Worldwide material consumption has expanded rapidly, as has the material footprint per capita. We are using resources 1.75x faster than the planet can regenerate, and with another billion people projected by 2030, we will need two planets to sustain our needs. Action is needed to ensure that current material needs do not lead to the over extraction of resources or to the degradation of environmental resources. These actions should reduce waste while mainstreaming sustainability practices across all sectors of the economy to help ensure responsible consumption and production. IT technology and data can help make the sustainability performance of a product or service transparent. For instance, technology solutions can enable new business models, such as pay-per-use, or help educate consumers about the social and environmental footprint of products to enable more conscious buying decisions.
Our current economy is largely based on a take-make-waste model where materials are extracted, manufactured into goods, used, and then disposed of. This is called a linear economy. A circular economy aims at eliminating waste and the continual use of resources. Circular systems employ reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a close-loop system, minimizing the use of resource inputs, and reducing the creation of waste, pollution, and carbon emissions.
Public opinion and tightening regulations are influencing the thinking about sustainable supply chains and accelerating the shift towards a circular economy. Regulators are moving forward with legislation (bans and taxation), with 100% of the cost of recycling moving to retail and consumer-product goods companies in 2022 due to the EU Circular Economy package.
The EU regulation to ban single-use plastic directly impacts the license to operate for companies depending on plastic packaging. Major consumer-facing corporations like Nestle, Unilever, and Kellogg’s are among 250 other major brands pledging to cut all plastic waste from their operations. In the Alliance to End Plastic Waste, more than 30 global companies will invest US$1.5 billion over the course of five years to spur innovation and to end the flow of plastic waste into the environment.
SAP Is Doing Its Part
As part of fulfilling our purpose to help the world run better and improve people’s lives, SAP is part of a growing movement of policymakers, NGOs, social groups, and leading companies working together on solutions to create a restorative and regenerative economy.
To achieve our shared aspiration of a world of zero waste and the United Nations Sustainable Development Goals, SAP is partnering with the Ellen MacArthur Foundation, the World Economic Forum’s Global Plastic Action Partnership, and many more to provide solutions for a circular economy.
Aiming to lead by example, SAP has also introduced a new plan in 2019 to phase out single-use plastic in its own operations as part of the latest update of its Global Environmental Policy.
In 2019, SAP and Google Cloud have partnered to cosponsor a sustainability contest for social entrepreneurs called Circular Economy 2030. Topolytics, the winner of this competition, uses technology to provide waste managers with transparency into generation, flow, and fate of industrial or municipal waste. Topolytics addresses the increasing problem of transparency into available recyclable secondary feedstock as a basis for the next cycle of a resource. Together with SAP, Topolytics launched the COP26 Waste Insights Project, which will unify and analyze data from consumer goods, retailers, waste managers, investors, NGOs, and local governments.
Yet plastic waste is not the only waste to worry about. The amounts of e-waste are rising, wasting valuable resources and releasing toxins into the ground, putting not only the health of humans in danger, but also land, sea, and animals. SAP’s intrapreneurship program promotes Recycletronics, a solution striving to reduce e-waste in India through building a marketplace for Indian electronics manufacturers and e-waste recyclers.
Having frequently collaborated with industry partners to contribute to Goal 12, SAP has taken the next step and joined the Ellen MacArthur Foundation (EMF). The objective is to create new circular solutions that accelerate marketplaces for waste materials and enable more responsible production methods using advanced data.
This also aligns with SAP’s commitment to help businesses thrive in a circular economy with the upcoming launch of SAP Responsible Design and Production, a new solution to help producers respond to Extended Producer Responsibility (EPR) obligations and other public commitments. This solution will allow businesses to keep track of public commitments and new regulations so they can manage the operational costs associated with downstream processing and gain better visibility of material flows overall. These insights can be used to inform better decision making when managing a sustainable product portfolio. Waste and pollution are the result of flaws in design. Ninety percent of environmental impact occurs at the design stage of a product. SAP and EMF have therefore partnered with the London Design Festival to launch the Circular Design Project in 2020. This was to empower and equip the design and creative community to seize the opportunity of the circular economy as a framework for positive global impact.
In Africa, less than 20 percent of plastics are recycled currently. Ghana however, has emerged as a regional front runner, with a recycling industry that protects both the environment and impoverished, mostly-female, community of waste pickers. Last year, Ghana became the first African country to join the World Economic Forum’s Global Plastic Action Partnership (GPAP). SAP is also a member of GPAP and has collaborated with MESTI, private industry, and local non-profits to create a technology solution that will help and minimize plastic waste.
