| Status |
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| Owner | Stefanie Schwartz, Alex Bechter | |
| Stakeholders | Marie Flourie, tbc Gilles Madjarian |
Issue
Carbon accounting solution required for Sysensqo as part of ERP Rebuild project.
Determine to what extent SAP tools can manage the business and system process to cover scope of AS IS third party applications (TPAs) for Sustainability. May require creation of further KDDs to cover specific TPAs.
Recommendation
Harmonise current ESG landscape.
Background & Context
ESG Landscape As Is
- BW Cerise (CO2 Energy Report Improvement Software Efficiency)
- Automatic reporting of GHG (greenhouse gases) and ETS (Emissions Trading System) allocations for all sites.
- Carbon accounting uses Cerise as closely linked to Finance, which was heavily involved with Cerise implementation.
- Cerise is not an SAP module, but custom solution in BW where master data is directly maintained in BW. It uses BW outside of its original purpose of consolidating relevant business information from productive SAP applications.
- Currently solution only covers scope 1 and 2 at site level. Scope 3 requirements with 15 subcategory e.g. GHG protocol 3.1 are not covered.
- Cerise is recent development without a formal RFI.
- New carbon accounting solution such as SAP Green Ledger needed to cover all categories, rather than a patchwork solution.
- Current dashboard access is via Qkliksense, which is expected to be redundant with a new solution for carbon footprint management such as Green Ledger.
- Cerise supports requirements for annual disclosures as backbone for reporting Scope 1 and 2 relating to energy. Some are essential for annual reports.
- Scope 1 data BW Cerise where activity is collected combined with emission factor for each plant. Mapping table for each plant in BW.
- Qty of energies are reported from ERP directly. Cerise is plant level, Syensqo are buying these energies and combining the emission factor. WP1 uses qty of energies in BOM . Emission factor not from BOM, Cerise tool to get emission factor at plant level.
- Qliksense
- Dashboard for BW Cerise, integration not required if dashboard functionality available via SAP Green Ledger, potentially redundant with the new solution.
- Used for SPM, which may remain valid with a new carbon footprint management solution.
- Qliksense used for reporting relating to CSRD for visualisation.
- EcotransIT (World)
- The most widely used software worldwide for the automatic calculation of energy consumption, carbon emissions, air pollutants, and external costs.
- Widely used by peers and 3PL providers.
- Calculates distances based on the most logical routing and most likely mode of transport e.g. diesel-powered trains in US vs electric trains in Europe.
- Contract not signed, yet, under negotiation.
- Database, no software.
- Should be in carbon accounting blue box middle. Should be part of scope 3 transport related emissions.
- May be covered by Green ledger. Comprehensive tool should replace it.
- Colmar (CAPEX tracking) - CAPEX - increased needs, covered by Finance
Non-SAP - out of scope for ERP Rebuild:
LCA
- EcoInvent (2ndary data) - library of emission factors. Linked to SimaPro. Database only, not software. Connected to LCA. Commercial issue as data bought through software lincence in Simapro. No further improvement.
- Sigreen (PCF collect) - SaaS aiming at facilitating the exchange of PCF within the value chain. It was co developed with TfS. Interested to see what SAP propose. Sector federation decision to chemical industry in 2024 from RFP two years. Syensqo cannot chose, collective decision. No change. Tableau - PCF.
- Ecovadis (supplier screening) - no questionnaire, prebuild questionnaire. same as Sigreen, collective choice by federation. No change.
- Wave (Star Factory) - Consumed by sustainability. Tool of McKinsey. PMO tool, project mgmt tool.
- WeGo (Portfolio Management) - project mgmt tool, managed by R&I and IT.
- SPM - SPM (Sustainable Portfolio Mgmt) - SPM is a custom built tool in SAP that standardizes and records sustainability assessments in order to support decision making processes. It combines:
- on the vertical axis: the monetization of all the environmental impacts based on the ecoprofile done in simapro (excel upload)
- on the horizontal side, the market positioning based on a form
The evaluation is done on a data object called PAC (Product in Application) that is linked via correlation tables to products and end uses in order to allow the visualisation of the sales for each SPM category. custom build by Solvay. SAP not right, too bespoke. Will remain out of scope. Just needs improvement. ABAP developed. Form technology. To BE webforms, not SAP.- RFI?
