Issue

Issue

There is a regulatory drive by the Corporate Sustainability and Reporting Directive (CSRD) to disclose percentages of raw materials.  Currently, there is no process or tool (structured or streamlined) to measure sustainable raw material percentages through the supply chain processes in Syensqo.  The company only has limited visibility into the origin of materials and to which extent they are truly sustainable.  Syensqo will have to disclose zero percentages , which is not a truthful disclosureas part of reporting as Syensqo is unable provide evidence with regards to actual percentages.  It carries a considerable reputational risk for Syensqo, which in could also turn triggers into a financial risk as green investors only consider Green Bond financing opportunities.  Green bonds are fixed-income financial instruments which are used to fund projects that have positive environmental and/or climate benefits.   Green bonds issuers may rely on percentages of sustainable raw materials among other elements.  Mass balance is used for commercial advantage and requires solid solution going forward. 

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In contrast, Syensqo is making claims to customers about the sustainability of some of their products.  Green bonds financing opportunities only consider green investors.  If zero raw material percentages are bought then Syensqo cannot be considered for Green Bonds.  Syensqo already makes claims to customers about some product being sustainable.  It is contradictory to the annual report stating zero percentages.  The inconsistency reflects the disconnect between Marketing and the regulatory requirements.  Syensqo needs a solution to enable the company company reporting stating low percentages of sustainable or renewable raw materials.   Syensqo needs a solution to enable the company to disclose sustainable raw material percentages based on actuals to customers in line with CSRD requirements going forward to alleviate further reputational  and financial risks.

Recommendation

Further, there is the need to capture and record various sustainability attributes attached to raw materials and track them end to end in order to be able able to issue certificates or KPIs at the finished product level, as per regulatory or customer requirements.  

Recommendation

The recommendation is to implement Material Traceability via Option D using Production BOMs for certified materials.  The solution enables an improved level of traceability and transparency from source to end product whilst managing supply chain complexities.  Further, it allows the company to track and report GHG emissions of products that are received and sold in conformance with certification standards as well as other Sustainability attributes.

The implementation of an appropriate Mass Balancing solution across the production processes still allows Syensqo to look at additional requirements e.g. around blockchain in the future.

Background & Context

Supply chain sustainability is based on the traceability and transparency of sustainable material usage for commingled and bulk-traded materials.  There is a regulatory drive by the Corporate Sustainability and Reporting Directive (CSRD) to disclose percentages of sustainable raw materials as part of as part of resource inflows reporting (Scope 3) .  It is relevant for non-bio-sourced (e.g. fossil-based plastics to circular plastics) and bio-sourced (e.g. vegetable or animal origins and biodiversity) raw materials as well as recycled materials.  

Today the information relating to raw material percentages is collected and stored in a redundant, unstructured and non-auditable manner, which is reflected in the current process.   The inconsistency reflects the disconnect between Marketing and the regulatory requirements. 

1. Initially the customer requests a non-GMO certificate. 
2. Questions arrive at the frontline desk.
3. Questions are then forwarded to the Sustainability champion of the relevant GBU.  
4. The Sustainability champion then asks the buyer to send a form to the supplier.  Data needed from supplier is GBU specific e.g. Aroma and food.
5. Alternatively the Sustainability champion contacts Product Stewardship. 
6. The completed forms are finally stored on a personal Google drive. 

There is an argument that 100% of raw materials in scope for this solution because Syensqo must report on a % of biobased materials out of the total quantity of purchased raw materials.  Syensqo needs to secure the traceability of special cases as well as the total.   A dry run exercise that is currently being run by Sysensqo should confirm percentages by end of September 2024.  Whilst the percentages of biobased materials will be smaller, the total set of materials in scope of this is 100% hence supporting the recommendation of a technology focused solution. 

Currently with regards to the financial valuation of inventories, the normal RM and the certified RM have two different values (two different purchasing prices).  Once put together (after the virtual process order) the resulting value of the stock will be a weighted average. 

