- Our corporate objectives
- Economic indicators
- Social indicators
- Environmental indicators
Total Energy Consumed
Total Energy Consumed
Total energy consumed is the sum of all energy consumed through SAP’s own operations, including energy from renewable sources.
Total Energy Consumed > Profitability
We have found that reduced energy consumption is strongly correlated with a reduction in costs. The cost avoidance thus achieved has a positive impact on our profit.
Total Energy Consumed > Carbon Emissions
The emissions caused by SAP’s energy consumption add directly to the corporate carbon emissions if they are not reduced through offsets or – for electricity consumption – renewable energy certificates (RECs).
Capability Building
Capability Building
Capability building is the internal hiring rate (promotions only) into management or expert positions as compared to the external hiring rate into such positions.
Capability Building > Employee Retention
According to the Global Workforce Study (2012), the “chances to advance the career” is the second-most important driver of employee retention.[20] By promoting and thus growing from within, SAP creates career opportunities for our employees. In turn, it is our expectation that this opportunity leads to an increase in employee retention.
Capability Building > Employee Engagement
Because it is closely linked to how much a company develops its employees and supports their careers, internal hiring to management and expert positions positively affects employees’ commitment and loyalty. This hypothesis was confirmed by a study by Bedarkar & Pandita (2014), which identified “career opportunities” as the key driver of employee engagement.[21]
Capability Building > Women in Management
Like many of our IT industry peers, SAP has less women than men in senior positions. Given our significant pool of talent, we assume that internal promotions will increase the percentage of women in management positions.
Social Investment
Social Investment
Social investment reflects SAP’s activities in volunteering and technology as well as cash donations.
Social Investment > BHCI
We believe that by supporting our employees in engaging in activities with a positive social impact, such as skills-based volunteering, we are enhancing the meaning they find in work. This sense of purpose helps create a richer and more rewarding work environment that reduces stress and promotes satisfaction and well-being. Additionally, volunteering can increase overall employee health, which is shown in a study by S. S. Johnson (2017).[17]
Social Investment > Employee Engagement
By engaging our employees in social sabbaticals, their creating of significant social impact led to increased employee engagement.
Mueller et al. (2012) have found that employees’ perception of a company’s commitment to corporate social responsibility is positively linked to their own commitment to the organization.[18]
Social Investment > Growth
A study by Muritala (2013) suggests that corporate social responsibility (or what we characterize as social investment) is likely to have a positive impact on an organization’s financial performance.[19] In our experience, social investments do, in fact, have a positive impact on our ability to acquire new customers, especially in emerging markets.
Profitability > Social Investment
It is a common practice for companies to invest a certain percentage of their annual profits in programs and activities that create a positive social impact. We believe that higher profit is therefore likely to lead SAP to make greater social investments.
Women in Management
Women in Management
“Women in Management” means the share of women in management positions (managing teams, managing managers, board members) as compared to the total number of managers.
Capability Building > Women in Management
Like many of our IT industry peers, SAP has less women than men in senior positions. Given our significant pool of talent, we assume that internal promotions will increase the percentage of women in management positions.
Women in Management > BHCI
We believe that a balance of men and women in management helps create a more balanced working environment, one in which diversity is valued and people feel free to express their individual styles. It is our expectation that such an environment will positively affect our BHCI.
BHCI > Women in Management
McKinsey (2013) found that different elements of the BHCI, such as flexible working hours, the ability to work from home, and career flexibility, can make it easier for employees to balance work and family life.[13] This leads us to conclude that the higher our BHCI, the more attractive SAP becomes to women who are also seeking management positions.
Women in Management > Growth
Studies show that companies with a relatively high percentage of women in upper management or as board members achieve stronger financial performance compared to those with a relatively low percentage (Catalyst, 2013).[14] We believe that having a higher share of women in management positions will increase our revenue as it helps us better serve our diverse customer base.
Women in Management > Customer Loyalty
Diversity programs – including those focused on the promotion of women to management positions – have a direct and positive impact on customer satisfaction (Catalyst, 2013).[15]
Women in Management > Profitability
Studies show that companies with a high level of gender diversity outperform companies with an average level in terms of return on equity (11.4% versus an average 10.3%); operating results (EBIT 11.1% versus 5.8%); and stock price increases (64% versus 47% over the period 2005–2007) (McKinsey, 2007).[16] It is therefore likely that having a higher share of women in management positions will result in higher profit for SAP.
Employee Retention
Employee Retention
Employee retention is the ratio of the average headcount (expressed in full-time equivalents), minus employee-initiated terminations (turnover), divided by the average headcount, taking into account the past 12 months.
Capability Building > Employee Retention
According to the Global Workforce Study (2012), the “chances to advance the career” is the second-most important driver of employee retention.[10] By promoting and thus growing from within, SAP creates career opportunities for our employees. In turn, it is our expectation that this opportunity leads to an increase in employee retention.
