Issue

Determine the best solution option for carbon footprint management aligning with ERP project principles.  A decision is required as to which the tools should manage the business and system process for carbon footprint management, potentially replacing current tools in the Sustainability landscape.

Recommendation

A way to understand where emissions come from at operational, procurement, market level enables Syensqo to start taking action on group targets.  The recommendation for managing carbon footprint in Syensqo is the implementation of SAP Green Ledger.

Background & Context

Carbon footprint management was briefly investigated by Syensqo about three years ago and disregarded whilst SAP was still in the development phase for this solution.  There is an expectation that Syensqo should adopt a mainstream integrated solution for carbon footprint management at this point.  A way to understand where emissions come from at operational, procurement and market level enables Syensqo to start taking action on group targets.   Sustainability footprint management for Syensqo can be split as follows:

• Carbon footprint management
• Emissions management
• Water management
• Land use

This KDD covers the carbon footprint management only.  The creation of further KDDs may be required to cover other areas of Sustainability.

There is a procurement initiative in Syensqo for pressuring vendors as part of scope 3.1 emissions (purchased goods an services).  Scope 3 emissions encompass in 15 different categories all indirect emissions generated throughout an organization's value chain, from the extraction of raw materials to the disposal of products.  Scope 3.1, one of those 15 categories, specifically refers to the carbon emissions associated with the products or services an organization purchases.  These emissions are bought in from suppliers and are often beyond the organization's immediate control.  Stakeholders, including investors, customers, and regulatory bodies, increasingly demand transparency and action on Scope 3.1 emissions.  Failure to comply can lead to reputational damage and financial consequences.

Regulatory Compliance

As governments worldwide tighten climate regulations, monitoring and reducing all emissions PCF management supports companies to avoid legal and financial penalties, especially in relation to Scope 3.1 emissions.  Regulations focus more on reporting on Environmental, Social and Governance (ESG), hence PCF not enforced to be provided by regulations.   Key driver currently is the customer impact on buying decisions focusing on more PCF friendly products.  There is currently no related single priority for Global Business Units (GBU). 

Calculation

The calculation of Scop 3.1 emissions according to GHG Protocol can be a complex task.  There is a choice of four different methods. The more effort these methods require, the better the results they produce:

• Spend-based method
• Average-data method
• Supplier-specific method

The calculations are fully manual today with some queries developed.  

Current ESG Landscape (new slide)

There are a number of applications currently in use, which contribute to carbon footprint management in Syensqo.   Current tools such as BW Cerise and PCF should be replaced.

• 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. 
• 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.  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.
• SPM
  • SPM is just methodology which will remain a custom solution, no appetite for vendors to change SPM.
  • Monetises carbon footprint and looks at the market regarding sustainability grading. 
  • It would be beneficial to be able to input carbon footprint data via SPM.  Eventually should be hard interface.
  • Integration should feed carbon footprint management to LCA tool, which should feed SPM.
• LCA tool
  • Should receive carbon footprint management data to forward to SPM tool
  • RFI for LCA space should be launched, sent out to vendors.  Proof of concept Q4 2024 before decision.  SAP will be invited.   
• Sigreen
  • Exchange platform sourcing PCF for raw material mapping.
  • Exchange tool managing requests from suppliers with exchange to customer. 
  • Customer connects to Sigreen for relevant data. 
  • Future interfaces should be API.
• PCF
  • Currently tool for managing PCF for Syensqo products.
  • Forwards data to Sigreen.   Customer connects to Sigreen for relevant data. 
  • Future interfaces should be API.
• PURE
  • Survey and reporting tool.
  • Annual survey to collect water and emissions KPIs.
  • Site results put in PURE.
  •  PURE contract renegotiated now to be moved to Gensuite 
• Gensuite
  • Directionally trying to position Gensuite no 1 industrial site application.  
  • PURE contract renegotiated now to be moved to Gensuite 

Data

Largely required from raw materials.  Needs request from suppliers, otherwise Syensqo has to rely on industry data. 

Can have footprint calculation and reporting.  Just talked about calculation.  PURE is a R2R? .  already moving accident reporting.  then  

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.  

SAP EHS Environment Management includes:

• Waste Management (seperate KDD)
• Emissions Management
• GHG Emissions Management
• Water/Wastewater Management

It tracks all aspects of environmental impacts allowing an auditable process for calculations emissions.  

