Eco-warriors: SAP vs Salesforce
With data centre power, water and land use in the spotlight, which of the business software makers leads the green charge?
Cloud providers are among the IT world's largest resource hogs. The amount of land, water and - especially - power data centres consume has seen much criticism levelled at AWS, Microsoft and Google - as well as smaller players like SAP, Salesforce, VMware, Rackspace, IBM, OVHCloud and Oracle. These vendors' data centre estates are increasingly subject to planning restrictions, and even temporary construction bans.
We've already covered the Big Three and their climate initiatives, and now it's time to turn our attention to the Tier 2 players. In this article, we'll examine two of the largest: Germany's SAP and the USA's Salesforce.
See also: Eco-warriors: Microsoft Azure versus Google Cloud Platform on sustainability
SAP vs Salesforce: At a glance
- Standards and Policies: Salesforce has a strong sustainability commitment, scoring 17 out of 20 possible points. SAP performed well but dropped points in supply chain engagement and ambition metrics.
- Emissions/Energy/Water: This tangible category is where commitments meet reality, and both Salesforce and SAP took less than half the available points, stymied by a lack of data.
- Waste/Circular Economy/Recycling: A mere four points for SAP still outperformed Salesforce's disappointing zero points, as the company shares no information around waste.
- Transparency: Both firms are held back by data obfuscation: they shout about favourable information but make damning data hard to find, spread through appendices and different reports
Methodology
We built our Sustainability Report on the foundation of the Sustainability Matrix: a set of 27 individual sustainability markers grouped into four categories. These are: Standards and Policies; Emissions/Energy/Water; Waste/Circular Economy/Recycling; and Transparency.
We assessed each vendor we covered against the Sustainability Matrix criteria based on that vendor's own data - drawn from Environmental, Social and Governance (ESG) reporting, direct interviews with individuals at those organisations, and more general data available publicly, such as press releases. Each criterion has its own individual weighting in terms of its importance to sustainability, and each vendor is awarded a rating for the sustainability of its cloud services. The maximum score available was 60 points. All data was taken from reporting for year 2021/2022 where possible, or 2020/2021 where reports had not been updated.
SAP vs Salesforce: The background
Both SAP and Salesforce are enterprise software vendors; SAP focuses on enterprise resource planning (ERP) tools, while Salesforce specialises in customer relationship management (CRM). However, both are (for the most part) cloud-based, and they are market leaders in their respective fields, making comparisons consistent.
SAP has some impressive near-term targets, but still only places in the middle of our rankings. A large reason for that is the delta between Standards & Policies and Energy/Emissions/Water. Whilst a relatively small emitter overall, SAP's choice to exclude most Scope 3 categories from its reporting (particularly the largest category, Purchased Goods and Services) and very limited data around areas such as energy intensity, water use and datacentre cooling stand against it.
The company also scored badly in the Waste and Transparency categories - choosing not to fully report Scope 3 emissions and hiding the notification of doing so in a note about gross emission figures. This suggests a degree of data cherry picking.
Salesforce comes just two points behind SAP overall, but that is enough to place it in the latter half of our vendor rankings - behind Microsoft, VMware, Google, OVHCloud and SAP, and tied with IBM.
The company has set itself (and its suppliers and partners) high sustainability standards. Its policies are robust, which is reflected in the very high score it received in the Standards & Policies category of our analysis. However, its score is lower in other categories due to an absence of data - particularly in the Waste/Recycling/Circular Economy section - and also to a considerable gap between the reporting of GHG emissions and the reality.
SAP vs Salesforce: Standards
Standards & Policies criteria exist to provide clarity about the standards vendors have signed up to.
Both SAP and Salesforce took full marks in multiple standards-based criteria. They have board-level representation for green issues (at SAP, CFO Luka Mucic; at Salesforce, Chief Impact Officer Suzanne DiBianca and VP of Sustainability Patrick Flynn); published policies (SAP and Salesforce); are members of the UN Sustainable Development Goals and Science-Based Targets (SBTi) initiatives; and have external sign-off for their sustainability audits (with KPMG and EY, respectively).
We should mention that Salesforce goes slightly beyond SAP in Science-Based Targets, extending its commitment to ensure that 250 of its top suppliers - representing 60% of the company's Scope 3 emissions - will set Science-Based Targets of their own by 2024.
This acknowledgement of its Scope 3 emissions, and awareness of the need to engage with the supply chain, helps Salesforce excel in other areas, scoring maximum points in Supplier/Customer Ecosystem Engagement. Another factor boosting its mark was the launch of the Sustainability Cloud last year: a module of the Customer 360 tool Salesforce customers can use to track their own Scope 3 emissions.
