Strength­en­ing an already-robust alliance that has deliv­ered busi­ness trans­for­ma­tion solu­tions to clients in over 80 coun­tries, PwC and SAP recent­ly announced a co-inno­va­tion strat­e­gy to embed sus­tain­abil­i­ty across cus­tomers’ stan­dard busi­ness oper­a­tions worldwide. 

Unveiled in Decem­ber, the strat­e­gy will focus on cre­at­ing solu­tions to address key envi­ron­men­tal, social, and gov­er­nance (ESG) busi­ness chal­lenges, from car­bon mea­sur­ing, report­ing, and steer­ing to sup­ply-chain decar­boniza­tion, cli­mate risk, and com­pet­i­tive analy­sis. The strat­e­gy builds on exist­ing col­lab­o­ra­tions, includ­ing PwC Germany’s Cli­mate Excel­lence tool, based on SAP Busi­ness Tech­nol­o­gy Plat­form (BTP). It will address chal­lenge areas, such as report­ing and dis­clo­sure, oper­a­tional­iz­ing sus­tain­abil­i­ty, and sup­ply-chain risk man­age­ment, mon­i­tor­ing, and compliance.

ASUG asked Sebas­t­ian Stein­haeuser, Chief Strat­e­gy Offi­cer, SAP, to detail the strategy’s co-inno­vat­ed solu­tions, cre­at­ed with PwC’s ESG and account­ing exper­tise and lever­ag­ing the SAP Cloud for Sus­tain­able Enter­pris­es solu­tion, along with SAP Sus­tain­abil­i­ty Con­trol Tow­er and SAP Prod­uct Foot­print Management. 

This is an edit­ed ver­sion of the discussion.

Ques­tion: Can you pro­vide some con­text on the pre-exist­ing alliance between PwC and SAP and what led you to for­mu­late this new strategy?

Answer: We have built upon an already exist­ing strong alliance with PwC, with joint cus­tomers in more than 80 coun­tries world­wide. Togeth­er, we can con­tin­u­ous­ly dri­ve trans­for­ma­tion projects in core busi­ness process­es. At SAP, we believe that we urgent­ly need to accel­er­ate to include sus­tain­abil­i­ty in any busi­ness trans­for­ma­tion dis­cus­sion with our cus­tomers. Our glob­al ecosys­tem, espe­cial­ly our Glob­al Strate­gic Part­ners like PwC, sup­ports our focus on car­bon reduc­tion, cir­cu­lar­i­ty, and equal­i­ty in business. 

At World Eco­nom­ic Forum 2023, you could expe­ri­ence the SAP Exec­u­tive Board act­ing togeth­er with our ecosys­tem on ESG. With regards to PwC, we co-host­ed, for exam­ple, a break­fast ses­sion, ​“Sus­tain­abil­i­ty: From Com­mit­ments to Action Lever­ag­ing Tech­nol­o­gy,” bring­ing togeth­er in-per­son sup­ply chain and net­work par­tic­i­pants and stake­hold­ers. You might want to have a look at a video we shot after­ward: Build­ing a Sus­tain­able World Togeth­er | WEF 2023 — YouTube

Co-inno­vat­ing with our ecosys­tem on Busi­ness Tech­nol­o­gy Plat­form (BTP) and in the con­text of busi­ness appli­ca­tions is not new to SAP. We are build­ing upon decades of joint indus­try and busi­ness inno­va­tion. What’s new with sus­tain­abil­i­ty is the per­ma­nent­ly present mul­ti­di­men­sion­al risk if we fail to act on actu­al data, the need for veloc­i­ty, and ulti­mate­ly the need to coop­er­ate in busi­ness networks. 

