Issue

Succinctly describe the issue or problem statement that this Decision addresses. Why is a decision required? What business or technical problem does it address?

The essential building blocks for CSRD reporting are based on tools from many vendors and Syensqo's existing technology.  It requires combining into a solution for ESG reporting going forward.  A decision is required on the long term solution post the implementation of RFI ESG Disclosure and Performance in 2024.  

A long-term solution is required to effectively manage sustainability initiatives to support achieving Syensqo's environmental goals.

Recommendation

Summarise the recommendation being made for the reader, leaving the pro/con evaluation and exact decision-making process to the subsequent sections.

Background & Context

Explain the context in which the decision is being made.

RFI on ESG Disclosure and Performance was launched in 2024 to consolidate all Sustainability data in one place, create reporting layer and insights layer on top.  The RFI is aiming at a one to two year contract, which is to be revisited with ERP Rebuild.  Demos have been presented by SAP in 2024 to the business together with PWC.   RFI supported by KPMG experience with other clients and finalised in July 2024 based on 2.5 weeks response time for providers to answer by mid June 2024.  June/July 2023 Go-No Go decision.  

The required capabilities are:

• Centrally managed calculations. Avoid large proportions of pre-calculation in various source systems across the landscape. 
• Centralisation of ESG data and reporting.
• Long term solution committment.
• Annual or quarterly reporting metrics.
• Leverage of AI where beneficial.

Process

1. Assess metrics and data: Priortise ESG topics based on risks and issues
2. Automated data collection and preparation: data capture for emissions and ESG reporting
3. Centralised ESG data: granularity
4. Metric calculation:  aggregation and calculation of scope 1, 2 and 3 emissions and other ESG metrics
5. Sustainability tracking via analytic insights (including visualisation) and reports and disclosures (multiple frameworks)
6. Sustainability initiatives based on actions and ESG compliance

The process is driven by a variety of internal and external data sources, which need control, tracing and verification.

Functional architecture

The following tools are data sources for storage and consolidation (automated or manual).  Enrichment with external data may also be required.  Metric calculations should make use of AI generated insights.

Design/R&I:

1. Project portfolio
2. LCA

• WeGo (accolade)
• Simapro/Gabi
• Fast LCA, checklist

Sustainable procurement (STP -Supply Tracking and Prioritisation):

1. Bio and recycled based raw material tracking (SAP - Green Token material origins?)
2. Human rights due to diligence (Ethixbase)
3. Carbon footprint sharing (Sigreen)

Manufacturing:

1. Carbon scope 1 and 2 (SAP Green Ledger, other?)
2. Emissions reporting (SAP EHS Emissions Management)
3. Waste reporting (SAP EHS Waste Management)
4. Water reporting (tbc - not readable on slide 4)
5. Star Factory project portfolio (Wave, Gensuite)
6. Accident reporting (Gensuite)
7. CAPEX tracking (SAP Finance, Colmar)

• Cerise (redundant)

Supply Chain:

1. Carbon scope 3 (SAP)

• EcotransIT
• Concur
• BW Tiers

HR:

1. Diversity, Equity, Inclusion (DEI) (SAP SuccessFactor)
2. Training and performance (xls offline)
3. Gender pay gap (Payroll)
4. Living wages (Payroll)

Business:

1. Marketing (Sustainability Portfolio Management - SPM)
2. Inventory (SAP Product Compliance: Substances of Very High Concern - SVHC)
3. Life Cycle Analysis (LCA - tbc)

• PCF - redundant?

Greenomy

smaller scope plus AI as an option to combine with other tools for supplier interaction and environmental accounting. Risk of remaining a spot solution for compliance. Greenomy as short term solution, plug and play, so not overspend.  Quickest time for return, off the shelves.  For various reasons not signed in August yet. Committee will sign off in September 2024.

