In Balance with the World

The publication of Upton Sinclair’s The Jungle in 1906 led to the passage of the Pure Food and Drugs Act and the Meat Inspection Act by the U.S. Congress. In 1904, Ida Tarbell’s book, The History of the Standard Oil Company, helped shape the U.S. Supreme Court’s decision to break up the company on antitrust grounds. Both of these writings served as major influences on what today is called the corporate social responsibility movement.

Corporate social responsibility, or CSR, encourages corporations to ask questions such as, “How do our products affect the environment? What role do corporations play in the divergence between the very rich and the very poor? And what is our company’s carbon footprint?” Companies are feeling the pressure to take responsibility for their impact on the environment and society. Many are making changes in their operations and disclosure practices as they realize the importance of moving toward a more carbon-conscious marketplace. CSR initiatives are challenging the way corporations are looking at profit. However, through these changes, new market segments are created, thereby reducing risk and costs, while making important social and environmental improvements.

On September 21, 2007, SAP hosted the Corporate Social Responsibility Expert Advisory Group at the Computer History Museum in Palo Alto, California, with the goal of creating traction in the CSR space and tackling some of these questions. Steve Rochlin of AccountAbility, an internationally recognized leader in stakeholder engagement, moderated the group of more than 30 attendees.

SAP gathered a group of notable experts and stakeholders in Silicon Valley to advise the third largest software company on how it could best align its business strategy and technologies with broader environmental, social, and corporate governance performance for its customers. Organizations such as Nestlé, The Pew Center on Global Climate Change, ebay, U.S. Chamber of Commerce, The World Bank Institute, Mattel, and Deutsche Telekom were among the companies represented by this all-star advisory group.

With a CSR report slated for 2008 and pressure to introduce corporate governance more fully into SAP’s suite of products, the event was a welcome opportunity for the highly experienced, diverse group to exchange concepts and provide constructive criticism, in a moderated forum, about SAP’s role regarding CSR. “I think corporate responsibility is fundamentally about trust and integrity, and with more than half the world’s economy running SAP, our role is integral,” said James Farrar, vice president of Corporate Citizenship at SAP. “What we are hearing more and more from our stakeholders is ‘what can SAP enable, what can SAP do to move organizations toward more sustainable business models.” And with that, the advisory group began reviewing SAP’s current core competencies and determining how SAP and CSR initiatives can facilitate positive global changes.

Measuring CSR globally

SAP’s core competency is the collection, presentation, and analysis of data. SAP’s 40,000 customers have collected data from every industry on Earth. And as one of the advisory attendees succinctly stated, “Data makes people do stuff.” But because a standardized way of measuring CSR does not yet exist, creating a bridge between intangible costs (risk) and tangible costs (supply chain management) remains a hurdle. In order to facilitate change, an organization with a broad outreach is required. With more than 50 percent of the world’s eco-nomy running SAP, including 17 of the top 30 sustainable companies (according to BusinessWeek), SAP’s capacity to affect change in the CSR arena is significant.

Currently, SAP solutions intrinsically improve governance because they create transparency throughout organizations. Unfortunately, a lack of unified global governance framework puts companies and countries in the untenable position of managing complex global environments with different measuring sticks. With SAP’s global outreach, they have the ability to help establish a common reporting framework and invigorate markets by incentivising market forces despite political hurdles. Where governance groups have historically been whistleblowers, they are now collaborating to create new value.

At the CSR event, many of SAP’s CSR advisory stakeholders saw alignment with federal and worldwide political bodies as an opportunity with tremendous potential for SAP. They hoped to see SAP establish itself as an exemplar by setting the global policy framework on climate change and establishing economy-wide policy solutions in concert with political organizations. With countries adopting parts of treaties and calculating environmental and governance standards using different measuring sticks, the advisors indicated that someone with a global outreach needs to create a diagnostic assessing all countries equally. The more aligned with public policy SAP can become, the more change it can facilitate with software solutions for sustainability and governance market needs. Businesses are becoming more dependent not only on the number crunching aspects of their IT infrastructure, but also on the analytics and questions the information raises.

“The moment you switch from a strong focus on product innovation to business model innovation is when you realize you can’t even think about your business model without thinking about IT,” said Herbert Heitmann, senior vice president of Global Communications at SAP.

The logistical hurdles

As SAP continues to assist companies with CSR initiatives through the use of the SAP solutions for governance, risk, and compliance, including SAP Environmental Compliance, managing and reporting its own CSR initiatives is at the top of SAP’s list. Products in the marketplace resonate more clearly to consumers and politicians when companies drink their own Kool-Aid.

As one of the advisory panelists noted, in the near future, there will be two types of consumers: those who see a brand and recognize that brand as socially responsible, and those who research, read labels, and determine how, or if, a company is socially responsible. In a world of corporate social responsibility, providing the most value to shareholders can no longer be a corporation’s primary goal. Social responsibility initiatives must be factored into the bottom line.

As the event concluded, SAP committed to unpacking all of the issues that came out of the Corporate Social Responsibility Expert Advisory Group, and donated €E1,000 for each participant in attendance to the UN World Food Program. The offset of the travel-related CO2 emissions was made through the German organization atmosfair, which supports emission-saving projects that are subject to the rules and procedures set out in the Clean Development Mechanism (CDM) of the Kyoto protocol.

Willy Brandt, the Nobel Peace Laureate of 1971, stated, “Today we are in the process of finding a tolerable balance between ourselves and with the world.” With that in mind, SAP is taking action, knowing that today becomes yesterday in the blink of an eye.

Ian Alexander, freelance journalist,
Palmetto, Florida