- Timeline RFI vs ERP if future not SAP
- Qliksense integration
- Gensuite should stay, sustainability just consumes. unlikely to be consumed by SAP.
Ongoing Projects
RFI ESG Disclosure and Performance
ESG Disclosure and Performance - SAP not mature enough with SCT (Sust Control Tower). Could be revisited in 3 years. Roadmap? SAP did not answer RFI, just off the shelf ppt. Access issues to links.
Gensuite one option. Synergies with reporting. Target state data capture and clean up close to source. May mean movin away from Gensuite to where data ownership, modelling is more frequent. Gensuite not right fit, maybe more towards Microsoft. Pilot in autumn to test automation of env metric, modelisation for data cleaning and then consume clean data on corporate level.
Shortlist of two, favourite Greenomy as short term solution so not overspend. Plug and play. Recommendation given, waiting for decision
Launch of Sustainbility Control Tower RFI, extended to SAP, SAP invited to answer. Unlikely they will be shortlisted. RFI to consolidate all sustainability data in one place, create reporting layer and insights layer on top. 1-2 year contract to revisit once ERP Rebuild is in place. Hence AS IS is a moving target. Different scope to Green Token. Demos have been presented by SAP this year to Marie with PWC. Scope, AI and insights not good enough. RFI supported by KPMG experience with other client and finalised in next days. 2.5 weeks for providers to answer by mid June. Other potential providers SAP, Gensuite, Salesforce, Microsoft (new partner AI), Simapro provider Sphera. Pure players: https://watershed.com/en-GB, https://www.cority.com/, https://figbytes.com/company/about/, Watershed.com. June/July 2023 Go-No Go decision. Syensqo IT contacts are Guillaume Muller (PM sustainability) and Mathilde Lascombes (for the AI capabilities) for now. Syensqo will involve purchasing and architecture once we have shortlisted
*Sustainability Control Tower: SAP scope, AI and insights not good enough. ESG data, elements on basic reporting using tools creating KPI library. This should be covered by SAP. Enhancement of this data SAP lacks, reporting layer e.g. KPIs, emission factors e.g. ecoinvent, ecotransit. For example carbon accounting. Pureplayers look into public data where plant data is missing, to make assumptions where there is gaps. Other functionality, AI native pureplayer is integrated benchmark. Competitors in tool for KPIs in market based on public information. SAP solution does not cover this. No company in manufacturing uses the Sustainability Control Towers.
Dedicated project on carbon footprint
managed by Philippe Chevaux (Sustainability DT)
eg. estimation on product footprint. Project finish by end of 2024.
Digital sustainability
Emissions impact when buying and selling to understand kg of CO2 to get product to customer. Importance to customers, the lower CO2 the greener. Other companies CSRD aim to reduce emissions.
Aim to take control what is happening in supply chain. Syensqo needs activity data and emission factor e.g. how many kg CO2 for certain activity. Data build by experts or external databases. Economic accounting and carbon accounting same: buy raw materials, production, transport, man power, waste. It is the first time ever that Syensqo have product level accounting for Sustainability. Few other companies are at same stage. Historically accounting at plant or group level only. CO2 = direct emission on product level (scope 3). Beforehand at plant level. Scope 1 directly e.g. burning into air, Scope 2 e.g. buying electricity. Scope 1 data BW Cerise where activity is collected combined with emission factor for each plant. Mapping table for each plant in BW. Qty of energies are reported from ERP directly. Cerise is plant level, Syensqo are buying these energies and combining the emission factor. WP1 uses qty of energies in BOM . Emission factor not from BOM, Cerise tool to get emission factor at plant level.
Changes to carbon print, that could reduce emission factor: optimise process leading to less consumption, measured at plant, change of BOM based on lower conception. Otherwise it is possible to change provider for energy supplies to reduce emissions factor. Selecting suppliers with lower footprint.
Accuracy key TO BE to govern and implement solution going forward. Data flow as one version of truth. For raw materials v good accuracy according to Matthieux. Better waste allocation would be beneficial.
Resource and time constraints hindering to go beyond PCF (Product Carbon Footprint) e.g LCA Life Cycle Assessment. Regulation more on reporting ESG than on PCF. PFC not forced by regs to be provided, other than customer impact deciding to buy more PCF friendly products. PCF for customer benefit only. GBUs have no one priority. Some customers may stop selling otherwise. Business continuity impact. PCF also needed for corporate ESG disclosures, especially 3.1.