SAP Sustainability Control Towers (SCT)

Launch of 2024 RFI on ESG Disclosure and Performance was extended to SAP.  2024 RFI response by SAP not satisfactory with off the shelf slide pack containing access issues to links.  SAP Sustainability Control Towers (SCT) currently not mature enough, but could be revisited in three years. Scope, AI and insights not good enough. 

ESG data, elements on basic reporting using tools creating KPI library.  This should be covered by SAP.  SAP lacks enhancement of this data SAP i.e. reporting layer including e.g. KPIs, emission factors as per toole Ecoinvent and 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. 

 Disclosure SCT was not to be solution.  

very limited AI, no disclosure tool, would require interface, requires custom integrations until S/4 is implemented. S/4 will bring SCT features.

Roadmap?

SAP overestimated level of integration which may be issue for disclosure.  Marginal only if Green Token or Green Ledger were implemented.  Emissions is game changer where solution is. 

Emissions mgmt in S4 would swing decision closer to SCT.

 SAP datasphere has no prepackaged off the shelf data for sustainability.

Possible to use Fabric as datalake, then SCT on top.

Microsoft Sustainability and Fabric. 

Queried during RFI.  Performance was promising.  Proof of concept in Taveau site launched last week for 2 months.   Goal to automate the calculation and gathering, traceability of 20 environmental KPI from SERF.  Technical feasibility to create some insights.  Does it need to integrate with S4.  no emissions in SAP at the moment. Integrates with MES system now based on data lake project where data collected by sensor.  Data lake Startek.  Idea is to collect water flow taking flow combined with Labware for analytical with pollutant, results in KPI as Microsoft had pre-packaged solution.  

Fabric has many more functionalities.  KPI library in Sustainability. Its just performance.  In relation to disclosure look to Microsoft Purview compliance Manager.  SCT is last mile disclosure.  Possible to use Fabric as datalake, then SCT on top.  Maybe separate Disclosure and Data e.g. KPI library.  Could also put Greenomy on top of Fabric.  SAP Datasphere is an option instead of Microsoft datalake.  Microsoft cloud may be good move with regards to Microsoft workstations. 

Embedded AI capabilities superior.

Pilot in autumn to test automation of environmental metrics and modelisation for data cleaning and then consume clean data on corporate level.

Automation can obtain consistent data and metrics to pinpoint sustainability issues in real-time.  Tech-enabled governance of the reporting process can manage complexity and risk.

Pure/Gensuite vs S4.  scop 1-3 about 20 metrics, 15 in scope 3.  Validation workflow most important.

not advanced enough for reporting (no CPD, taxonomy etc), lack of integration. Syensqo leaning more towards Microsoft. 

PAPM (SAP) currently used for tax purposes by Finance in scope of ERP Rebuild to deal with complex reporting requirements.  Might be an option to cover circularity for Sustainability.  SPM may not be the way forward as missing master data.  Additional option?

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. Good idea to move carbon accounting into SAP as finance project.   

Economic accounting and carbon accounting same: buy raw materials, production, transport, man power, waste.  

Supports promotion of sustainable capital flows for sustainable enterprises.  ISAB set standards in combination with IFRS requires sustainability standards and disclosures.  EU policy CSRD different to US, China, but all are influenced by TCFD framework established 2025, which used by global investment companies e.g. Black Rock.  

TCFD

Climate related financial disclosure:

Structural assessment of CAPEX impact.  Forecast of financial impact of sustainability impact.  

Needs access and transparency in one central place in the company.  Currently spread throughout the company in complex landscape.   Solution SCT for holistic steering and reporting on aggregated/periodic level.  

SAP SFM enables to automate the data collection at more granularity.  e.g. scope 3.1 which can make up 80% of emissions.  SAP SFM connects to ERP system e.g. goods receipt, goods issue, suppliers, products purchased, assigns emission factor.  Results in footprint extraction possible.  Eventually solution can calculate corporate and product footprints.  basis for SCT. 

Supplier footprint often manual currently, no standard footprint sharing, error prone.  SAP Sustainability Data Exchange publishes and makes available footprint to the network.  

