Can SAP's New Data Exchange Solve Scope 3 Reporting Issues?

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SAP's new Sustainability Data Exchange programme is touted to increase precision in Scope 3 emissions measurements | Credit: SAP
Technology will be a defining theme of COP29. Will SAP's new data sharing platform become one of the world's most valuable weapons in the climate fight?

Next month, global leaders from the worlds of business, government and civil society will all converge on Baku, the capital city of Azerbaijan. In November 2024, this far flung corner of Europe plays host to the world's largest climate conference, for its 29th iteration.

The United Nations (which organises the annual event) says that COP29 comes at "a vital moment for the world". The world's eyes will be on Azerbaijan as problems mount and the demand for action intensifies.

At every COP there are themed days, where certain subjects are discussed. The first thematic day of COP29 is all about digitalising the climate fight, showcasing how technology can best be utilised to solve environmental problems.

One company introducing such a technology is SAP, which has announced the launch of its Sustainability Data Exchange, a cloud-based application designed to transform how companies collect, share and analyse carbon-related data.

Baku, the capital city of Azerbaijan, will host COP29 in November 2024

The challenge of tackling Scope 3 emissions

While reducing a company’s direct emissions—known as Scope 1 and Scope 2 emissions—may be manageable, tackling Scope 3 emissions involves removing emissions from right across the supply chain. These emissions, which arise from sources not directly controlled by the company, such as suppliers and logistics, often make up the lion's share of a company’s carbon footprint.

Execs from SAP stress that the complexity of addressing these emissions is often compounded by existing technology.

Gunther Rothemel, Chief Product Officer and Co-General Manager at SAP Sustainability, says: "One major challenge companies face is outdated tools, such as spreadsheets or questionnaires, and disconnected processes to collaborate with their network."

Without a standardised approach to data collection and sharing, lots of companies struggle to measure the emissions up and down their supply chains. They end up relying on industry averages rather than their own data, which means they don't know what their baselines are or how their sustainability measures are performing.

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Moving from estimates to absolutes

SAP's Sustainability Data Exchange aims to remedy this issue by facilitating the standardised exchange of carbon data between supply chain partners. The software helps organisations shift from estimates to actual carbon measurements, allowing them to implement more precise climate action strategies.

By integrating emissions data from suppliers, businesses can avoid double-counting emissions and identify the most impactful areas for CO2 reduction.

"Having an accurate view of carbon emissions across the entire supply chain not only enables data exchange but can have a real impact on the bottom line," Gunther says.

The aim is to enable businesses to treat carbon data with the same rigour as financial data—a principle SAP calls the “Green Ledger” approach, where carbon metrics are considered as integral to the corporate balance sheet as cash.

Gunther Rothermel, Chief Product Officer and Co-General Manager at SAP Sustainability

Leveraging SAP's Business Network for Broad Adoption

SAP's platform also leverages the company’s Business Network, a global ecosystem that handles transactions worth nearly US$6tn annually across 750+ million exchanges.

By tapping into this extensive network, the Sustainability Data Exchange is poised to support broad-based adoption, potentially setting a new standard in how companies measure and manage their environmental impact.

However, the effectiveness of these solutions will depend on widespread buy-in from companies, as well as the willingness of suppliers to provide precise carbon data.

Christian Klein, CEO of SAP | Credit: SAP

As SAP gears up for the release of its Green Ledger in late 2024, the company envisions a future where carbon accounting becomes as critical as financial reporting. As Gunther says, there is value in "treating carbon like money."

Christian Klein, CEO of SAP, is excited by the project and its potential. He says: “This open and collaborative data ecosystem perfectly reflects SAP’s vision to enable every organisation to become a network of intelligent, sustainable enterprises."

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