It needs to be considered that one of the IFRS rules is that Syensqo's physical stock on hand should be aligned with what exists in the system (physical versus available stock).  

The following Sustainability attributes are examples of what needs to be considered as part of the future solution:

• GHG emissions
• Genetically Modified Ingredients (GMO).
• Aroma related certificates relating to  halal, kosher, vegan. 
• EU deforestation and sustainability of forests, relevant for Novecare where customers are requesting natural rather than chemical ingredients.

Audits

At company level, Syensqo has KPIs on circular sales hence asking each GBU for sales of renewable products twice per year.  There is a lack of transparency as part procurement process resulting in Syensqo having to change as auditors will not accept current way of working.   Circular sales KPIs have been audited for four years by Deloitte.  Since last year these KPIs have been audited by Ernst and Young, which nearly failed in first year.  If audit fails next year then the figures cannot be published in the annual report.   Sysensqo's credit rating as well as credibility might be impacted.   

It holds a different level of risk at product level, where products could be sold at higher price due to being sustainable e.g. the purchase of palm oil which is certified sustainable.  Audits are possible from customers at random and fines and commercial disputes are possible due to breach of contract.  

Certification

The mass balance approach is an important milestone on the pathway to a circular economy and bioeconomy. It has been designed to trace the flow of materials through a complex value chain. The mass balance approach is used among other in ISCC Pl us certification .  ISCC Plus is a voluntary sustainability certification for e.g. plastics and chemicals to reflect that traceability along the supply chain is given.

Conforms to EUDR (EU Deforestation-free Products Regulation).  Introduced in 2023 and was planned to be mandatory from December 2024.  A proposal for a one year postponement was issued in September. (https://ec.europa.eu/commission/presscorner/detail/en/ip_24_5009).  EUDR carries fines for non-compliance of up to 4% of annual EU revenue)

Current Landscape

No impact on current Sustainability landscape as currently managed using Excel files only.  

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SAP GreenToken

SAP Green Token is a chain-of-custody business application designed to help organizations trace and account for certified sustainable versus conventional products throughout the supply chain network.  Organisations can trace the inbound material’s origins from their suppliers and outbound product sold to downstream partners.  It is a SaaS (Software-as-a-service) cloud stand-alone solution.  SAP GreenToken has been previously investigated by Syensqo in 2023 when it was decided to await the implementation of SAP S/4HANA.  It has been implemented as a solution for other companies in the extended chemicals industry e.g. Eastman Chemical and DIC Corporation. 

The solution capabilities include the following:

• Mass balance accounting
• Traceability and transparency of attributes
• Managing supply chain complexity
• Accessibility and onboarding
• Certification management
• Reporting and auditing
• Data privacy and process transparency
• Automation via integration:
  • Open APIs for non-SAP systems.
  • Integration with SAP sustainability solutions e.g. SAP Product Footprint Management (PFM).

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Using the principles of mass balance, tokenization and blockchain, SAP Green Token acts as a multicommodity platform that enables the accounting of the full chain-of-custody of commingled raw materials to their origin.  By combining Tokenization, Blockchain and Mass Balance the solution supports certification management for e.g. ISCC+.

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Use Case Example:

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Track and Trace

The chain of custody feature provides transparency into all materials as per inventory and what materials they are comprised of.  It also provides key information on the materials, the number of sustainable and conventional volumes transferred, along with the identity of the member who provided the material.  This level of transparency is only available for upstream members of the network. The supply chain member accessing chain of custody won't have this level of transparency for downstream members of the network.

The material provenance view shows the original raw material from which the selected product or material was derived, regardless of the intermediary conversions or transformations. It gives visibility of the sustainable qualities of raw material from its original source and introduction into the supply chain.