Finance dimension covered by Green Ledger.   What is the footprint impact on balance sheet, assets, cost centres, budgets.  Consolidates financial and sustainability data.

SAP EHS Environment for collection data from smart meters and other device.

Ambtions:

SCT showing trends, targets.

SFM:

One step deeper in granulirity.  Shows emissions for purchased and sold goods.  Can also calculate product footprints.  System knows greener footprints by adding products used to e..g build a car.  System extracts data from ERP via BOM with all components needed to build a car.  e..g calculate costs.  Can assign certain footprints to materials in BOM, like already done with costs, also using SAP EHS.  Includes assigning footrpints to activities e.g. car assembly line.  

Data can be published back from SFM into S/4HANA and post green ledger journal entry.  If product sold, post finish goods account and debit COX account.  Same for sustainability.  Takes calculated data from SFM, takes it and posts it in Green Ledger.  Can analyse finance and sustainability data in one dashboard.  Adds additional dimension to enterprise performance management over and above regulatory and standard reuqirmeent to report on sustainabilty.

CSRD for FY2024 more granularity of information.

Green Ledger does not calculate footprints.  It relies getting them from another source e.g. SAP SFM.  

Green Ledger data reporting via Fiori UIs or SAC to make data accessible.  Green Ledger is a data repository, which can be seen in Fiori apps, SCT, Datasphere etc, simliar to finance processes.

Green Ledger posted to cost centres or business segments/company code level, which are available for reporting.   Enables simulations exchanging a material inhouse production or external sourcing, supports decision making as such. 

Green Ledger data format for external regulation requirements can be achieved.  Asset or CAPEX accounts with emissions for data preparation for e.g CSRD via SAP SCT.  Can model and structure KPIs in SCT, which can then be sourced from Green Ledger to calculate and fulfil requirements.  From SCT with disclosure management tool into XPRL format to send to authorities.  

There are elements of Green Ledger that sit in ACDOCA table universal journal in S/4HANA core.  Other elements are outside.  Product costing entry will be enhanced with Green Ledger, new object universal component breakdown, new input in product costing entry, which sits in ACDOCA table.  Green journal entries are outside technically.  As business user no difference. 

More info:

👉Find more information: https://www.sap.com/assetdetail/2023/... 👉https://www.sap.com/events/sapphire/n... 👉https://www.sap.com/sustainability.html

Assumptions

Clearly describe the underlying assumptions which informed or limited the choices available, or impacted the decision: cost, schedule, regulatory requirements, business drivers, country footprint, technology, etc. Include links as necessary. This section is important because a future change in circumstances might invalidate some key assumptions, which then prompts a decision to be revisited. 

Implementation of related SAP Sustainability functions to support SCT.

Constraints

Capture any constraints or limitations inherent to the recommended option. This could be aspects which, if changed or removed in future, could cause the decision to be revisited or invalidated. For example, a constraint might be that a new product has significant gaps in important functionality, which caused an older alternative to be recommended. If those gaps are closed in future, this might cause the decision to be invalidated.

Impacts

Describe the impact of the decision on other aspects such as other processes, infrastructure, other SAP modules or systems, data cleansing and migration, developments, automations, interfaces, in-flight projects, etc.

SAP Sustainability Control Tower (SCT) integration involves connecting various SAP and non-SAP systems to provide a comprehensive view of Syensqo's sustainability performance.  This integration enables real-time data collection, advanced analytics, and reporting to support sustainability initiatives. 

1. SAP ERP and S/4HANA:

   • Integrate with core ERP systems to gather data on resource usage, production processes, and financial metrics.
   • Leverage existing data structures and processes to ensure consistency and accuracy.

2. SAP Environment, Health, and Safety (EHS):

   • Connect with SAP EHS to monitor and manage environmental compliance, health, and safety data.
   • Use EHS data to track hazardous materials, emissions, and waste management.

