SAP has taken a bold step towards environmental sustainability by launching a comprehensive supply chain engagement program. This initiative is designed to tackle Scope 3 greenhouse gas (GHG) emissions, which encompass indirect emissions along a company’s value chain. As businesses worldwide face mounting pressure to address their carbon footprint, SAP’s multi-phased approach demonstrates a commitment to collaborating with its vendors to significantly reduce emissions and drive positive change.
Scope 3 emissions have become a critical challenge in the journey toward achieving net-zero carbon goals. These emissions are not directly produced by a company’s own activities but are generated by its suppliers, partners and consumers. Although the urgency to combat climate change grows, a recent study conducted by GEP and North Carolina State University (NCSU) revealed that less than a quarter of supply chain and procurement leaders are actively prioritizing Scope 3 emissions reduction initiatives.
SAP’s supply chain engagement program, slated for establishment by 2024, represents a multi-phased approach to mitigate Scope 3 emissions. The primary objective is to empower SAP’s crucial vendors to significantly curtail greenhouse gas emissions across the upstream value chain. This approach acknowledges the interconnectedness of supply chains and emphasizes collaboration among stakeholders to drive impactful change.
Central to SAP’s program is the integration of a novel sustainability classification system within procurement processes. This classification system will enable the evaluation of suppliers’ environmental sustainability practices, encouraging the adoption of eco-friendly methods. Additionally, SAP aims to embed environmental impact criteria directly into procurement documentation, thereby ensuring that sustainability considerations are an integral part of vendor selection and engagement.
SAP aims to collaborate with its top 100 suppliers to facilitate the reporting and recording of both company-wide and product-level emissions by 2027. By relying on actual emissions data rather than averages, SAP aims to provide a more precise representation of its carbon footprint.
SAP’s recent introduction of the Sustainability Data Exchange platform further enhances the program’s potential impact. This platform facilitates the standardized sharing of sustainability data between companies and their clients. In the context of the supply chain engagement program, the Sustainability Data Exchange will play a pivotal role in exchanging CO2 information. This streamlined data sharing will enhance transparency and enable stakeholders to collectively address Scope 3 emissions, thus fostering a more sustainable value chain.
Dominik Asam, CFO, SAP, said: “Reducing Scope 3 emissions is a key factor on the journey to net zero. This is a team effort, and we are happy to collaborate with our business partners on reducing emissions throughout our supply chain.”