Q&A: SAP CSO’s Guidance on New ESG Reporting Standards
As an influx of new ESG reporting standards come into play, companies shouldn’t lose sight of what reporting standards are trying to achieve.
That is the key message of Sophia Mendelsohn, Chief Sustainability and Commercial Officer at SAP, who explores the reporting landscape and provides practical insights on how organisations can balance rigorous sustainability reporting with operational efficiency.
As new IAASB and IESBA standards emerge, she discusses how companies can transform compliance challenges into meaningful business opportunities.
In this interview, Sophia offers her expert perspective on the evolving landscape of sustainability reporting in the technology sector.
How do you see these new IAASB and IESBA standards influencing corporate sustainability reporting across the technology sector?
In reporting, there is a difference between knowing what to do or what to look out for and actually being able to perform on it. The introduction of these new auditing and ethics guidelines underscores the market’s demand to both understand and trust ESG and sustainability reporting.
Sustainability needs to be a business process and not a reporting exercise.
Likewise, businesses only want to report on decision-useful information that demonstrates true, related value. That is crucial to ensure that compliance efforts don't detract from the real goal: meaningful business transformation. We must avoid sustainability becoming an exercise in reporting rather than action. This shift will not only enhance stakeholder trust but also encourage companies to adopt more robust sustainability practices, ultimately leading to a more sustainable and responsible technology sector.
What challenges do you anticipate companies facing as they work to comply with these new auditing and ethical standards?
The lack of access to high-quality data. Sustainability is fundamentally a data play and a data challenge that touches every part of the business. It involves a lot of disjointed data in many streams that all need to be combined, organised, and understood, not only across business units but across the supply chain.
For data to become enablers rather than obstacles in achieving the goals behind regulatory requests, organisations must have access to and start embracing tools and technologies that streamline reporting and compliance. That’s what allows teams to focus on furthering sustainability initiatives. We can free sustainability teams from the burden of calculations and reporting. By standardising data across applications and embedding AI and advanced analytics into core operations, technology adoption can allow teams to focus on driving change and delivering value.
With enforcement starting in December 2026, do you believe most technology firms will be ready, or do you foresee delays in adoption?
Climate change is a top three issue for global C-suite level business leaders, according to Deloitte’s 2024 CxO Sustainability Report. Yet only half have started to implement technology solutions to help achieve climate goals. If companies are not accelerating their technological adoption, I believe the risk is high that there will be delays. Trying to navigate regulatory complexity without the right technology is like trying to surf without a board — you can get in the water, but you’re not going to ride the waves.
To achieve the purpose behind these regulatory requests, organisations must have access to and immediately start embracing tools and technologies that streamline reporting and compliance, allowing teams to focus on furthering sustainability initiatives.
This means transforming the way we leverage business data and business processes. It means treating sustainability data with the same rigor that we treat all other business data.
How do these new assurance standards align with other global frameworks, such as the EU Corporate Sustainability Reporting Directive (CSRD) or the SEC’s climate disclosure rules?
The new assurance standards are designed to be ‘scalable and adaptable’ with other global frameworks, such as the EU CSRD and the SEC’s climate disclosure rules. These regulations are primarily designed to stimulate transparency, so all companies and their finance departments are adhering to standardised sustainability reporting. We’ve all greatly benefitted from it, with the ultimate goal being to root out greenwashing and fraudulent claims.
That said, business leaders must remember that these standards and regulations weren’t designed to provide decision-useful information for operational management. Instead, CSOs need to collaborate closely with CFOs, leveraging technologies like AI to make sustainability part of the bottom line and managing 'carbon books' with the same precision as financials. With all this information in one place, they can see the full picture and spot areas of risks and opportunities. It's a complete transformation in how businesses can align their financial strategies with sustainability goals.
How can technology help companies ensure the accuracy and integrity of sustainability data?
If data accuracy and integrity is the heart of sustainability management, technology is what powers it by automating data collection, processing, and reporting. Take SAP Green Ledger, for example: It is the most comprehensive carbon accounting system globally that integrates directly with customers’ financial data. It enables businesses to use verified and reported real data, not estimates, to allocate carbon emissions to specific business transactions. That means customers can use SAP Green Ledger to integrate financial and environmental data in line with their individual and unique sustainability journeys. This level of data granularity also helps them to adapt to evolving regulations and international standards.
What innovations in supply chain tracking or carbon accounting are helping tech companies meet these stricter reporting requirements?
At SAP, we have everything it takes to be the pioneer in carbon accounting. SAP Green Ledger mirrors the logic of our financial and accounting systems, which are at the core of our Cloud ERP portfolio. As a result, SAP Green Ledger empowers organisations to accurately account for, analyse, and report carbon footprints across products, services, and organisational units like finance and supply chain.
It enables businesses to drill-down on revenue, cost, and profit in relation to emissions along org structures, time dimensions, and value chains.
For example, Covestro, a world-leading manufacturer of high-quality polymer materials, is using SAP Green Ledger in an early pilot phase to test the linking of carbon dioxide values generated during the manufacture of specific products in the supply chain.
How do you balance the need for greater sustainability reporting rigor with ensuring it doesn’t become an overwhelming burden on business operations?
My advice is to stick to your enterprise resource plan. Sustainability needs to be a business process and not a reporting exercise. When it becomes a business process, with all departments aligned on the overarching sustainability goal, you can move toward the big picture. There’s no point in planting a garden if you aren’t clear on how to help it grow.
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