3. SAP Supply Chain Management (SCM):

   • Integrate with SCM to monitor the sustainability performance of suppliers and logistics partners.
   • Track the carbon footprint and resource usage across the supply chain.

4. SAP Ariba:

   • Connect with SAP Ariba for sustainable procurement and supplier management.
   • Ensure that suppliers meet sustainability criteria and track their performance.

5. SAP SuccessFactors:

   • Integrate with SAP SuccessFactors to manage employee training and certification related to sustainability practices.
   • Track employee engagement and participation in sustainability initiatives.

6. SAP Analytics Cloud (SAC):

   • Use SAC for advanced analytics, reporting, and dashboarding.
   • Visualize sustainability data and generate insights to support decision-making.

7. Internet of Things (IoT) and Sensors:

   • Integrate IoT devices and sensors to collect real-time data on energy consumption, emissions, and resource usage.
   • Use IoT data to monitor and optimize sustainability performance.

8. Third-Party Systems:

   • Connect with non-SAP systems and external data sources for a holistic view of sustainability performance.
   • Use APIs and data integration tools to ensure seamless data flow.

Business Rules

The decision may translate into business rules which enforce the decision and will require configuration. List these business rules here. For example, "An Outline Agreement cannot be created via the RFQ process. An awarded RFQ can only result in a Purchase Order". 

The management of business rules supports sustainability initiatives to be more effective, compliant, and aligned with their strategic objectives.  It enables continuous monitoring, optimization, and improvement of sustainability performance.

1. Data Collection and Validation:

   • Define rules for data collection from various sources, ensuring data accuracy and completeness.
   • Implement validation checks to ensure data integrity and consistency.

2. Performance Metrics and KPIs:

   • Define key performance indicators (KPIs) for sustainability initiatives (e.g., carbon footprint, energy consumption, water usage).

   • Set targets and thresholds for each KPI to monitor performance against sustainability goals.

3. Resource Optimisation:

   • Establish rules for optimising resource usage, such as energy efficiency, water conservation, and waste reduction.
   • Monitor resource consumption and implement corrective actions when deviations occur.

4. Scenario Planning and Forecasting:

   • Define rules for scenario planning and forecasting to evaluate the potential impact of different sustainability strategies.
   • Use predictive analytics to forecast future sustainability performance based on current trends.

Examples

• Energy Consumption: Monitor energy consumption across all facilities and compare against predefined targets.

• Carbon Emissions: Calculate carbon emissions for each production process and ensure compliance with emission limits.

• Water Usage: Track water usage in manufacturing processes and identify opportunities for conservation.

• Waste Management: Monitor waste generation and disposal practices to ensure compliance with waste management regulations.

• Supplier Sustainability: Evaluate supplier sustainability performance based on predefined criteria (e.g. environmental impact).

Options considered

List the options (viable options or alternatives) you considered. These often require a longer explanation with diagrams, or references to other documents (links are best, but attachments are also possible). Use enough detail to adequately explain what you considered so that a project or business stakeholder reviewing this decision will not come back and ask "did you think about...?"; this leads to loss of credibility and questioning of other decisions. This section also helps ensure that you considered enough suitable alternatives rather than just copy/pasting SAP's recommendations.

Option A:  SAP Sustainability Control Towers (SCT)

Describe the option in sufficient detail for a reader familiar with the subject matter to understand it properly

SAP SCT is a centralised platform designed to monitor, manage, and optimize sustainability initiatives across an organization. It leverages data analytics, real-time monitoring, and integrated systems to provide a comprehensive view of an organisation's sustainability performance.

Capabilities

1. Real-Time Data Monitoring:

   • Collect and analyze data from various sources, including IoT devices, sensors, and enterprise systems.
   • Monitor key sustainability metrics such as energy consumption, carbon emissions, water usage, and waste generation in real-time.

2. Integrated Systems:

   • Integrate with existing enterprise systems like ERP, supply chain management, and environmental management systems.
   • Ensure seamless data flow and consistency across different departments and functions.

