Asked what she would do if she were a regulatory czar, Sophia Mendelsohn, Chief Sustainability Officer, SAP, told Stephen Dunbar-Johnson, President, The New York Times, that she would tell companies to get more comfortable with complex regulations.
“We had 150 years to get comfortable with financial complexity; we just need to get comfortable with sustainability complexity much faster,” said Mendelsohn.
Speaking at an event at COP28, Mendelsohn explained how software and AI can help companies tackle the hurdles to effective sustainability reporting.
At SAP's Sustainability Showcase at COP28, business, government and technology leaders discussed how technology can help reduce complexity around sustainability challenges.
SAPThe adoption of the Corporate Sustainability Reporting Directive (CSRD) and other such regulations entail major changes that are causing much uncertainty. Regulations are continuously evolving, and while still in its infancy, the environmental, social and governance (ESG) regulatory landscape is already mired in complexity.
“The tools in SAP’s sustainability portfolio can help companies treat reporting as an exercise in business discovery instead of a regulatory disclosure chore,” said Mendelsohn.
The SAP Sustainability Control Tower is a software-as-a-service solution that helps businesses oversee their sustainability performance. Equipped with pre-established content aligned to sustainability standards such as GRI, WEF, TCFD, CSRD, and the EU Taxonomy, it helps companies establish a sturdy, auditable ESG framework using data from SAP and non-SAP systems.
The Showcase
To demonstrate how the solution can help companies transition from sporadic sustainability reporting to a comprehensive approach, four manufacturing companies in the United Arab Emirates (UAE) collaborated with SAP and the UAE Ministry of Energy and Infrastructure (MoEI) to create a hypothetical showcase featured at COP28.
The four companies shared several years’ worth of ESG data which was processed by the SAP Sustainability Control Tower and consolidated in SAP Analytics Cloud for an industry view. The showcase shows how the solution could be implemented by individual companies and how data from multiple companies can be aggregated to offer an industry or country-level analysis of sustainability performance. It identifies areas for improvement to be addressed through new policies or regulations.
Here are four different examples highlighted at COP28:
Food and Beverage
Alan Smith, Group CEO, Agthia Group PJSC, a global company whose business relies heavily on water, said investors are keenly interested in how the company manages sustainability. “SAP is helping us get a better insight into our data,” said Smith. “At the same time, we are working closely with the government and regional partners to develop more sustainable packaging and recycling opportunities,” he said.
Agthia recently launched a plant-based bottle, a completely new concept in the region. Previously, UAE legislation prohibited the use of recycled PET bottles as primary packaging because high temperatures in the region impact their safe use. Agthia worked with the government to research, implement and secure approval for locally sourced plastic, eliminating the need to bring it in from Indonesia.
“Technology is absolutely critical,” said Smith. “We use it to measure everything, from waste going into landfill to energy consumption. We are heavily focused on our scope three footprint. We believe the circular economy has to be within the UAE to be truly carbon efficient.”
Paper and Pulp
Technology is what keeps Crown Paper Mill (CPM) competitive. It helps reduce the use of water, energy, gas and every other component of the manufacturing cycle. Furthermore, it helps minimize waste and enables the predictive maintenance of assets. “Without technology we would not be able to maintain our high standards of quality and remain cost effective,” said Abdullah Al Khateeb, Managing Director, Crown Paper Mill LLC & Ittihad Paper Mill LLC.
The data shared in the showcase helps CMP optimize energy and water management. Data gained from CPM’s treatment of sludge, for example, can help the government gain better insight into the industry’s overall requirements for water, energy and waste management.
“There is a lot to be learned through cross industry comparisons,” said Al Khateeb. “Finding innovative ways to reuse sludge is not so different from finding ways to reuse slag, waste generated in the steel production cycle.”
Ceramics and Lifestyle
At RAK Ceramics, sustainability is also a competitive advantage. Operating on a global scale requires compliance with the environmental standards and certifications required in each of the 150 countries where they distribute products. Complying with emissions regulations and developing sustainable products using recycled materials require specific certifications or elements of innovation in the production process or in the product itself.
RAK is in the process of integrating AI and advanced data analytics into its supply chain operations in order to forecast demand more accurately, optimize inventory levels, and streamline logistics processes.
Construction and Infrastructure
Producing cement, a key ingredient in concrete, is the third largest source of industrial pollution. Exeed Litecrete has developed aerated, lightweight concrete blocks that reduce CO2 emissions by 30 percent. The company’s green building products are manufactured in a fully automated production system using advanced technology at every step.
"Not only have we reduced the cement content in our products, we use less raw materials and less energy for production and transportation,” said Mohammed Alameer, Group General Manager, Exeed Industries. “The showcase exercise really helped us understand our emissions within our own manufacturing processes and how they impact our carbon footprint globally. As a result, we are now looking at rail transportation to reduce downstream emissions.”
Treating Carbon Like Money
According to His Excellency Eng Sharif Al Olama, Undersecretary for Energy and Petroleum Affairs at MoEI, collaboration is needed to ensure the UAE meets its net zero 2050 goal.
“This showcase is a great example of how the public and private sector can work together to achieve shared objectives,” he said. “It shows how we can measure our progress holistically and identify sectors where extra effort is needed to ensure all organizations are working effectively to meet our collective carbon neutral objective.”
For Sophia Mendelsohn, it boils down to treating carbon like money.
“You can’t manage what you can’t measure. Only when you start managing sustainability data with the same rigor as financial data will it be possible to accelerate decarbonization while recovering costs associated with high-carbon output,” she said.
Clearly, the companies and government entities featured in the SAP Sustainability Showcase COP28 are leading the way.
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