SAP believes that supply chains should always be transparent, open, and immutable. The GreenToken solution offers companies a new level of transparency for their complex raw-material supply chains. This not only helps companies to become accountable, but ultimately also helps customers to make ethical buying decisions.
This is also an important issue, especially in the food sector: Consumers request transparency on the origin or the environmental and social footprint of products. Scantrust partners with SAP and has developed an integration to the material traceability option for SAP Logistics Business Network, giving food and beverage brand consumers the ability to track the provenance of their food from end to end.
The German dairy Schwarzwaldmilch is taking a similar approach: With the help of SAP, they developed a digital food label for organic hay milk that shows consumers the exact route their milk has taken from the farm to the store. The seafood company Bumble Bee shows another way to maximize supply chain transparency using blockchain.
ERG S.p.A., a leading European independent power producer in the renewables sector, has been engaged in a continuous process of sustainability improvement. It recently introduced a code of conduct for suppliers in line with the company’s green principles. With the implementation of SAP Ariba Solutions, ERG is to drive their digital transformation, ensure greater supplier compliance and transparency and improve supplier qualification to align with their sustainability initiatives.
Another important aspect for consumers is the availability of products. This also affects the procurement of promotional goods: While understocking may leave customers disappointed, overstocking can result in environmentally damaging waste. In order to realize their vision of zero waste, Swiss supermarket chain Coop Group needs to reliably predict the demand of promotional goods. Using the SAP Promotion Management application, Coop Group is able to reliably predict where and when said goods must arrive. Self-learning artificial intelligence improves their forecast with each new sale, allowing them to cut waste and enhance consumer experience.
To ensure that stores are always stocked, it is crucial for Foodstuffs to monitor the transportation of their goods from three different distributions centers on New Zealand’s South Island, using more than 115 trucks as well as third-party providers. SAP Transportation Management significantly improved the visibility and management of their transport activity, allowing them to speed up deliveries and make more efficient use of resources.,
Johnson & Johnson is one company that has combined its procurement and sustainability practice so suppliers can help the company achieve its mission. The company requires procurement partners to adhere to its code of conduct and follow responsibility standards. Through its Supplier Diversity Program, it also opens doors for small and diverse suppliers, such as certified businesses owned by women, minorities, veterans, and disadvantaged people. For example, Johnson & Johnson buys office supplies from WildHearts Office through Ariba Network. As a Business for Good company, WildHearts is the UK’s leading social business and a member of Social Enterprise UK.
Another SAP customer that has successfully embedded the circular economy concept into its business is Mohawk, which recycles more than 6.6 billion plastic bottles each year to make its flooring products and thus is the largest recycler in the flooring industry. In addition, the business strives for zero-waste-to-landfill certification, which requires a plant to recycle or reuse 90% or more of its manufacturing process waste. To date, 48 Mohawk facilities have earned this certification. In 2018, Mohawk saved $4.3 million on landfill and haul-away costs, as well as the costs of treating and discharging water to public sewer systems.
The paper manufacturer Steinbeis is using SAP HANA for driving its digitalization forward. Having digitalized processes helps the company not only in increasing cost efficiency, but also in the saving of resources. Steinbeis is embracing the circular economy by using significantly less energy and water to produce its paper, reusing wastepaper and lowering their CO2 emissions.
For Temperpack, leveraging SAP technology is not only about improving lead times by 50%. The manufacturer of plant-based, widely recyclable cold-chain packaging is also working with SAP to track the sustainability of their materials and finished products e.g. calculating scope 1 and 2 carbon footprint and providing customers with estimates on the packaging they purchase.
The collaboration between Danone and SAP in Danone’s Dual Project to create both shareholder and societal value even made it to the finals of the SAP Innovation Awards 2020. This project identified various “planet stewardship” KPIs: 100% recyclable, reusable, or compostable packaging; 50% reintegrated and recyclable PET bottles; and reducing CO2 emissions by 50%. These KPIs can be embedded directly into the measurement and approval of CAPEX projects, ensuring investments are prioritized with the highest impact on the business and planet values.
SAP too seeks to buy products and services from suppliers who meet high environmental and social standards. Such procurement practices help us create a positive impact and provide levers through which we can reduce our emissions. Working with suppliers who demonstrate a commitment to sustainability enables us to comply with the requirements of our own customers.
In 2020, SAP announced the initiative 5 & 5 by ’25, targeting five percent of addressable spend with social enterprises and with diverse businesses by 2025. In setting this target, SAP aims to inspire organizations around the world to buy more goods and services from purposeful suppliers, making a positive collective impact on the societies they operate in.
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