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SAP: Circular economy needs a level playing field

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SAP: Circular economy needs a level playing field

Organisations are keen to become more sustainable, but find their paths strewn with obstacles.

The COP26 summit is due to kick off in a fortnight, and the topic of how to transform concern about climate change and an interest in sustainability into action is at the heart of research recently unveiled by enterprise software giant SAP. The global study of more than 7,000 business leaders, including 400 from the UK, found that organisations are keen to act, but are finding their paths to a greener future strewn with obstacles.

How to change this was the topic of a recent virtual sustainability roundtable chaired by SAP UK and Ireland MD, Michiel Verhoeven. In addition to Stephen Jamieson, SAP global head of circular economy solutions, the panel was comprised of sustainability and circular economy specialists drawn from industry and academia.

Green shoots

According to SAP research, more than one third of UK leaders report struggling to align their eco commitments with their wider business strategies, and a similar number are still trying to get to grips with how to embed sustainability into their processes and systems. Why? Stephen Jamieson acknowledged that the challenges facing businesses are profound - and not wholly within their control.

"Organisations that have got the right intent, have to operate within a free market economy, where other organisations may not have quite the same commitments. One of the great acknowledgments we see across the sustainability world and the business world in general, is the need for a level playing field in order to be able to have a consistent basis on which to embed the cost, the externalities of impact of materials, whether environmental or social, into the cost of product."

However, greater regulation is only part of the answer, and Jamieson is positive that a framework for progress is being built.

"The second element is really around innovation and how you unlock capital. We're now starting to see some really positive movement in the ESG space, not just green investing but surgical intervention where people are giving green bonds to problematic organisations in order to make genuine material contract-based improvement. I think we're starting to see a framework of regulation, of investor requirement and of consumer demand starting to come together."

What businesses can control is who takes responsibility for change within their business, and how progress is measured. It seems intuitive to point to senior management when asked about accountability for actions to improve the environment, and SAPs research shows that this is very much the case for UK businesses.

Change makers

Wouter van Tol, head of sustainability at DS Smith, believes that a small group of change makers should lead the way, although not be expected to bring about all the necessary change themselves, rather they should train the rest of the company in how to embed sustainability throughout a business. Indeed, he believes that sustainability as a distinct function should make itself superfluous as quickly as possible, which it should do if a company adapts accordingly.

The measurement of environmental impact is an enormously complex area, particularly the question of how to measure Scope 3 emissions which most businesses are grappling with. In addition to launching Product Footprint Management, which focuses on Scope 1 and 2, SAP is leveraging its business network to try to scale into the wider business network and gain insights across the full scope of emissions.

The panel acknowledged the difficulties inherent in Scope 3 measurement and in measuring the circular economy. Peter Hopkinson, professor of circular economy at the University of Exeter stressed the need for systemic indicators of progress.

"We already have quite sophisticated national material accounts which are codified in the UK by the Office of National Statistics. And there are taxonomies, methods and ways of justifying the quality of data. But what seems to be is a mismatch between that and what happens at a level below at the value chain and the sectoral level. There's a proliferation of KPIs so companies often cherry-pick the KPIs that maximise their positive agenda. What we're trying to do is think about how you create system level KPIs, because the circular economy is a system, so you need a systemic approach."

This measurement, which is fundamental to the whole concept of circular economy is exactly what Topolytics are trying to provide, as their CEO Mike Groves explained.

"We won't get a scaled approach to maximising utility of all that material that we're using in products and packaging, unless you have a systemic view of what happens to that material once it's out of production systems and into the world with consumers, or in a commercial and industrial waste context or by products. That's what we're trying to do. We're trying to build that systemic view of that downstream system in order to then help drive that material back into that production system and close the loop. The more material can be recovered, the lower the carbon emissions attached to it are."

Hopes and fears

The discussion closed with participants setting out their hopes for the COP26 summit. There was a consensus that any agreement should join the environmental dots and reflect not just the race to Net Zero but also take in the impact of consumption and materials and the wider damage this is doing to biodiversity. Other goals included a reinforcement of the need to switch to alternative energy sources - and a hope that this aspiration wasn't derailed by the current energy crisis.

Concern was also expressed about the emerging of a two-tier strategy - with one being more European led and the other less so. If this happens, it will seriously hamper the effectiveness of global sustainability efforts. The problem is global, and so must be the strategy for addressing it.

Issues around sustainability and partnership will be discussed in Computing 's Tech Impact Conference, coming in 2022.

SAP: Circular economy needs a level playing field

Organisations are keen to become more sustainable, but find their paths strewn with obstacles.

Green shoots

Change makers

Hopes and fears

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