Making a business case for sustainability: SAP best practice


Many executives struggle with launching sustainability programs.  Their challenges are many, one of the biggest being how do you craft a business case for making sustainability a key business priority?  This is an important question as a weak business case will not support the resources and focus needed to deliver the maximum business and environmental impact.  Overall, I recommend evaluating and implementing sustainability programs the same way you evaluate any other business initiative – by strategic congruence, customer need and ROI.  My approach to developing a business case balances elements of strategic fit and financial analysis with stakeholder alignment and organizational transformation.  This recipe has been proven successful in many green companies, including SAP.  This global leader in business management software has garnered impressive results to date with their sustainability program.

In a recent interview with MIT’s Sloan Management Review, Peter Graf the Chief Sustainability Officer for SAP, discussed how he crafted his sustainability business case. Some of his and my recommendations include:

  1. Review the financial risk of not meeting current customer environmental requirements.  Simply put, if you don’t comply with customer needs they will find another vendor that will. Although financial risk may be the biggest catalyst for action, you do not need a compliance requirement to make the business case work.
  2. Drill deep for cost savings in the areas of resource productivity and organizational efficiency.  Potential savings can be identified using proven analytical techniques such as Product Lifecycle Analysis. For perspective, SAP’s sustainability strategy delivered 90 million euros of direct savings to the company during the first year of its program. That traced to a 7% reduction in energy consumption, 25% reduction in paper and printing, and a 30% reduction in airline travel.
  3. Consider how sustainability can drive new revenues through new sales as well as higher price premiums.  With a public and sincere commitment to leading in green business, it is possible for companies to differentiate their offering and brand. To achieve this, firms need to conduct extensive customer research to understand their customer’s sustainability needs.  Additionally, executives need to internalize and communicate a strong vision that sustainability will be a fundamental part of their business 3-5 years out. Finally, achieving environmental leadership can provide your firm with a platform to shape governmental policy and standards for your industry, to your competitive advantage.
  4. Use sustainability as a means of re-energizing your employees and improving your talent acquisition.  Sustainability can be a passionate issue for many people, with the ability to improve morale and catalyze productivity improvements.  As well, possessing an exemplary sustainability pedigree could improve a firm’s ability to attract and retain highly-skilled and motivated talent.
  5. Make sustainability a part of your company’s fabric.  For sustainability strategies to be truly successful, piecemeal implementation will not work. Based on SAP’s example, sustainability must become a corporate priority as well as embedded within your value system and tactical decision-making criteria. Measurement tools such as the Balanced Scorecard or the One Report should be used to ensure internal compliance and stakeholder alignment.

Graf’s noted that his biggest challenge in the business case process was assembling and analyzing the numbers.  A financial analysis necessitates building a comprehensive data baseline to understand the firm’s current state.  For example, organizations must execute an environmental audit around their energy consumption, carbon footprint etc.  Sustainability leaders need to understand the metrics around their current state and then make assumptions around key questions like the cost of energy, anticipated regulations etc. This multi-functional exercise is time-consuming and difficult in large companies because they often lack the expertise and resources to undertake it internally. Moreover, this analysis needs input from the supply chain and marketing partners who may not be able or willing to generate the necessary data.

Creating a business case is fundamental to any corporate initiative.  With sustainability, do your homework.

 For more information on our services and work please visit the Quanta Consulting Inc web site.

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5 comments so far

  1. […] sustainability criteria into decision making and operational analysis is essential for developing a business case and gaining external compliance.  Companies like SAP and Walmart have driven sustainability […]

  2. […] sustainability criteria into decision-making and operational analysis is essential for developing a business case and gaining external compliance.  Companies like SAP and Walmart have driven sustainability savings […]

  3. […] previous columns, I have written about how companies such as Nike, Walmart and SAP are using sustainability strategies like Product Life Cycle Analysis, green product development and […]

  4. […] previous columns, I have written about how companies such as Nike, Walmart and SAP are using sustainability strategies like Product Life Cycle Analysis, green product development and […]

  5. […] previous columns, I have written about how companies such as Nike, Walmart and SAP are using sustainability strategies like Product Life Cycle Analysis, green product development and […]


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