Salesforce has also added a Sustainability Exhibit to all supplier procurement contracts, boosting its score in Upstream Supply Chain Sustainability. The Exhibit adds the requirements of SBTi pledges and continuous (and quantifiable) improvements to both carbon footprint and environmental impact to suppliers' contracts.
SAP falls behind in both areas. While it is not doing badly on ecosystem engagement (it has its own Cloud for Sustainable Enterprises), it focuses most of its attention downstream - where most of its Scope 3 emissions originate - and less so on the business/supplier ecosystem, so scores one point less than Salesforce.
Meanwhile, in the Upstream Supply Chain criteria, SAP targets the entire value chain to get key suppliers to commit to net zero - which is good. However, it fails to share quantifiable targets and data - which costs it points.
Finally, Salesforce scores three points on the ambition of its emissions reduction target. It has an explicit goal to ‘further avoid and reduce absolute emissions across our value chain. Our objective is to reduce absolute (location-based) Scope 1, 2, and 3 emissions as quickly as possible, with a goal of 50% reduction by 2030 and near-zero by 2040 (relative to a 2019 baseline).'
While the deadline could be closer, points are given for the interim target and the welcome emphasis on absolute emissions.
SAP takes two points for its own ambition, with an impressively short timescale for carbon neutrality by the end of 2023 - two years earlier than originally planned. However, specific and quantifiable targets in other areas, such as water withdrawal or waste, seem to be missing, and targets for supplier emissions need to be quantified.
SAP vs Salesforce: Energy
Energy/Emissions/Water covers the sustainability of data centres and office buildings.
This category is where the ambition of the promises companies made in the previous category meets cold reality - and sadly neither SAP nor Salesforce lived up to their big claims.
Salesforce, to be fair, performed well in reducing its emissions - but only in 2021, when it slashed its Scope 1 and market-based (MBM) Scope 2 emissions by 48% versus 2019, against a 50% target. However, in 2022 those emissions rose 8.2% year-on-year to 92,000 MTCO2e. LBM Scope 2 emissions rose 3.9% from 2019 to 2021, and fell 1.7% YoY in 2022 (286,000 MTCO2e).
These figures exclude Scope 3, which make up the majority of most companies' GHG emissions. Salesforce generated 791,000 MTCO2e Scope 3 emissions in 2019, rising to 832,000 in 2021 (5.2% increase) and 1,004,000 MTCO2e (20.7% YoY increase) in 2022.
Salesforce's total emissions in 2022 are 20.3% higher than they were in 2019, before offsets. The company says this is down to organic growth, but even so does not include data from its acquisition of Slack in mid-2021.
The company claims to be a net zero firm since 2017, but this is primarily based on offsetting, which is not a long-term solution to climate change.
As well as offsetting, Salesforce uses renewable energy generation to back up its ‘Net zero since 2017' claim. It is about 75% of the way towards its 100% renewable energy target. However, there is a considerable gap between location- and market-based Scope 2 (indirect emissions from purchased energy) data.
Location-based emissions are given at 292,000 metric tonnes of carbon dioxide equivalent (MTCO2e), but our researchers had to dig into the appendices of the Independent Accountants Review Report to establish that market-based emissions are given at 84,000 MTCO2.
Confusing matters further, in the Energy Data Table of the Stakeholder Impact Report, location-based electricity mix data indicates that 12% of overall energy consumed (777,000 MWh, up from 691,000 in 2019) is clean and renewable.
There is no explanation for the difference between the Scope 2 totals, other to state that they have been offset with Carbon Credits certified under the Gold Standard or Verified Carbon Standard (VCS). Whilst both standards are a good benchmark of integrity and impact, the fact that they are different, and that the quality and integrity of offsets are so variable, illustrates the need for Salesforce to be more transparent about how it offsets such a high proportion of its emissions with these methods.
Data is also missing or severely lacking in other criteria where Salesforce picked up one or zero points. The company makes claims without backing them up - for example, Salesforce Tower in Dublin (announced January 2019) was to be LEED Platinum certified, but there is no confirmation if that has been achieved.
For its part, SAP is a much smaller emitter than many other companies in our analysis, with emissions given in kilotonnes (thousands) rather than megatonnes (millions). The firm's total emissions in 2021 were 110 KTCO2e, 19% down on 2020's figure. It speaks well of SAP that it has continued double-digit annual reductions post-pandemic, compared to 5% and 3% reductions in 2018 and 2019. SAP used this reduction to accelerate its progress towards net zero, bringing its target date forward from 2025 to 2023.
The company also does well on renewable energy. It produces nearly half of the electricity its Palo Alto and Bangalore datacentres consume from solar generation and buys the rest using EKOenergy-certified renewable energy certificates (RECs).
However, there are areas where SAP loses points. For example, it fails to include multiple Scope 3 categories in its reporting and doesn't provide a full Scope-by-Scope breakdown in the main Stakeholder Report. Metrics for energy use intensity, LEED (or any other) building certification and water use efficiency are also notable by their absence.