Capabilities:

• Many options for collecting data and sampling to be used for compliance tracking and emission calculations.
• Buildt-in equitations and content driving a flexible and auditable calculator for hazardous air pollutant and GHG emissions inventories.
• Emissions forecasting tools
• Realtime and analytical tools and support for ESG and sustainability reporting

Benefits: 

Sustainability Footprint Management

• Reuse existing ERP data: Reuse of existing ERP data for calculation and embed footrpint results back into business processes to influence decision-making.
• Reuse existing business data, structures, and logic from SAP S/4HANA Cloud and import transactional activity data for your footprint calculation (e.g. material movements) and connect any ERP system via public APIs.
• Integrate results into business processes: Help drive sustainable business decisions by embedding footprint results into business processes, like supply chain planning or sourcing and procurement, via direct integration
• Leverage full sustainability portfolio:  Make use of our holistic sustainability portfolio through direct integrations with SAP Sustainability Control Tower, SAP Sustainability Data Exchange, and SAP S/4HANA Cloud for EHS environment management.

Emission Factor Management

• Increase accuracy with emission factor mapping powered by AI and include supplier specific footprints
• Map emission factors with AI:  Use SAP Business AI to automate the mapping of emission factors to ERP data to minimise manual effort and enhance the accuracy of result.
• Include actual supplier data:  Increase the share of primary data by directly importing footprints from your suppliers. Leverage the integration with SAP Sustainability Data Exchange (PACT V2) or use direct entry, file upload, and push API.
• Use lifecycle assessment (LCA) data:  Use industry averages from third-party content providers, upload your own data packages, or use preconfigured data packages (e.g. EPA, GLEC) for maximum flexibility and consistency status.

Carbon Footprint Calculation at scale

• Calculate and manage Scope 1, 2, and 3 corporate, value-chain, and product footprint data.
• Calculate product and corporate carbon footprint:  Calculate footprints on product and corporate level at scale by integrating transactional and master data using flexible calculation methods.
• Model energy flows and allocations:  Model energy flows per energy carrier and resource in your production line or facility to allocate energy consumption and assign emissions to manufactured products.
• Manage footprint inventory scopes:  Maintain individual inventory scopes to define the organisational boundaries of the footprint calculation. Define and list all data sources to be used for the calculation and monitor its progress.
•  

integration with SAP sustainability solutions e.g. SAP Product Footprint Management (PFM)

Green Ledger

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.

Next up is the Sustainability Footprint Management solution, which tracks what’s flowing in and out of the business, such as the actual footprint of a product, the materials used to produce it, the packaging, and the transportation. Footprint Management collects that data, maps it out, and gives an overview of what’s really driving impact at a much more granular level.

Step three in the journey is the soon-to-be-launched Sustainability Data Exchange, the ‘real visionary part’ says Jesper.

“The Control Tower gives you the impact overview, the Footprint gives you the detail, but you’re still using business averages to gauge how much carbon you’re producing,” he says. “We want partners to help their customers to move away from averages and start using actuals, to start getting sight of actual data from their suppliers, and their suppliers’ suppliers.”

It’s here that SAP really ‘begins to differentiate on a global level’. The Data Exchange will become a standard-setting engine that allows businesses to exchange data, securely, across value chains, thus unlocking ‘the carbon calculation of impact’.

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.

Assumptions

Constraints

• This KDD covers the carbon footprint management only.  The creation of further KDDs may be required to cover other areas of Sustainability.
• Resource and time constraints are currently hindering to go beyond Product Carbon Footprint (PCF) whilst striving for Life Cycle Assessment (LCA).
• Product stewwardship cannot approach suppliers.
• This KDD covers the carbon footprint management only.  The creation of further KDDs may be required to cover other areas of Sustainability.

Impacts

• Business continuity impact. 
• Reporting requirements? R2R integration
• Cerise very closely linked to Finance, which was heavily involved with Cerise implementation.  Good idea to move carbon footprint management into SAP as finance project.  Financial transactions are influenced by carbon emissions, which is also related to energy purchase and energy consumption.  Should be able to rely on financial transaction.   That is how Cerise was designed with transactional financial transactional flow.
•  Stakeholders should Procurement. 

Business Rules

Options considered

Option A: SAP Green Ledger

Option B: Continue As Is

Option C: 

Option D: 

Evaluation

	Option A - SAP Green Ledger	Option B - As Is	Option C	Option D
Compliance	Pro Harmonise current ESG landscape. Con	Pro Pro	Pro Con	Pro Con
Integration	Pro Qliksense as dashboard for carbon footprint would be redundant Con	Con	Pro Pro	Con Con
Business Impact	Pro	Con	Con	Pro

See also

Change log

Workflow history