- We have identified human and intellectual capital management, data security and privacy, financial performance, business conduct and climate change as material for our business.
- Our materiality approach follows the G4 guidelines of the Global Reporting Initiative (GRI).
- The scope of our materiality assessment includes our own operations and how we enable our customers to create social, environmental and economic impact.
We continuously update and assess material aspects that are relevant to our innovation and sustainable growth and also reflect our four corporate objectives. Our materiality approach is based on the Global Reporting Initiative (GRI) G4 guidelines, which define material aspects as those that “reflect an organization’s significant economic, environmental, and social impacts, or substantively influence the assessments and decisions of stakeholders.” We also conduct materiality assessments for our financial reporting based on the International Financial Reporting Standards (IFRS). The process described here pertains to issues that fall outside these financial statement related materiality considerations.
Over the past years we increasingly expanded our materiality approach towards understanding our economic, social and environmental value creation. We do this from two distinct points of view: SAP as a company (which includes our operations and supply chain) and SAP as a solution provider (which is how we serve our customers). Our goal is to determine materiality based on what is most relevant to our core business strategy. By analyzing our impacts as a solution provider, we can incorporate our conclusions as we create a sustainable strategy. Such a strategy enables us to holistically manage the economic, environmental, and social contexts in which we operate.
Assessing and Rating the Relevance of Numerous Issues
We followed the GRI G4 guidelines, assessing the materiality of topics: identification, prioritization, and validation by our external sustainability advisory panel and our chief sustainability officer. We composed an initial list of topics referenced in the GRI G4 guidelines, as well as those that emerged from our various engagements with stakeholders and our sustainability advisory panel, or the Sustainability Accounting Standards Board (SASB) provisional standard for the Technology and Communications sector. We cluster detailed indicators of the various frameworks against our six material aspects, at which level we manage our company. Based on the feedback of our sustainability advisory panel in November 2015, in 2016 we will reassess our material aspects with respect to the trend of outcome reporting.
Our initial 2015 review confirmed our identified most material topics, which are also clearly interrelated to our four financial and non-financial core objectives namely revenue, profit, employee engagement and customer loyalty. In this we link our material aspects of Human and Intellectual capital management, Climate and Energy and Financial Performance clearly to the core elements of our integrated performance analysis. Data Security and Privacy are the foundation of our business model. We will continue to evaluate how business conduct is connected with our financial and non-financial performance.
Drawing Conclusions and Understanding the Implications of Our Assessment
We identified six main areas that are material to SAP as a company. For the most part, these are consistent with our past assessments and comprise:
- Human capital management – Helps us ensure we employ, develop, integrate and retain the very best talent within our company and be attractive to potential employees
- Intellectual capital management – Helps us innovate and deliver new solutions with the highest quality through continuous organizational learning, people development, and suitable internal structures and processes. Such capital also leads to increased customer loyalty
- Security and privacy – Ensures we design and deliver our solutions in ways that afford the very highest levels of data security and privacy control
- Financial performance – Mirrors the success of our strategy and ensures our long-term viability
- Business conduct – Ensures we conduct our business activities while upholding the highest levels of behavior, as set out in the SAP Code of Business Conduct for Employees and other company policies
- Climate and energy – Helps us offer solutions to our customers for reducing energy consumption and emissions, find ways to minimize the environmental impact of our solutions and transform our corporate operations accordingly
While these issues are critical for us as a company, we see our solutions touching on a broad range of issues that are highly material to our customers – from financial viability to natural resources, energy, and human rights. While we do offer solutions in some of these areas, technology such as SAP HANA and our Cloud offerings hold enormous potential to help our customers improve and differentiate their own operations and impacts. For example, our software already enables many of the world’s largest companies to better measure, track, and manage their resource consumption, as well as increase their efficiency in a host of areas. Addressing our most material impacts means finding additional ways to support our customers in becoming more sustainable organizations. In this sense, our materiality assessment helps point the way to creating an integrated strategy, in which sustainability is seamlessly connected to how we serve our customers and drive our own long-term success.
Applying Our Assessment to Further Develop an Integrated Strategy
Our environmental and social performance remains critically important to SAP. We have gained important insights into helping our customers tackle challenges by doing so ourselves, especially by presenting the impact of our non-financial performance on our financial performance. In addition, working to become more sustainable has fed our innovation and improved our bottom line. SAP’s sustainability performance, as well as our work to create a sustainable corporate strategy, is also of increased importance to investors and newer generations of talent we want to attract and hire. At the same time, we recognize that it is in our role of solution provider that we continue on the path to creating the greatest customer value and designing our integrated strategy. In addition, we continue to explain our approach to our employees and other key stakeholders to enlist them in realizing our vision “Help the world run better and improve people’s lives”.
As noted above, we have already headed down this path with a number of our solutions, which are enabling our customers to comply with regulation, become more efficient, operate more sustainably, and begin to transform how business is conducted. We also have more to do – for example, we have not yet created a methodology to quantify our impact as a solution provider. To do so, we will continue to work with customers and partners. Namely, we need to understand our impacts in the context of the limits and demands of economic, environmental, and social resources. As a founding member we joined the Global Partnership for Sustainable Development Data to help monitor the progress of achieving the recently released 17 Sustainable Development Goals (SDG). We will continue to assess and describe how our technologies can contribute to the SDGs, thereby creating positive social, environmental and economic value by enabling customers. With the release of these global goals we observe an increasing trend in our customer base to initiate business transformations based on new sustainable corporate strategies. Supporting our customers with our solutions enables them to execute accordingly and helps us on our journey to fulfill our vision.
We will continue to drive behavioral change throughout SAP through bottom-up strategies such as employee engagement, education, and the promotion of peer leadership and role models. We will also continue to emphasize co-innovation with our customers, as customers are the means through which we can help create long-term, sustainable change. We will work with our customers to enable them navigate global trends, such as hyperconnectivity, cloud computing, and Big Data, which go hand-in-hand with social and business trends that are changing how we live and work. Rapid urbanization, the sharing economy, enormous demographic change, and resource scarcity are demanding that leaders of tomorrow adapt to a world in which the pace of change continues to accelerate. Based on this we will continue to develop criteria to evaluate our sustainability impacts to help us inform and refine our materiality assessment.