Employee Engagement > Employee Retention
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of employee engagement. We were able to prove a significant positive correlation between employee engagement and employee retention.
Employee Retention > Growth
Meifert (2005) stated a clear relationship between employee retention and a company’s revenue and margin.[11]
Employee Retention > Customer Loyalty
Koys (2001) has found evidence that employee turnover has a negative impact on customer satisfaction.[12] We believe this effect stems from the fact that experienced employees work more efficiently, have better product knowledge, and can build trusting relationships with colleagues and customers, so therefore have the ability to better serve customers’ needs.
Employee Retention > Profitability
We used real data from SAP to analyze and prove the financial impact of employee retention. We showed what a change by 1pp of employee retention would mean for SAP’s operating profit.
BHCI
Business Health Culture Index (BHCI)
Our Business Health Culture Index assesses the health of both our organizational culture and our employees
Women in Management > BHCI
We believe that a balance of men and women in management roles helps create a more balanced working environment, one in which diversity is valued and people feel free to express their individual styles. It is our expectation that such an environment will positively affect our BHCI.
BHCI > Women in Management
McKinsey (2013) found that different elements of the BHCI, such as flexible working hours, the ability to work from home, and career flexibility, can make it easier for employees to balance work and family life.[5] This leads us to conclude that the higher our BHCI, the more attractive SAP becomes to women who are also seeking management positions.
BHCI > Profitability
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of the BHCI. We showed what a change by 1pp of the BHCI would mean for SAP’s operating profit.
Social Investment > BHCI
We believe that by supporting our employees in engaging in activities with a positive social impact, such as skills-based volunteering, we are enhancing the meaning they find in work. This sense of purpose can help create a richer and more rewarding work environment that reduces stress and promotes satisfaction and well-being. Additionally, volunteering can increase overall employee health, which is shown in a study by S. S. Johnson (2017).[6]
BHCI > Employee Engagement
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of the BHCI. We were able to prove a significant positive correlation between the BHCI and employee engagement. The BHCI positively influences the Leadership Trust Index, which positively influences the Employee Engagement Index; all correlations are significant. This hypothesis was also confirmed by several studies, for example by Johnson, Sheena et al. (2018).[7]
BHCI > Growth
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of the BHCI. We were able to prove a significant positive correlation between the BHCI and revenue.
Carbon Emissions > BHCI
Many of SAP’s carbon emissions are caused by business travel and commuting, which we believe can have both negative and positive impacts on employee health. Some people may experience greater stress from more travel because they have less time to spend at home, suffer from jetlag, or lose valuable working time; others may enjoy travel because it enables them to experience other places and cultures as well as meet new people. Studies show that business travel potentially increases stress and poses a threat to employees’ mental and physical health: see, for example, the study by Rundle, Revenson & Friedman (2017).[8]
BHCI > Customer Loyalty
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of the BHCI. We were able to prove a significant positive correlation between the BHCI and customer loyalty. Recent studies, for example by Reed, Goolsby & Johnston (2016) also suggest this correlation.[9]
Employee Engagement
Employee Engagement
Employee engagement is the level of employee commitment, pride, and loyalty, as well as the feeling of employees of being advocates for their company.
Capability Building > Employee Engagement
Because it is closely linked to how much a company develops its employees and supports their careers, internal hiring to management and expert positions positively affects employees’ commitment and loyalty. This hypothesis was confirmed by a study by Bedarkar & Pandita (2014), which identified “career opportunities” as the key driver of employee engagement.[1]
Social Investment > Employee Engagement
By engaging our employees in social sabbaticals, their creating of significant social impact led to increased employee engagement.
Mueller et al. (2012) have found that employees’ perception of a company’s commitment to corporate social responsibility is positively linked to their own commitment to the organization.[2]
Employee Engagement > Profitability
From 2014 to 2018, we used real data from SAP to analyze and proof the financial impact of employee engagement. We showed what a change by 1pp of employee engagement would mean for SAP’s operating profit.
Profitability > Employee Engagement
In our view, a high operating profit, as great business news, can raise employee morale, encourage identification with our purpose, and thus drive employee engagement. On the other hand, we believe that a high profit can also have a negative impact on employee engagement. For example, if cost savings and budget cuts are implemented to reach an ambitious profit target, employees might feel constrained and dissatisfied.
Business Health Culture Index (BHCI) > Employee Engagement
Since 2014, we have been using real data from SAP to analyze and prove the financial impact of the BHCI. We have been able to prove a significant positive correlation between the BHCI and employee engagement. The BHCI positively influences the Leadership Trust Index, which positively influences the Employee Engagement Index; all correlations are significant. This hypothesis was also confirmed by several studies, for example by Johnson, Sheena et al. (2018).[3]
Employee Engagement > Employee Retention
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of employee engagement. We were able to prove a significant positive correlation between employee engagement and employee retention.