Man­ag­ing this sus­tain­abil­i­ty ecosys­tem com­plex­i­ty, and set­ting the right focus, has become cru­cial. We need trust­ful part­ner­ships, inno­va­tion invest­ments, and exper­tise focus at the same time from many stake­hold­ers. It starts with record­ing actu­al busi­ness data, report­ing the real sta­tus instead of aver­ages, and dri­ving action. With PwC, for exam­ple, we focus on: 

• Report­ing and dis­clo­sure: help­ing to sat­is­fy require­ments to mate­ri­al­ly report and dis­close investor-grade car­bon mea­sur­ing data to meet the demands of investors, lenders, reg­u­la­tors, and customers
• Oper­a­tional­iz­ing sus­tain­abil­i­ty: sup­port­ing the incor­po­ra­tion of ESG mea­sures, espe­cial­ly car­bon issues, direct­ly into busi­ness func­tions, such as trad­ing, cap­i­tal­iza­tion, and tax 
• Sup­ply chain risk man­age­ment, mon­i­tor­ing, and com­pli­ance: extend­ing sup­port for ESG mea­sures to cov­er the impact of sup­pli­ers on orga­ni­za­tion­al performance

We are build­ing upon our long track record of co-inno­va­tion on SAP BTP in the con­text of Enter­prise Resource Plan­ning and also on PwC’s busi­ness advi­so­ry exper­tise, where our Sus­tain­abil­i­ty port­fo­lio, includ­ing Sus­tain­abil­i­ty Con­trol Tow­er and SAP S/4HANA, and the future of sus­tain­able finance meet. 

By the way, our ecosys­tem is built upon mul­ti-stake­hold­er archi­tec­ture to offer our cus­tomers flex­i­bil­i­ty and the best exper­tise. We enable our SAP part­ners to dri­ve ESG in business. 

Q: In terms of day-to-day oper­a­tions, how will this co-inno­va­tion strat­e­gy work between PwC and SAP? As Chief Strat­e­gy Offi­cer, how is it chang­ing the way you work, and what excites you the most about that? What will it allow you to achieve in your position?

A: Co-inno­va­tion on BTP with SAP part­ners helps us to adapt more quick­ly in fast-chang­ing envi­ron­ments. Both teams involved will joint­ly focus on cus­tomer demand. I’m also head­ing the growth area of Sus­tain­abil­i­ty at SAP. We need agili­ty to adapt to require­ment changes, as well as data intel­li­gence with­in a fast-learn­ing orga­ni­za­tion, in order to offer our cus­tomers a No. 1 enter­prise appli­ca­tion portfolio. 

As we enter true busi­ness net­work col­lab­o­ra­tion, I’m con­vinced that is the key to offer­ing a trans­par­ent plat­form strat­e­gy, along with many addi­tion­al gov­er­nance top­ics in terms of who’s doing what. PwC has built a cli­mate excel­lence solu­tion that fits nice­ly into SAP’s sus­tain­abil­i­ty port­fo­lio; you can find it in SAP Sus­tain­abil­i­ty Nav­i­ga­tor (onde​mand​.com) as well. 

Our part­ners also dri­ve SAP in day-to-day busi­ness. What excites me most is that there is no more ques­tion­ing whether to adopt sus­tain­abil­i­ty and write busi­ness plans around it. Now, the ques­tion is: how can we act even faster with cus­tomers? And we should not for­get that we lever­age the pow­er of the Cloud, which allows us to deliv­er sustainability. 

Q: PwC Germany’s Cli­mate Excel­lence tool is based on SAP BTP. What lessons have you learned from this solu­tion and its suc­cess about the ways PwC and SAP can collaborate?

A: Cli­mate Excel­lence is a great start­ing point for cus­tomers’ ESG trans­for­ma­tion jour­neys. Each company’s busi­ness change sus­tain­abil­i­ty project is unique and comes with dif­fer­ent urgency pat­terns and focus­es. PwC is very expe­ri­enced in devel­op­ing solu­tions on SAP BTP and help­ing its cus­tomers inno­vate faster. What’s new from a col­lab­o­ra­tion point of view is that we will inte­grate cer­ti­fied Build part­ners’ SAP BTP-based ESG solu­tions around ​“Cli­mate Excel­lence” in our sus­tain­abil­i­ty port­fo­lio. The next step is to enhance our core solu­tions, like SAP Sus­tain­abil­i­ty Con­trol Tow­er, with part­ners based on our open tech­nol­o­gy archi­tec­ture. Let me empha­size again that we can adopt busi­ness process­es faster and trans­form toward cir­cu­lar­i­ty and net zero, but only if busi­ness­es all start to record, report, and act on actu­als with the help of trans­paren­cy tools based on BTP and inte­grate them into the sus­tain­abil­i­ty portfolio.