Data can be sourced from:

• IoT Devices and Sensors: Real-time data from IoT devices and sensors installed at different stages of the supply chain.
• Enterprise Resource Planning (ERP) Systems: Integration with ERP systems like SAP ERP to pull relevant data.
• Manual Entry: In cases where automated data collection is not possible, manual data entry can be performed by authorized personnel.
• Third-Party Data Providers: Data from third-party providers who specialize in sustainability metrics and certifications.

Data can be input into SAP GreenToken through various methods:

• APIs (Application Programming Interfaces): APIs allow for seamless integration with other systems, enabling automatic data transfer.
• Batch Uploads: Bulk data can be uploaded using CSV or Excel files, especially useful for historical data or large datasets. Uploading CSV files automatically drives other features within SAP Green Token, such as volume requests and the creation of volumes, and creating or updating entries on the inbound delivery screen.
  • Inbound Deliveries CSV
  • Conversions CSV
  • Pending Orders Fulfilment CSV
  • Goods Issued CSV
  • Sales Inquiries CSV
• Mobile and Web Applications: User-friendly interfaces for manual data entry and real-time updates.
• Blockchain Integration: Data can be directly recorded on the blockchain, ensuring immutability and transparency.

Sustainable and conventional (non-sustainable) commodities are traced through your supply chain and production processes using mass digital twins (tokens) on a blockchain. This allows transparency from different origins to be measured by counting the tokens. Each organization or member of the supply chain forms part of the network. Members of your supply chain network that are onboarded into SAP Green Token are referred to as 'online' members, while those that are not are 'offline' members.  There are slightly different workflows for interacting with online and offline members.

Process workflows include:

• Conversion Workflow
• Outbound Workflow
• Inbound Workflow
• Consumption Workflow
• Multisite Workflow

Example for online partner inbound workflow:

1. Consolidate relevant deliveries for the delivery period:  automated upon integration with SAP S/4HANA.  
2. Extract delivery information to Inbound Deliveries CSV:  extract the inbound deliveries identified and consolidated in the step above and populate the Inbound Deliveries CSV manually or automatically if configured appropriately in the ERP system.
3. Import the CSV into SAP Green Token: entries on the Inbounds screen are created by uploading volumes in CSV files using the Import CSV button on the overview screen or by dragging and dropping files on the Imports screen.  After uploading an inbound deliveries CSV, you can review all inbound delivery transactions on the Inbounds screen.  The Inbounds screen provides details on the delivery of certified and conventional materials.  Users can view different attributes associated with the materials as well as the status of the order.
4. Fulfilment request generated and inbound delivery entries created.
5. Request fulfilled by upstream partner.
6. Tokens received and your balance is updated.

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Certification and Reports

Green Token allows the company to track and report GHG emissions of products that are received and sold in conformance with ISCC+ standards.  It is accomplished by the persistence of attributes to the certified tokens associated to an inbound and conversion order.  ISCC GHG attributes are provided out-of-the-box with Green Token. The attributes can be assigned to any material to track and report against manufacturing and delivery processes.

The Reports view includes a set of complementary reports which can be used to support audits for International Sustainability and Carbon Certification (ISCC).  The data for these reports is generated in real time through the day-to-day transactions that are executed in SAP Green Token.  It reduces the level of effort and the margin for error in pulling supporting details from disparate systems.  The following reports are available:

• Conversion Audit Report
• Material Balance Report
• Material Movement Audit Report
• Order Audit Report
• Transaction Audit Report

Assumptions

• There is a current RFI to replace Ethixbase for use case 1 (company information), which is not in scope for ERP as there is an immediate need for implementation due to the termination of Ethixbase in December 2024.  Use case 2 (product level information), for which there is no time constraint, is covered by the ERP Rebuild project based on this Key Design Decision Document.
• This KDD becomes redundant if the SAP Sustainability Footprint Management solution covers the requirements for material traceability.
• GreenToken cites end to end views, which is more beneficial if suppliers participate and provide data via SAP GreenToken.