3. Advanced Analytics and Reporting:

   • Use advanced analytics to identify trends, patterns, and anomalies in sustainability data.
   • Generate detailed reports and dashboards that provide insights into sustainability performance and progress towards goals.

4. Predictive and Prescriptive Analytics:

   • Employ predictive analytics to forecast future sustainability impacts based on current trends.
   • Use prescriptive analytics to recommend actions and strategies to improve sustainability outcomes.

5. Compliance and Risk Management:

   • Ensure compliance with environmental regulations and standards.
   • Identify and mitigate sustainability-related risks, such as supply chain disruptions or regulatory changes.

6. Scenario Planning and Simulation:

   • Conduct scenario planning and simulations to evaluate the potential impact of different sustainability initiatives and strategies.
   • Make informed decisions based on simulated outcomes.

7. Stakeholder Engagement:

   • Facilitate communication and collaboration with stakeholders, including employees, customers, suppliers, and regulatory bodies.
   • Share sustainability performance data and progress with stakeholders to build trust and transparency.

Benefits

1. Enhanced Visibility:

   • Gain a holistic view of the organisation's sustainability performance, enabling better decision-making and strategic planning.

2. Improved Efficiency:

   • Optimise resource usage and reduce waste, leading to cost savings and improved operational efficiency.

3. Regulatory Compliance:

   • Ensure compliance with environmental regulations and standards, reducing the risk of fines and penalties.

4. Risk Mitigation:

   • Identify and address sustainability-related risks proactively, minimizing potential disruptions and negative impacts.

5. Increased Transparency:

   • Provide stakeholders with transparent and accurate information about sustainability initiatives and performance.

6. Strategic Advantage:

   • Enhance the organization's reputation and brand value by demonstrating a commitment to sustainability.
   • Gain a competitive edge by adopting sustainable practices that appeal to environmentally conscious consumers and investors.

Use Cases

1. Supply Chain Sustainability:

   • Monitor and optimise the sustainability performance of suppliers and logistics partners.
   • Ensure sustainable sourcing and reduce the carbon footprint of the supply chain.

2. Energy Management:

   • Track and manage energy consumption across facilities.
   • Implement energy-saving initiatives and renewable energy projects.

3. Waste Management:

   • Monitor waste generation and disposal practices.
   • Implement waste reduction and recycling programs.

4. Water Management:

   • Track water usage and identify opportunities for conservation.
   • Implement water-saving technologies and practices.

5. Carbon Footprint Reduction:

   • Monitor and reduce greenhouse gas emissions.
   • Implement carbon offset projects and renewable energy initiatives.

“The Control Tower gives the impact overview, the Footprint gives the detail, but it is still using business averages to gauge how much carbon is being produced.  The aim is to help to move away from averages and start using actuals, to start getting sight of actual data from 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’.

Option B:  Microsoft Fabric

Describe the option in sufficient detail for a reader familiar with the subject matter to understand it properly

Option C:  Greenomy - Do nothing

Describe the option in sufficient detail for a reader familiar with the subject matter to understand it properly

Evaluation

Outline why you selected a position. The best format could be a pro/con table (sample below), but is up to you as the author. You must consider complexity, feasibility, cost/effort to implement, but also ongoing operational impact and cost. You must consider the program principles and explain any deviations in detail. This is probably as important as the decision itself.

	Option A - SCT	Option B - Microsoft	Option C - Greenomy
Compliance	Pro Con Not known when S4/HANA modules will be implemented as part of ERP Rebuild project timeline.  Can the business wait for this long?	Pro Pro	Pro Con
Integration	Pro Con	Con	Pro Pro
Business Impact	Pro	Con	Con

See also

Insert links and references to other documents which are relevant when trying to understand this decision and its implications. Other decisions are often impacted, so it's good to list them here with links. Attachments are also possible but dangerous as they are static documents and not updated by their authors.

Change log

Workflow history