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Materiality

Defining Key Priorities for Our Reporting

By understanding which environmental, social, and governance issues are key priorities for our stakeholders, we are better able to allocate time, budget, and resources accordingly within our integrated reporting and efforts towards realizing our corporate vision. Based on our existing material aspects, in 2016, we completed a new materiality assessment to help identify and validate those topics which are the most relevant to our stakeholders such as employees, investors, and customers. The assessment also highlights those topics which contribute most to value creation both in our own operations and in those of our customers.

Our new process combines the GRI G4 standards for sustainability reporting and the International Integrated Reporting Framework. Key stages are detailed below.

Identification

During this stage, we drew up a long list of potential topics based on guidance from GRI G4 and the Sustainability Accounting Standards Board (SASB), as well as our existing material aspects. We also considered a materiality assessment for the ICT industry by the Global E-Sustainability Initiative (GeSI) as well as the United Nations’ Sustainable Development Goals (SDGs).

When identifying our key topics and their boundaries, we looked first at areas related to our operations and supply chain. Second, we looked at topics related to how our software can help our customers contribute to the achievement of the SDGs.

Prioritization

During the prioritization stage we looked at the extent to which each individual topic affects our ability to create value at SAP. We assessed whether this value was financial, operational, strategic, reputational, or regulatory. All topics that were identified as delivering value in three or more areas were then included on our short list of seven categories, as follows:

  • Business conduct
  • Climate and energy
  • Financial performance
  • Human and digital rights
  • Human capital
  • Innovation
  • Impact on society

Next, we conducted semi-structured interviews with selected stakeholders to validate the shortlisted topics. We asked stakeholders to rate topics on a scale from 0 to 5 (where 0 is not important at all and 5 is very important) based on the following questions for the first six categories:

  • To what degree does this topic influence SAP's ability to create value?
  • How important is that topic for you to engage into a business relationship with SAP?

To assess the category “impact on society,” we asked stakeholders the following questions:

  • How high is the potential of SAP to enable our customers to achieve the SDGs?
  • How important is our ability to help achieve the SDGs for you to engage in a business relationship with SAP?

We have included in our materiality matrix all topics with stakeholder ratings in the upper 50% for both questions.

Validation

The results of the materiality analysis were reviewed and confirmed by our steering committee for integrated reporting and our sustainability advisory panel. It was also reviewed by our chief financial officer, who is the board sponsor for sustainability and integrated reporting.

Review

Feedback on and analysis of the SAP Integrated Report 2016 will serve as an input for future materiality assessments.

Results

Materiality Matrix (in Addition to Financial Performance)

Key points of our results include:

  • Financial performance was seen as a mandatory part of reporting and was often not expressly discussed as a result. However, this category received high individual scores.
  • The innovation, business conduct, and human capital categories received the highest scores and response rates.
  • In evaluating our impact on society through the SAP portfolio, our stakeholders identified the following seven SDGs as material:
    • SDG 9 Industry, innovation, and infrastructure
    • SDG 3 Good health and well-being
    • SDG 8 Decent work and economic growth
    • SDG 13 Climate action
    • SDG 17 Global partnerships
    • SDG 12 Responsible consumption and production
    • SDG 4 Quality education
  • The climate and energy category had the lowest response rates. In response to this, we have reduced the volume of our reporting on this category. We have only included a short description of our environmental targets and our progress in achieving them.

Understanding the Relevance of Our Material and Other Reported Aspects

Each of our material aspects has significant impact on the business success of SAP as described below.

Business Conduct

For more information, see the Business Conduct section.

Climate and Energy

For more information, see the Energy and Emissions section.

Financial Performance

Not only do we create financial value for SAP and our shareholders, we also create wealth for a broad range of stakeholders. We do this through employee wages and benefits, payments to our value chain and ecosystem, and tax payments to local governments and economies, for example.

Human and Digital Rights

For more information, see the Security and Privacy section and the Human Rights and Labor Standards section.

Human Capital

Nothing has a greater impact on our long-term success than the creativity, talent, and commitment of our people. Their ability to innovate and understand the needs of our customers delivers sustainable value to our company and our society. Successful strategies to attract, retain, develop, lead, and engage our employees are therefore critical to driving a diverse culture of innovation, sustained growth, and profitability.

Impact on Society

We believe that digital technologies will enable companies and organizations to tackle some of the world’s most complex, intractable problems. These include issues that are highlighted within the United Nations’ 17 SDGs, such as abolishing poverty and reducing global carbon emissions. Through our solutions, we provide customers, partners, and consumers with the tools that help them make a difference. This may be through empowering those disadvantaged in society through financial services, providing personalized medicine, building infrastructure, or combating climate change.

As well as creating positive impacts through our solutions, we are equipping young people all over the world with the skills they need to tackle society‘s problems and thrive in the digital economy. By engaging talent, leveraging technology, and building strong partnerships, we can build the workforce of the future.

Innovation and Customer Loyalty

To realize our vision of helping the world run better and improving people’s lives, we help our customers operate more efficiently, protect the safety of their products, manage their employees, and become more effective overall. Our customers inspire everything we do, from the first spark of innovation to the design and completion of new products, as well as to how we serve their needs over time. Innovation throughout the company helps us realize our vision and serve our customers’ needs.

Our future business success, specifically in the cloud business, depends on customer loyalty. We view customer loyalty as being so critical to our own success that we have made it one of our four company-wide strategic goals, in addition to employee engagement, growth, and profitability.

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