In recent years, companies have been facing the need to solve a wide range of issues, including significant aspects of environmental responsibility and business process optimization. In this context, SAP provides its solutions that help companies measure and manage their carbon footprint, which is a crucial step towards more sustainable and environmentally responsible operations. The Sustainability Management solution allows to cover almost all areas of a company’s activities and manage the entire spectrum of corporate emissions, including both the value chain and the product level. This means that companies will have a better understanding of the environmental impact of their operations.

(Source: https://news.sap.com/2023/05/sap-sapphire-future-proofed-business-age-of-ai/; https://fintechnews.ch/blockchain_bitcoin/sap-green-tokens-tap-blockchain-for-improved-transparency-in-plastic-recycling/54048/; https://www.sap.com/sustainability/circular-economy.html).

It seems to me that in the future, companies will be able to include environmental certification criteria for materials in their procurement requests and select suppliers whose materials have the lowest carbon footprint. This will allow companies not only to enhance the environmental-friendliness of their products but also to encourage suppliers to produce more eco-friendly materials.

However, in the current economic crisis, not all companies can afford investments in new software products due to limited resources. It seems possible to create a customized solution based on existing standard SAP S/4HANA tools, which could be a significant step towards accounting for and managing the carbon footprint.

There are two possible ways to implement a solution to this problem and improve the SAP system:

a) Below there is an example of building carbon footprint management in companies using batch management.

1) The MM (Material Management) module enables the selection of optimal suppliers, considering factors like quality, cost, and even the carbon footprint of their products, whether they are raw materials, materials, or services such as energy supply. Thus, “green practices” can be integrated at the initial stages of value chain creation.

Through the use of batch management of stocks, companies can store carbon footprint data for each batch of material. This will allow tracking the level of the carbon footprint at different stages of the supply chain and inventory management.

2) The PP (Production Planning) module provides the capability to create detailed specifications for each product, including information about utilized materials, raw material characteristics, and energy resource consumption. This data provides a preliminary calculation of the carbon footprint for each product unit. This approach ensures more accurate planning and control over the environmental impact at all production stages.

3) The SD (Sales and Distribution) module allows businesses to configure flexible pricing strategies, which can be contingent upon various product attributes, including their carbon footprint. This means that product prices can align with their environmental impact, fostering more sustainable consumption.

Furthermore, companies can provide customers with information about the carbon footprint contribution to product costs using Electronic Data Interchange (EDI). This transparently informs customers about the ecological value of products and encourages the selection of more environmentally friendly options.

The SD module enables the consolidation of various orders into a single delivery, optimizing logistical costs. This reduction in individual trips decrease environmental impact.

4) Using the tools of the Transportation module, companies can effectively manage delivery route data for customers. This includes stop-point selection, route distance, transport type, and characteristics. Optimizing routes leads to reduced fuel consumption, time, logistics expenses, and ultimately, a smaller carbon footprint.

Characteristics of each transportation vehicle, whether they are leased or owned, are integrated into the system. These characteristics encompass fuel consumption, carbon dioxide emissions, and other parameters that influence delivery eco-friendliness.

In conclusion, this approach facilitates effective delivery process management, enabling companies to consider environmental aspects in decision-making. This contributes to responsible logistics.

5) Electronic Data Interchange (EDI) with business partners facilitates the exchange of incoming and outgoing messages, which can include information about the carbon component of acquired and sold products. Consequently, EDI documents can be integrated into the process of end-to-end carbon footprint traceability for goods.

b) Effective carbon footprint management without material batch management is achievable through minor adjustments within the SAP system:

1) Create specialized document types with necessary carbon content data for material inflow and outflow. Introduce custom fields in these documents to record the carbon content of incoming or outgoing materials. These characteristics can be numerical values reflecting carbon emissions.

2) Associate the new documents with company operations. Link company documents that record material inflow and outflow to new document types. In this way, it is possible to achieve parallel accounting of data on the carbon content of each product.

3) Update the database with new document types for each material movement. Use First In, First Out (FIFO) or Last In, First Out (LIFO) principles to reflect material consumption. This ensures precise carbon footprint tracing. This operation can be performed simultaneously with every created document or at the end of a specified period, by launching the appropriate calculation operation based on the created documents.

In addition to the solutions described above, optimization can also be carried out at the level of the PS (Project System) module during investment project planning. It is possible to organize the selection of equipment suppliers, based on the environmental friendliness of their production. The data from the FI (Financial Accounting) and CO (Controlling) modules can be used for monthly calculations and reflection in the created carbon footprint accounting. For instance, data based on a company’s own costs for electricity and heat consumption, as well as emissions into the atmosphere, can be accumulated monthly, and at the end of the month, the data can be allocated to the produced goods. It also seems possible to me to create reports that will include carbon footprint data from all modules. The information gathered can be used to identify the most significant sources of emissions and pollution. Such analysis will allow focusing on key areas for optimization. Implementing more efficient and environmentally responsible production methods can reduce the overall carbon emission.

The customized solutions described above options will help companies effectively account for the carbon footprint, make adjustments to emission reduction strategies and assist businesses in maximizing their budget allocation across all developmental strategies. Thus, the integration of carbon footprint data and its analysis lays the foundation for a conscious approach to environmental responsibility, process optimization, and carbon footprint reduction. This not only contributes to the company’s sustainability but also promotes the formation of a greener and more responsible business culture. The ability to provide customers with information about the impact of the carbon footprint on the final cost of the product being sold promotes their trust and loyalty.