Constraints

SAP Roadmap for GreenToken:

• Due diligence statement management for the Regulation on Deforestation Free Products (EUDR)
• Configure, manage, and apply EUDR and deforestation free–related information across transactions (Q3 2024)
• Automatically submit, retrieve, and manage information from external EUDR systems

Impacts

• The sustainability data from SAP GreenToken is integrated into SAP SFM through APIs or middleware that facilitate the transfer of data between the two systems.
• There is an impact on integrated supply chain processes (inbound and outbound) e.g. procurement and manufacturing.  
  • Every raw material in question must be batch managed, which is possible by managing the batch mix where multiple deliveries arrive in one tank.

  • An assessment will be required to understand the impact on the logistics and supply chain teams for materials which are currently not batch managed today.

• The relevant master data requires support and governance.  For example, it is implied that the vendor or Syensqo have a responsibility to capture some metadata. 

  • Required attributes in case of electronic vendor communication (e.g. ASN) to be included in electronic communication channels.

  • Required attributes in case of manual vendor communication to be entered at point of receipt by the warehouse personnel based on paperwork from the vendor.

• Potential integration impacts with Ariba (if any) are to be confirmed.

• Segregation capability to identify which raw materials are being consumed in which process may require changes in production.

• There is an argument that 100% of raw materials in scope because Syensqo must report on a % of biobased materials out of the total quantity of purchased raw materials.  Syensqo needs to secure the traceability of special cases as well as the total.   A dry run exercise that is being run by Sysensqo at the moment should confirm percentages by end of September 2024.  Whilst the percentages of biobased materials will be smaller, the total set of materials in scope of this is 100% hence supporting the recommendation of a technology focused solution.

• There might be a financial impact in capital expenditure (CAPEX) to allow the implementation of the process e.g.:
  • Deployment of IT solutions to capture the metadata from the vendors
  • Technology improvements e.g. mobility solutions for the warehouse e.g. scanners to collect or enter specific information
  • Potential requirement to use more tanks to store the products from the vendors independently.
• Key impact for GBU Specialty Polymers, which have close to 100m€ of sales based on Mass Balance and growing. 

Business Rules

The solution is relevant for product level information for non-bio-sourced and bio-sourced raw materials.  

Options considered

Option A: SAP Green Token

• Ensures traceability as part of Procurement (Sourcing/Buying)
• Substantiates sustainability claims to derive value based pricing (Marketing/Selling)
• Reduces Scope 3 emissions as part of Supply Chain (Transporting)
• Follows trajectories to meet targets as part of Reporting (Finance/Regulatory)
• Supports access to green financing
• Meets ESG expectations (customers/regulators/investors/disclosure)
• Identification of raw materials consumed in which production process is possible with with different materials code (preferable) or with batch management and classification. 
• Requires batch management of all raw materials including an assessment to understand the impact on the logistics and supply chain for materials which are currently not batch managed. 

• Master data governance e.g. responsibility of vendor or Syensqo to capture some metadata. 

  • Required attributes in case of electronic vendor communication (e.g. ASN) to be included in electronic communication channels.

  • Required attributes in case of manual vendor communication to be entered at point of receipt by the warehouse personnel based on paperwork from the vendor.

• Potential financial impact in capital expenditure (CAPEX) to allow the implementation of the process e.g.:
  • Deployment of IT solutions to capture the metadata from the vendors
  • Technology improvements e.g. mobility solutions for the warehouse e.g. scanners to collect or enter specific information
  • Potential requirement to use more tanks to store the products from the vendors independently.

Option B: Hentrac

• Small start up company founded in 2022.
• Niche alternative. 
• Specialises in supply chain traceability. 
• All batches are identified throughout the entire production and distribution process by setting up parallel or sequential production processes.
• E2E mass traceability solution using a designated platform. 
• Combines production data with sustainability information, which is exportable. 
• Notifications of breaches.
• Very small use case, only ISCC plus audit.  
• Demo scheduled for Syensqo in September 2024.

