and are pleased that it paid off.
- SAP’s use of digital technologies for its Sustainability Report reinforces the link between its core business and sustainability. Given that interactive sustainability reports remain in their infancy, SAP is both breaking new ground, and contributing to further understanding of the potential of dynamic reporting. SAP has provided a truly unique platform for report readers to engage with information on their own terms and dialogue directly with the company. This holds great potential for making SAP’s report a model of reader engagement.
- Overall, SAP should continue to refine its methodology for measuring and demonstrating how its products enable its customers to achieve improvements. In particular, SAP can develop, on its own or in partnership with others, improved data with additional explanations of how it is measuring impacts.
- We understand SAP’s desire to assert the positive impacts of its products: we believe this is a natural outcome of the integration of sustainability into its product offerings and a sign that sustainability genuinely is a driver of profitability for the company. That said, we urge a degree of caution in how this is communicated. For example, asserting that “our solutions provide competitive advantage – and sustainable outcomes” risks overstating impacts. It might instead be better to speak about “progress towards sustainable outcomes,” which is considerably easier to demonstrate credibly.
- We would like to see SAP extend its verification and assurance to topics beyond the carbon footprint of its customers. This would bolster the credibility of the information in its Sustainability Report, and more importantly, create additional opportunities for impact and learning. This is especially true on social and economic questions, where many companies and stakeholders are keenly interested in improved models for measuring impact, and are therefore likely to show strong interest in innovative products.
- SAP has a distance to travel with request to gender equity in top management, and at Board level. Like many companies, SAP is considering how best to make progress in this area, and we believe that it represents a great opportunity for the company to strengthen its decision-making, as well as addressing a topic of great public interest. To its credit, SAP acknowledges its shortcomings in this area in its Sustainability Report, and its treatment of why this is important and what it needs to do to improve reflects a candid approach to an important topic.
- While we applaud SAP’s thorough attention to integrating sustainability into its product offering, we believe its organizational model could be streamlined and better coordinated. We observe a very high degree of integration of the sustainability function, which is linked directly to the core value proposition of the company’s products. Maintaining a separate CSR team, however, suggests that their efforts are less central to the core business, and also creates confusion about what the terms actually mean.
Opportunities for Improvement
We are pleased to see SAP working to integrate sustainability into the core of its business. The fact that it sees business opportunities in sustainability is, in our view, a positive sign. As the company goes further in aligning its product offerings with sustainability, and demonstrates both financial and broader societal returns, this will indeed enable all of industry to progress in the same way.
Aron Cramer - Karina Litvack - William McDonough
Dear Aron, Karina and Bill
Thanks again for sharing your opinion on SAP strategy and performance publicly and for your continued engagement in 2011 on behalf of the extended stakeholder base. Your strategic input has been important to the formulation and adaptation of our strategy so it is gratifying that you acknowledge our responsiveness.
Your letter captures nicely the dilemma we face in reporting on our solutions impact – on the one hand you advise us to focus on ‘positive impact’ but on the other you caution us of the ‘risk of overstatement’. And yet the advice is good – even if seemingly contradictory – as it represents the reality. As a leading technology provider SAP has an obligation to lead from the front in providing and using solutions that can transform the sustainability profile of the business and communicating as much. But I feel we, as a community of reporters, have a long way to go towards finding a sound and easily assurable reporting process for enterprise level, integrated, positive impact. In rolling out our estimated customer impact measures this year we are hoping to stimulate engagement and dialogue – we are ready to listen, learn and adapt our future reporting.
On behalf of the SAP team, I’d like to thank you for your advice and support.
Peter
Dear Aron, Karina and Bill
Thanks again for sharing your opinion on SAP strategy and performance publicly and for your continued engagement in 2011 on behalf of the extended stakeholder base. Your strategic input has been important to the formulation and adaptation of our strategy so it is gratifying that you acknowledge our responsiveness.
Your letter captures nicely the dilemma we face in reporting on our solutions impact – on the one hand you advise us to focus on ‘positive impact’ but on the other you caution us of the ‘risk of overstatement’. And yet the advice is good – even if seemingly contradictory – as it represents the reality. As a leading technology provider SAP has an obligation to lead from the front in providing and using solutions that can transform the sustainability profile of the business and communicating as much. But I feel we, as a community of reporters, have a long way to go towards finding a sound and easily assurable reporting process for enterprise level, integrated, positive impact. In rolling out our estimated customer impact measures this year we are hoping to stimulate engagement and dialogue – we are ready to listen, learn and adapt our future reporting.
On behalf of the SAP team, I’d like to thank you for your advice and support.
Peter
Dear Aron, Karina and Bill
Thanks again for sharing your opinion on SAP strategy and performance publicly and for your continued engagement in 2011 on behalf of the extended stakeholder base. Your strategic input has been important to the formulation and adaptation of our strategy so it is gratifying that you acknowledge our responsiveness.
Your letter captures nicely the dilemma we face in reporting on our solutions impact – on the one hand you advise us to focus on ‘positive impact’ but on the other you caution us of the ‘risk of overstatement’. And yet the advice is good – even if seemingly contradictory – as it represents the reality. As a leading technology provider SAP has an obligation to lead from the front in providing and using solutions that can transform the sustainability profile of the business and communicating as much. But I feel we, as a community of reporters, have a long way to go towards finding a sound and easily assurable reporting process for enterprise level, integrated, positive impact. In rolling out our estimated customer impact measures this year we are hoping to stimulate engagement and dialogue – we are ready to listen, learn and adapt our future reporting.
On behalf of the SAP team, I’d like to thank you for your advice and support.
Peter
Dear Aron, Karina and Bill
Thanks again for sharing your opinion on SAP strategy and performance publicly and for your continued engagement in 2011 on behalf of the extended stakeholder base. Your strategic input has been important to the formulation and adaptation of our strategy so it is gratifying that you acknowledge our responsiveness.
Your letter captures nicely the dilemma we face in reporting on our solutions impact – on the one hand you advise us to focus on ‘positive impact’ but on the other you caution us of the ‘risk of overstatement’. And yet the advice is good – even if seemingly contradictory – as it represents the reality. As a leading technology provider SAP has an obligation to lead from the front in providing and using solutions that can transform the sustainability profile of the business and communicating as much. But I feel we, as a community of reporters, have a long way to go towards finding a sound and easily assurable reporting process for enterprise level, integrated, positive impact. In rolling out our estimated customer impact measures this year we are hoping to stimulate engagement and dialogue – we are ready to listen, learn and adapt our future reporting.
On behalf of the SAP team, I’d like to thank you for your advice and support.
Peter
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