SAP vs Salesforce: Waste
Waste/Circular Economy/Recycling is all about the extent to which cloud vendors are squeezing various categories of waste out of their value chain.
This was overall the weakest area for Salesforce, with one of the weakest scores of all the companies we tracked. In fact, the company provides no data on any of the waste metrics and took zero points: one of only two firms in our analysis to do so (the other was Rackspace).
SAP is also held back by lack of data, sharing nothing on total waste generation and landfill diversion rate. Our researchers attempted to calculate this but could not due to the absence of data on recycling and reuse (outside e-waste), as well as overall volumes.
We were able to give SAP four points, however, for its cut in paper consumption (down 88% from 2009 in 2021, and 42% from 2020) and single-use plastics (it has now phased out nearly all single-use plastics at the company in line with its 2020 goal, after this was delayed by Covid), as well as its management of electronic waste.
SAP generated 268 tonnes of e-waste in 2021, which sounds very high compared to 134 tonnes in 2020. However, this is because SAP changed its reporting in late 2020. Instead of reporting only scrapped e-waste, the company works with its major IT asset lifecycle partners to establish a more granular (W)EEE report, which shows more precisely what type of end-of-life treatment was applied to disposed IT assets and devices.
SAP sent 151 tonnes of waste for refurbishment or remarketing in 2021. Of the remaining 114 tonnes, the vast majority was recycled. Just three tonnes were sent for disposal.
SAP vs Salesforce: Transparency
Our final category, Transparency, deals with the extent to which the vendors make their environmental data available.
From the scores, it is clear that neither SAP nor Salesforce are standouts for transparency. Salesforce barely scored more than half the points available, and SAP even fewer.
Salesforce's key weakness is the confused way it presents emission data and carbon accounting, scattering this information between different reports and appendices. Likewise, there is scant data about offsetting - despite offsets being used to back up a substantial portion of Salesforce's net zero claims - and none at all about waste or recycling.
Salesforce could easily take more marks by being upfront with its environmental data. For example, while the company does use carbon credits these are of high quality (Verified Carbon Standard (VCS) or Gold Standard), which would easily earn full points - but this information is hidden away outside the main Stakeholder Report. Carbon credits are a complex and contentious area, and companies using them need to go out of their way to be transparent to avoid the appearance of greenwashing.
SAP suffers from the same problem: the data is there, but it's selectively presented. The lack of raw data means the company's carbon calculations are not transparent (all the charts it shows include offsets - you need to read appendices to find its absolute emissions), and the exclusion of multiple Scope 3 categories from the analysis means the real extent of SAP's emissions are being under-reported.
The company is also very selective in what it reports, covering just four upstream Scope 3 categories (notably excluding the largest category, purchased goods & services) and leaving out many downstream emissions, despite those accounting for around 85% of the total.
SAP does pick up a few points here and there: one for the accessibility of its data and one for its emissions reporting, losing points in these categories for all of the above reasons. It did, however, take full marks in the quality of its carbon offsets. It provides details of Scope 1 and 3 offset quality (Livelihoods Carbon Funds) and certified Verified Carbon Standard (VCS), and mandates that offsets have to be Real, Additional, Permanent and Verifiable.
Conclusions
SAP and Salesforce share similarities in more than just their main product offerings: they are nearly identical in how they deal with green concerns.
Both firms do relatively well in their ambitions. The scale of their sustainability commitments is disproportionate with their size as second-tier cloud vendors: Salesforce is notably ahead of every other vendor in the ranking except Microsoft, while SAP is tied with VMWare and IBM. They are members of several third-party initiatives and pledges; engage with their ecosystems to encourage commitment to carbon accounting; and represent green issues at the board level.
The companies talk the talk, but do they walk the walk?
Unfortunately, no. While SAP does well in reducing its absolute emissions and using renewable energy, we have to ask if it only looks so good because we're missing data. It simply doesn't track certain Scope 3 categories - like Purchased Goods and Services - and also skips out on revealing anything about its water use, energy intensity or building certifications.
By contrast Salesforce's emissions keep climbing, after hitting a low point in 2020. This is largely down to the company's acquisition-fuelled growth, but with that comes a responsibility to set and keep standards across the board.
A stipulation to bring emissions down should be part of any modern M&A agreement and indeed, this might be the case - but Salesforce does nothing to promote the fact if it is.
That ties back into the wider issue around transparency. A recurring theme throughout our analysis has been missing, obfuscated or difficult-to-locate climate data; and while Salesforce slightly outperformed SAP in this area, neither firm will earn plaudits.
Green issues are important to suppliers, customers and regulators today. Companies should not selectively present choice data, hiding the rest in difficult to find appendices and footnotes - those that try may be living on borrowed time.
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