Option C: Do Nothing

• No product life cycle management. 
• Continued use of Excel files.
• No ERP integration. 
• No central data repository.
• Issues as described would remain 

Option D: Mass Balance using Production Order BOMs

Custom solution using SAP standard functionality for mass balancing via the use of production orders (virtual process orders), which decompose the certified raw materials after goods receipt and to compose the certified finished product before shipping.   The solution guarantees the proportions of certified/uncertified finished products the business sells are compatible with the quantity of certificates received.  It allows demand management of certified and non-certified products.  Material traceability is covered via standard segregation of material codes together with batch traceability.

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Material Management:

• Management of certified and uncertified raw materials as different material codes.  Every sustainable raw material requires a certified material.  Certified finished goods have separate material codes.
• Traceability of certifiable material usage via goods movements and stock of certificates.
• Different material masters upon purchase, then use consumption of certified into normal material via purchase order.   

BOM Management:

• Use of BOMs where the uncertified raw material is composed by the certified materials and generates the certificate as co-product (additional material).  
• BOM is composed by the uncertified finished goods and the proportional quantity of the certificate.
• BOM acts as link between purchasing and selling purchased or produced raw material.  
• Expiry dates of certificates is reflected as shelf life.
• There may still be the requirement to batch manage receipt of received materials. 
• BOM conversion immediately upon goods receipt.  Certificates stay with BOM until consumed by finished product. 
• It requires the creation and confirmation of process orders. Process order check is possible if certificate consumption was not made.  
• One or more process order can use up the remaining certified stock as needed until empty.
• Multiple certified stocks could be used on one process order.
• One certificate per raw material number meaning each certified raw material will have a unique certificate.

Average Value:

• Normal RM vs certified RM never come together.  Example:
  1. Normal RM is received in stock at his own value, e.g. 2 EUR / Kg
  2. Certified RM is received in stock at his own value, e.g. 3 EUR / Kg
  3. The split process order consumes the certified RM and puts in stock the normal RM (2 EUR / Kg) and the certificate (1 EUR /Kg)
     1. The stock of the certificate is not physical stock: it represents the amount of certificates you own based on the certified RM you purchased.
  4. Production Runs:
     1. Syensqo produces a finished product, the normal not certified stock has for instance a value of 10 EUR /kg and it uses 30% of the Raw Material.
     2. The finished product is sold as "normal": the COGS is 10 EUR / Kg
     3. The finished product as "certified": immediately before shipping the process order is created and confirmed to recombine the product with the certificate. The process order:  
        1. Consumes the normal FP, 
        2. Consumes a quantity of the certificate equal to 30% of the finished product (BOM proportion of the Raw Material). 
        3. Confirmation books the GR of the certified FP whose value is 10,30 EUR / KG.
        4. Is sold at this COGS.

Evaluation

See also

Change log

Background & Context

ESG Landscape As Is

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SAP Applications to upgrade:

• 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.  Not an SAP module.  Home developed in BW.  BW not used in way it is meant to work.  Master data created directly created in BW. Green Ledger in SAP.  New KDD.   No formal ground work done in past.  Cerise is recent development. There was no formal RFI.  Cerise currently only scope 1 and 2.  Scope 3 with 15 subcategory. New carbon accounting solution to cover all categories, not patchwork. Green Ledger ?
  • Dashboard access Qkliksense.
  • Reporting Architect
• Emissions management S/4HANA as future tool to replace non-SAP applications?

SAP Applications to integrate/connect:

• SAP EHS (Product Safety, SVHC, DG)
  • SVHC: SPM box connection.  Assess sustainability, checks toxicity and ecotox.  As Is no integration.  would be better to integrate.  CSRD report not including SVC and SVHC.  SAP have developed product for Prod Compl.  May resolve Prod Compl and GTS and Sustainability.  Question SAP.
• Colmar (CAPEX tracking) - CAPEX - increased needs, covered by Finance
• Concur (travel) - Finance/Payroll
• BW Tiers (transport) - Reporting architect?
• SuccessFactors (HR) - SAC dashboard relating to SuccessFactors - bad experience, horrible performance.  about 2 years ago.  big project for all HR reporting.  Catastrophe. 
  • HR architect?
  • Pay Equity - new regulatory requ.  Already some country regs moving to EU and US e..g on gender pay.  Need to compute 3 types of ratios.  source data is in SAP payroll and time mgmt.  Other non-SAP tools e..g Mercer. Link up with HR architect.  today payroll not in Successfactor. To Be?