Q: What can you say specif­i­cal­ly about the co-inno­vat­ed solu­tions includ­ed with­in this enter­prise-wide ESG strategy? 

A: We need all of our enter­prise appli­ca­tions to sup­port ESG trans­for­ma­tion based on one ESG archi­tec­ture mas­ter­plan with clear trans­paren­cy tar­gets of emis­sion reduc­tion, cir­cu­lar­i­ty in process­es, and equal­i­ty. Stan­dard­ized co-inno­va­tion process­es deliv­ered in the Cloud are key. If we take the exam­ple of frame­works rel­e­vant to report­ing and dis­clo­sure, these are evolv­ing fast. There­fore, we need strate­gic part­ners with proven account­ing exper­tise to com­bine this exper­tise with sus­tain­abil­i­ty data in the SAP S/4HANA core or sup­ply chain appli­ca­tions to enable a sus­tain­able BTP enter­prise to act on actu­al data instead of aver­ages. This is a mas­ter­piece of team effort and col­lab­o­ra­tion. We lever­age sev­er­al co-inno­va­tions in par­al­lel to deliv­er on our unit­ed strategy. 

Q: These co-inno­vat­ed solu­tions will lever­age the SAP Cloud for Sus­tain­able Enter­pris­es solu­tion, along with the SAP Sus­tain­abil­i­ty Con­trol Tow­er solu­tion and the SAP Prod­uct Foot­print Man­age­ment solu­tion. Those solu­tions have all been intro­duced with­in the past two years. How has their release and adop­tion influ­enced and enabled the SAP sus­tain­abil­i­ty strategy?

A: SAP Sus­tain­abil­i­ty Con­trol Tow­er, SAP Prod­uct Foot­print Man­age­ment, and SAP Respon­si­ble Design and Pro­duc­tion have all been intro­duced with­in the past two years and are core ele­ments of our SAP sus­tain­abil­i­ty strat­e­gy. Through these solu­tions, we help to reduce emis­sions by man­ag­ing the prod­uct car­bon foot­print, accel­er­at­ing actu­als record­ing, report­ing, and act­ing on glob­al evolv­ing frame­works, as well as sup­port­ing local plas­tics tax require­ments and sup­pli­er due dili­gence acts. 

Based on BTP tech­nol­o­gy, we’ve co-devel­oped solu­tions with part­ners, we con­tin­ue to co-inno­vate the port­fo­lio, and most impor­tant­ly, we are adopt­ing all solu­tions with­in our ecosys­tem. Our strat­e­gy, built upon our respon­si­ble and inno­v­a­tive sus­tain­abil­i­ty ecosys­tem, goes hand in hand with our port­fo­lio devel­op­ment and agility.

Q: In announc­ing the co-inno­va­tion strat­e­gy, Chris­t­ian Klein and Bob Moritz both com­ment­ed upon the urgent role that ESG trans­paren­cy has to play in help­ing com­pa­nies rein­vent busi­ness mod­els and deliv­er sus­tain­able out­comes. Could you expand on that belief in ESG trans­paren­cy and how this strat­e­gy cen­ters it? 

A: Cor­po­rate ESG man­age­ment has become a cat­a­lyst for com­pa­nies to min­i­mize their car­bon foot­prints, reduce waste, and cre­ate fair, safe, and just work­ing envi­ron­ments for employ­ees. Many com­pa­nies are respond­ing to rapid­ly increas­ing reg­u­la­tion in this area and have set ambi­tious ESG tar­gets. Cur­rent ESG man­age­ment relies heav­i­ly on data aver­ages and esti­mates. Most com­pa­nies have not ful­ly inte­grat­ed their ESG data record­ing and con­trol into their core finan­cial, pro­cure­ment, sup­ply chain man­age­ment, and human resources (HR) sys­tems. This finan­cial and non-finan­cial data is dis­con­nect­ed, stored in spread­sheets, not updat­ed from real-time sys­tems, and not eas­i­ly shared with­in the com­pa­ny or with part­ners such as upstream sup­pli­ers or down­stream logis­tics providers. Con­sid­er­ing that, on aver­age, 90% of a business’s car­bon foot­print lies with­in its sup­ply chain, the inabil­i­ty to track, man­age, and gain insights from live data and embed it into core busi­ness process­es can crip­ple even the best-inten­tioned ESG efforts. Worse, it can mis­lead investors, cre­ate com­pli­ance issues, and mis­guide trans­for­ma­tion efforts. Uni­fy­ing ESG data pro­vides sig­nif­i­cant gains in capa­bil­i­ties and com­pet­i­tive per­for­mance. Com­pa­nies can­not make sus­tain­able busi­ness deci­sions using data they do not have or can­not use. That is why we devel­oped SAP Sus­tain­abil­i­ty Con­trol Tow­er.