What are the requirements for annual disclosures? Cerise tool is backbone for reporting Scope 1 and 2 relating to energy. Some are essential for annual reports. Strategy Gabriela, SAP first, if not fully cover requirements, then certified product. In some instances, SAP development instead of 3rd party product.
Procurement initiative for pressuring vendors as part of 3.1. A way to understand where emissions come from at operational, procurement, market level. Enables to start taking action on group targets.
Assumptions
Constraints
Impacts
Business Rules
Options considered
Option A: SAP Green Token
Combines financial and environmental data to enable deep insights and effective decision making at different points across the business process.
Business decisions need to consider environmental costs. The Green Ledger allows for thses costs to become visible up front.
Makes it easier for businesses to accurately account for the carbon they produce across their value chain. Given the fact that SAP handles 70% of the world’s business transactions, it will also – when it launches next year – be the largest solution of its kind available.“To truly make progress and create a more sustainable world, it’s important that enterprises take action on the carbon they’re producing,” explains Jesper Schleimann, SAP’s Chief Strategy and Innovation Officer. “But the only way to do that is to have actual data so they can make business decisions.”
Couple the need for action with an increased need for transparency from investors, employees, regulatory bodies, and customers, enterprises are being pushed to make sustainability an integral part of their business blueprint.
available within the RISE and GROW with SAP programmes.
By adding in the fourth element, the Green Ledger, businesses will be able to act on the insight they have in front of them.“Of course, you can take action at any stage but the Green Ledger will help to make bigger, bolder, decisions that become integral to what a business does; embedded across the enterprise.”
Just as financial ledgers detail the value that moves across an enterprise – how much money has been made, where it should be invested – with the Green Ledger, businesses will know which activities are driving their carbon footprint so they can look at where and how they can reduce it and make better decisions.
Option B: Continue As Is
Option C:
Option D:
The current carbon accounting and reporting solution Syensqo is using is a heavily customized solution in the existing BW system. It only covers scope 1 and scope 2 of the carbon emission protocols and another solution for capturing additional categories of scope 3 emissions is currently being deployed (Novecare is fully live whilst Speciality Polymers is under way).
With the current BW system being phased-out by SAP and replaced in the ERP Rebuild with a state-of-the-art data warehousing solution and the concurrent push from SAP for fully-integrated sustainability solutions to measure carbon emissions effectively at the individual process and transaction level in the underlying ERP systems, an opportunity arises to re-design, simplify and standardize the carbon emission accounting solution used at Syensqo.
Recommendation
Based on the analysis performed, the project team recommends to pursue option A 'Deploy 'Green Ledger' for carbon emission accounting in S/4 HANA'. With this option the carbon emission impact across all sustainability scope items can be accurately captured, tracked and monitored at various levels of the organization and correlations between financial and carbon emission performance can be identified and measured against. It is the state-of-the art product from SAP for carbon emission accounting with a heavily loaded roadmap of additional features and functionalities to be added in the near future to the current scope of capabilities which makes it a future-proof and scalable solution. It comes with its own set of analytics and reporting applications that allow for insightful and comparative reporting on the performance of the organization both in terms of financial as well as carbon emission results.
SAP Green Ledger will only be available from SAP in December 2024. It needs to be considered how the recommended solution could be de-risked as part of the implementation approach. Hence the recommendation is to implement SAP Green Ledger with a phased implementation to allow for the stabilisation of SAP SFM to support Green Ledger functionalities. Phase implementation meaning the use of SAP Datasphere to de-risk the stabilisation phase between SAP SFM and SAP Green Ledger.
Background & Context
Financial decision-making may be influenced by carbon emission considerations as regulations become stricter globally, financial incentive systems are put in place for companies to accelerate their carbon emission curbing and consumer as well as investor decisions are becoming increasingly driven and influenced by a company’s public perception of its environmental impacts and sustainability efforts. Publicly listed companies such as Syensqo are also obliged to disclose sustainability outlooks and carbon emission performance details in the annual reports published by the company. All these factors call for a growing need of companies for a reliable, robust and auditable system with transparent and governed mechanisms to digitally track its carbon emission footprints end-to-end from cradle-to-grave.