Non-SAP Applications to upgrade:

LCA:

• Simapro - LCA (Life Cycle Assessment) software to quantify environmental product development objectives. Will be in R&I scope.
  • Qliksense integration change?
• Gabi - LCA software for profiles of carbon, water and product environmental footprints.  R&I tool, should in R&I scope. 
  • LCA - SQO launch Proof of Concept for automation.  Today Simapro/Gabi.  PCF in SAP only one dimension of LCA.  Happy to consider SAP.

• IBAT (biodiversity)
• Pure (SERF) - Emissions and water, survey tool to manage the reporting campaign to collect all the HSE KPIs. It includes plauseability checks, simple calculations, KPI ownership management.  Connected to Gensuite to receive reported accidents. 
  • Water Live Dashboard - Water live dashboard connected to MES to debimeters, sensors, water meters.  Not SAP.
  • Waste Quarterly Dashboard
  • Qkliksense integration
• EcotransIT (World) - The most widely used software worldwide for the automatic calculation of energy consumption, carbon emissions, air pollutants, and external costs.  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.
• Qliksense - integrates with SPM, PURE (SERF), BW Cerise.
• Supplier questionnaires - Ethixbase only for human rights.  too narrow.  Reporting requ for value chain up and downstream by 2027.  RFI to replace Ethixbase in Sep24.  SAP may be considered.  May need short/mid term solution until long term in e.g SAP ready.
• Ren energy dashboard - purely in xls.

• Waste mgmt module in SAP S4 HANA is being looked into as should be in SAP from Marie's point of view. Harmonisation.

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.  

S/4HANA Capabilities To Be

SAP Green Token

Green token:  E2E transferability of sourcing scheme.  Should be in ERP.  Biobased raw mat & mass balance.  needed quickly, temp tool required?   Discussion needed with SAP this year.   No impact in AS IS landscape. In xls only.   Being looked at by Sustainability since last year, stopped as waiting for S4HANA.  Some docs from last year exist from SAP, March 2023. Raw materials, purchasing, issue certificates for finished products

SAP Green Token is a chain-of-custody business application designed to help organizations trace and account for certified sustainable versus conventional feedstock throughout their supply chain network. Organizations can easily trace their inbound material’s provenance (origin) from their suppliers and outbound product sold to their downstream partners. SAP Green Token aims at providing organizations with the following benefits:

• A first-in-class traceability and transparency approach to work with their supply chain partners and customers.

• An immutable proof of certified commodity chain-of-custody and ownership whether it be inbound, processed, or outbound.

Using the principles of mass balance, tokenization and blockchain, SAP Green Token acts as a multicommodity platform that enables you to account for the full chain-of-custody of commingled raw materials to their origin.

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Sustainable and conventional (that is, non-sustainable) commodities are traced through your supply chain and production processes using mass digital twins (tokens) on a blockchain. This allows transparency from different origins to be measured by counting the tokens.

Each organization or member of the supply chain forms part of your network, and may be responsible for operations like:

• Aggregation of sustainable or conventional commodities.

• Processing of commodities through comingling commodities for the purpose of refining or production of new commodities or products.

• Distributing finished products to end consumers or other organizations.