Com­pa­nies push increas­ing­ly to record ESG fac­tors based on actu­al data, not aver­ages. SAP Sus­tain­abil­i­ty Con­trol Tow­er imports cross-enter­prise data from SAP sys­tems like SAP S/4HANA, SAP Prod­uct Foot­print Man­age­ment, and SAP Envi­ron­ment, Health, and Safe­ty. It also inte­grates with non-SAP sys­tems using a range of APIs to cre­ate audit-ready data. Busi­ness­es can inte­grate and ana­lyze gran­u­lar ESG data using the estab­lished struc­tures from their finance, HR, and oper­a­tions teams using tem­plat­ed data mod­els and cal­cu­la­tions. Our part­ner knows their cus­tomers’ data best and helps to find the rec­om­mend­ed start point to record actu­als. In order to inno­vate faster, to escape spread­sheet and restate­ment ​“hell,” we offer joint val­ue journeys. 

For cus­tomers who want to report to exist­ing and future stan­dards, we offer to effec­tive­ly share and orga­nize ESG data from across the com­pa­ny. With com­plete and inte­grat­ed ESG data, com­pa­nies can more accu­rate­ly and read­i­ly report their per­for­mance to var­i­ous report­ing require­ments and frame­works, such as GRI, WEF, TCFD, the E.U. Tax­on­o­my, and upcom­ing U.S. SEC require­ments. Through APIs, cus­tomers can fur­ther extend func­tion­al­i­ty by bring­ing in their own met­rics as well as indus­try and reg­u­la­to­ry con­tent and using oth­er appli­ca­tions in addi­tion to our co-inno­va­tion part­ners’ solu­tions. By reduc­ing efforts in man­u­al data col­lec­tion and report­ing vari­a­tion with dif­fer­ent reg­u­la­to­ry require­ments and time­lines, we stan­dard­ize process­es and help to rethink how enter­prise resources are planned sustainably.

Q: The co-inno­va­tion strat­e­gy fur­thers the SAP promise to embed sus­tain­abil­i­ty across stan­dard busi­ness oper­a­tions, in part by address­ing three top chal­lenge areas for ESG, net zero, and sus­tain­abil­i­ty report­ing: report­ing and dis­clo­sure, oper­a­tional­iz­ing sus­tain­abil­i­ty, and sup­ply chain risk man­age­ment, mon­i­tor­ing, and com­pli­ance. Can you touch upon these top chal­lenge areas and how SAP and PwC arrived at each of them?

A: As com­pa­nies, both PwC and SAP are com­mit­ted to using tech­nol­o­gy to improve our plan­et by sat­is­fy­ing Unit­ed Nations (UN) Race to Zero tar­gets, mon­i­tor­ing and mit­i­gat­ing cli­mate and ESG risks, and report­ing trans­par­ent­ly. We cur­rent­ly adopt our co-inno­va­tion strat­e­gy in mul­ti­ple cus­tomer projects around the world togeth­er. I’d like to share also with you that we observe a strong momen­tum of SAP S/4HANA projects accel­er­at­ing with sus­tain­abil­i­ty work­streams cov­er­ing all the top­ics you men­tioned. Intel­li­gent enter­prise projects ulti­mate­ly all trans­form into sus­tain­able enter­prise projects. Sus­tain­abil­i­ty data intel­li­gence needs to be on everyone’s busi­ness agen­da, from record­ing data and report­ing to com­pli­ance to sus­tain­able lead­er­ship. And final­ly, what makes me con­fi­dent is that we are work­ing togeth­er with and chal­leng­ing each oth­er in our strong ecosys­tem to learn and adopt every day so that we can act even faster.

Dis­cov­er more insights, news, and Sus­tain­abil­i­ty updates from ASUG here.