SAP recognised the need and potential benefits for companies to operate with a more accurate, integrated and automated carbon accounting solution and has recently launched a new product, under its comprehensive product suite of sustainability-focused solutions, called the ‘Green Ledger’ to facilitate this process. The SAP roadmap and development pipeline for new product features and planned capabilities to be added to the Green ledger functionalities over the next two years is remarkably packed with over 35 items available in the list at the time of writing (refer to section 'See Also' for a complete list of SAP roadmap items). This is another indicator which evidently shows that SAP is serious and committed in its efforts to provide companies with a capable and comprehensive carbon accounting solution embedded in the core ERP system going forward.
The green ledger allows for transaction-oriented accounting of carbon emissions thereby applying the same rigorous rules that are required for accounting data to comply with Financial Accounting standards. This guarantees accuracy, full traceability, clear accountability and reportability of carbon emissions throughout the organization. It gives the Finance departments and other interested stakeholders also the ability to track any direct or indirect correlations between Financial results and carbon emission impacts at the various levels of the reporting hierarchies defined as part of the ERP Rebuild Program (e.g by market, GBU, entity, region, group). The green ledger will also provide useful insights to the involved teams to further facilitate emission trading as it allows for accurate reporting of actual CO2e consumptions as well as simulation and forecast capabilities based on planned financial or operational data. Needs to replenish or sell CO2 certificates can therefore be identified early on in the process. During detailed design it will be further explored if Procurement and Sales activities for emission trading can be further automated based on information available in the green ledger and/or SAP Sustainability Footprint Management (SFM).
Technically, the green ledger relies on underlying data captured by the Sustainability Footprint Management (SFM) solution. Once implemented, SFM tracks the carbon emission footprint of all transactions relevant to scope 1, 2 and 3 as defined by the GHG protocols. For further details on the capabilities of SAP SFM, please refer to the KDD on ' EHS - Sustainability Footprint Management '. The multiple layers involved in the transition from aggregated data down to the transactional data available in the green ledger can be viewed in the below chart:
The below screenshots offer a look-and-feel for analytics and reporting features available out of the green ledger in S/4 HANA:
1. Carbon emission totals for each section of the P&L and Balance Sheet (e.g. at carbon totals at contribution margin level).
2. Drill-down abilities from top-level Financial Statement position to individual carbon collection documents causing carbon emission total for reporting period (e.g. drill-down from inventory account balance to goods receipt/goods issues impacting carbon emission total for inventory holdings):
3. Break-down of each carbon collection document by scope and GHG category:
4. Translation of carbon collection document into Financial Accounting document inside the 'Green Ledger' (e.g. carbon emission impact from goods receipt/goods issue posting assigned to same G/L account and profit centre/cost centre as source posting in Financial Accounting):
5.) Dashboard Reporting of GHG emissions based on Financial Accounting dimensions and reporting hierarchies (e.g. visibility of scope 1 to scope 3 footprint in operating income of company by financial period and company code/segment/profit centre):
The SAP Green Ledger is, however, still an unreleased product from SAP at the time of writing (official release expected by end of 2024). There are also some uncertainties associated with its licensing and availability in private cloud environments. It is therefore important to also consider other options for carbon emission accounting should there be any delays in the SAP roadmap for the planned product release or other licensing constraints imposed by SAP in recent months. A reliable system for carbon emission accounting and reporting has become a key strategic pillar for Syensqo’s sustainability efforts in recent years that must not be compromised in the ERP Rebuild solution.
Against this background, the following options are considered in this KDD:
- Deploy ‘Green Ledger’ for Carbon Accounting and Reporting in S/4 HANA.
- Re-build current solution for carbon emission accounting and reporting in SAP Datasphere.
Assumptions
- SAP Green Ledger will be released as per current release schedule in Q4 2024.
- SAP Sustainability Footprint Management will be implemented in the ERP Rebuild Program.
- Automatic event-based triggers of Procurement activities with regards to external emission trading due to carbon footprint requirements (e.g. additional need for CO2 certificates due to increased production levels) will be explored in detailed design under the umbrella of SAP Sustainability Footprint Management functionalities.
- SAP Green Ledger is available as part of the licensing package acquired by Syensqo for S/4 HANA, private cloud edition.