The primary source of input for the SAP Green Token application is through the upload of structured files in a comma-separated values format (CSV). These include:

• Inbound Deliveries CSV
• Conversions CSV
• Pending Orders Fulfillment CSV
• Goods Issued CSV
• Sales Inquiries CSV

The CSV files can be from any 3rd party system, and you upload them on the Imports screen. Uploading CSVs automatically drives other features within SAP Green Token, such as volume requests and the creation of volumes, and creating or updating entries on the Inbound Delivery screen.  

Process Workflows

• Conversion Workflow
• Outbound Workflow
• Inbound Workflow
• Consumption Workflow
• Multisite Workflow

Example for online partner inbound workflow:

1. Consolidate relevant deliveries for the delivery period:  If your instance of SAP Green Token has been set up for integration with SAP ERP Central Component (SAP ECC) or SAP S/4HANA this will be handled automatically. This may also be the case if the non-SAP ERP system used supports this step.
2. Extract delivery information to Inbound Deliveries CSV: Extract the inbound deliveries identified and consolidated in the step above and populate the Inbound Deliveries CSV manually. This can happen automatically if configured appropriately in your ERP system.
3. Import the CSV into SAP Green Token: 

   Entries on the Inbounds screen (under the Process tab) are created by uploading volumes in CSV files using the Import CSV button on the overview screen or by dragging and dropping files on the Imports screen.

   After uploading an inbound deliveries CSV, you can review all inbound delivery transactions on the Inbounds screen.

   The Inbounds screen provides details on the delivery of certified and conventional materials. Users can view different attributes associated with the materials as well as the status of the order.

4. Fulfilment request generated and inbound delivery entries created
5. Request fulfilled by upstream partner
6. Tokens received and your balance is updated

Green Token empowers companies to track and report their Greenhouse Gas emissions of the products they receive and sell, specifically for companies that conform to ISCC+ standards to substantiate their sustainability claims. This is accomplished by the persistence of attributes to the certified tokens associated to an inbound and conversion order.

ISCC GHG Attributes are provided out-of-the-box with Green Token. You can assign these attributes to any material in your company catalog to track and report against your manufacturing and delivery processes.

Track and Trace

The Chain of Custody feature provides transparency into all materials in your inventory and what materials they're comprised of. It also provides key information on the materials, the number of sustainable and conventional volumes transferred, along with the identity of the member who provided the material.  This level of transparency is only available for upstream members of the network. The supply chain member accessing Chain of Custody won't have this level of transparency for downstream members of the network.

The Material Provenance view shows you the original raw material from which the selected product or material was derived, regardless of the intermediary conversions or transformations. This helps you see the sustainable qualities of raw material from its original source and introduction into the supply chain.

Reports

Under Reports, you can find a set of complementary reports that can be used by organizations being audited for International Sustainability and Carbon Certification (ISCC), for example. The data for these reports are generated in real time through the day-to-day transactions that are executed in SAP Green Token. This reduces the level of effort and the margin for error in pulling supporting details from disparate systems.  The following reports are available:

• Conversion Audit Report
• Material Balance Report
• Material Movement Audit Report
• Order Audit Report
• Transaction Audit Report

Assumptions

Constraints

Impacts

Business Rules

Options considered

Option A: SAP Green Token

helps you see the sustainable qualities of raw material from its original source and introduction into the supply chain.

Option B: Hentrac

• Niche alternative
• Niche alternative one only called Hentrac (www.hentrac.com), start up, small company.

Option C: Custom Solution

• Other alternative to develop self. 

Option D: 

Evaluation

Criterion 1

Pro

• Ensures traceability as part of Procurement (Sourcing/Buying)
• Substantiate sustainability claims to derive value based pricing (Marketing/Selling)
• Reduce Scope 3 emissions as part of Supply Chain (Transporting)
• Follow trajectories to meet targets as part of Reporting (Finance/Regulatory)
• Access green financing
• Meet ESG expectations (customers/regulators/investors/disclosure)

• 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

Criterion 2

Pro

Con

Con

Pro

Pro

Con

Con

Criterion 3ProConConPro

See also

Attachments
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Change log

change-history

Workflow history