- SAP Green Ledger is currently only available in SAP RISE. To be confirmed in December 2024 if SAP RISE part of ERP Rebuild scope.
Constraints
- Should SAP Sustainability Footprint Management not be implemented in the to-be solution or should there be any delays in the planned product release for the 'Green Ledger' by SAP, the recommendation shifts from 'Option A' to 'Option B'.
Impacts
- Reporting: Native SAP Fiori apps are available to support reporting out of the green ledger. These reports may require some form of customization to fulfill current reporting requirements with regards to carbon emission accounting for Syensqo.
- Change Management: Intensified user training and awareness campaigns needed to ensure seamless transition from legacy to new green ledger solution.
- Data: Historical data needs to be migrated and potentially converted for year-on-year reporting out of S/4 HANA.
Business Rules
- None identified at the time of writing. This section may be revisited and updated during detailed design.
Options considered
Option A: ‘SAP Green Ledger’
In this option, it is assumed that the ‘SAP Green Ledger’ will be released by SAP according to its currently laid out roadmap.
The SAP Green Ledger allows for holistic management and accounting of carbon emissions across all 3 tiers of scope. It is closely linked to the Financial Accounting data captured in the S/4 HANA system following typical rules for capturing accounting data in an audited ERP system (e.g. zero-balance between debits and credits per ledger entry) to allow for comparative reporting of financial results and the environmental impact the financial performance of the organization brings about.
The SAP Green Ledger requires data feeds from Sustainability Footprint Management to be able to use it efficiently. It is assumed in this option that Sustainability Footprint Management will be introduced as part of the ERP Rebuild Program. SFM is capable of capturing carbon footprints of all business and supply chain activities at the various scope levels. Carbon emission accounting in the SAP Green Ledger will subsequently be performed based on data captured in the SAP SFM module. It can be posted at various levels of granularity using objects from the SAP enterprise structure and organizational units depending on the reporting needs for the respective activities (e.g. company code, cost centre, plant, sales area, profit centre, etc.).
Option B: SAP Datasphere
The current As-is solution for Carbon Emission Accounting and Reporting named ‘Cerise’ is a heavily customized solution built in the existing BW system with data extracted from various modules in WP1 and PF1 as the main source of information for its calculations and computations of the actual carbon emission footprint of Syensqo’s scope 1 and scope 2 operations.
In this option, the intention would be to re-build the core parts of the existing solution in a similar fashion based on new S/4 HANA master and transactional data designs. Efforts would be made to extend its current coverage beyond scope 2 to also include scope 3 categories, which are becoming increasingly important to the company. With the deployment of SAP Sustainability Footprint Management in the to-be solution and its comprehensive coverage of data capture across all 3 scope categories this should become a realisable improvement opportunity.
The classic BW system will be replaced with the succeeding and roadmap-aligned data warehousing software from SAP called ‘Datasphere’ as part of the ERP Rebuild program. It is expected that similar and potentially more advanced data extractors and calculations models as currently used in the BW system can be replicated in Datasphere allowing for at least like-for-like reporting to what's available at the moment in the legacy BW system.
Evaluation
The below table provides an overview of each option's pros and cons against selected key pillars of the project charter and other important evaluation criteria in the context of the solution that need to be considered in the selection process:
Qualitative Evaluation | Score | ||||
|---|---|---|---|---|---|
Weighting(H/M/L) | Option A: SAP Green Ledger | Option B: SAP Datasphere | Option A | Option B | |
| Compliance | H |
|
| High | Medium |
| Standardization and Simplification | M |
|
| High | Low |
| Integration | M |
|
| High | Low |
| Future-Proof/Scalability | L |
|
| High | Low |
| Costs | H |
|
| Medium | Medium |
Deployment Risk (Score) | H |
|
| Low | Medium |
Overall Score (High: 3 Points, Medium: 2 Points, Low: 1 Point) | - | - | - | 33 | 23 |
See also
SAP Roadmap for 'Green Ledger' as of September 2024 - click 'expand' below:
Evaluation
Option A
SAP Green Token
Pro
helps you see the sustainable qualities of raw material from its original source and introduction into the supply chain.
Con
Pro
Pro
Pro
Con
Pro
Con
Pro
Con
ConPro
Pro
Con
Con
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