Carbon Emissions > Employee Engagement
We believe that lowering SAP’s carbon emissions can have a positive impact on employee engagement because loyalty should rise as employees see their company act responsibly towards the environment. However, because lowering emissions also brings certain restrictions, such as on business travel, it may also have a negative impact on employee engagement.
Employee Engagement > Carbon Emissions
We believe that engaged employees are more likely to want to help SAP achieve our own target in lowering carbon emissions. Yet another possible outcome is that a higher level of employee engagement may lead to more business activity requiring travel, and therefore could lead to an increase in carbon emissions.
Employee Engagement > Growth
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of employee engagement. We were able to prove a significant positive correlation between employee engagement and revenue.
Growth > Employee Engagement
We believe that higher revenue has a positive impact on a company’s work environment, thereby increasing employee pride and loyalty. This is also stated in a study of Harter et al. (2010), which states that improving financial performance appears to increase general satisfaction and some specific work perceptions.[4]
Growth
Growth
Growth is one of our strategic objectives. We measure it through several KPIs, for example total revenue that SAP receives from the sale of our products and services.
Social Investment > Growth
A study by Muritala (2013) suggests that corporate social responsibility (or what we characterize as social investment) is likely to have a positive impact on an organization’s financial performance.[22] In our experience, social investments do, in fact, have a positive impact on our ability to acquire new customers, especially in emerging markets.
Women in Management > Growth
Studies show that companies with a relatively high percentage of women in upper management ranks or as board members achieve stronger financial performance compared to those with a relatively low percentage (Catalyst, 2013).[23] We believe that having a higher share of women in management positions will increase our revenue as it helps us to better serve our diverse customer base.
BHCI > Growth
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of the BHCI. We were able to prove a significant positive correlation between the BHCI and revenue.
Employee Retention > Growth
Meifert (2005) stated a clear relationship between employee retention and the company’s revenue and margin.[24]
Carbon Emissions > Growth
Lowering SAP’s carbon emissions could have a positive impact on SAP’s revenue because customers increasingly ask their suppliers to act sustainably. This reasoning is supported by a study by PwC (2013) confirming the existence of a positive correlation between a company’s environmental performance and financial per-formance.[25] On the other hand, where additional travel is conducted to generate additional business, the resulting increase in SAP’s carbon emissions could have positive impact on growth.
Employee Engagement > Growth
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of employee engagement. We were able to prove a significant positive correlation between employee engagement and revenue.
Growth > Employee Engagement
We believe that a higher revenue will have a positive impact on a company’s work environment, thereby increasing employee pride and loyalty. This is also stated in a study of Harter et al. (2010), stating that improving financial performance appears to increase general satisfaction and some specific work perceptions.[26]
Customer Loyalty > Growth
Reichheld (2003) found a strong correlation between companies’ Customer NPS results and their revenue growth rates.[27] We support this view, as we believe that loyal SAP customers are likely to recommend SAP products to other companies, which is likely to result in increased sales and stronger revenue.
Growth > Profitability
Profit (or loss) is the total of income less expenses; if revenue as the main part of total income grows at a higher rate than costs, it will lead to greater profit.
Profitability
Profitability
Profitability is one of our strategic objectives. We measure it through operating profit. Profit (or loss) is the total of income less expenses.
BHCI > Profitability
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of the BHCI. We showed what a change by 1pp of the BHCI would mean for SAP’s operating profit.
Employee Engagement > Profitability
From 2014 to 2018, we used real data from SAP to analyze and prove the financial impact of employee engagement. We showed what a change by 1pp of employee engagement would mean for SAP’s operating profit.
Profitability > Employee Engagement
In our view, high profits, as great business news, can raise employee morale, encourage identification with our purpose, and help increase employee engagement. On the other hand, we believe that a high profit expectation can also have a negative impact on employee engagement. If cost savings and budget cuts are implemented to reach an ambitious profit target, employees might feel constrained and dissatisfied.
Women in Management > Profitability
Studies show that companies with a high level of gender diversity outperform companies with an average level in terms of return on equity (11.4% versus an average 10.3%); operating results (EBIT 11.1% versus 5.8%); and stock price increases (64% versus 47% over the period 2005–2007) (McKinsey, 2007).[28] It is therefore likely that having a higher share of women in management positions will result in higher profit for SAP.
Profitability > Social Investment
It is a common practice for companies to invest a certain percentage of their annual profits in programs and activities that create a positive social impact. We believe that a higher profit is therefore likely to lead SAP to make greater social investments.
Employee Retention > Profitability
We used real data from SAP to analyze and prove the financial impact of employee retention. We showed what a change by 1pp of employee retention would mean for SAP’s operating profit.
Total Energy Consumed > Profitability
We have found that reduced energy consumption is strongly correlated with a reduction in costs. Therefore, any cost avoidance achieved has a positive impact on our profit.
Growth > Profitability
Profit (or loss) is the total of income less expenses; if revenue as the main part of total income grows at a higher rate than costs, it will lead to greater profit.
Customer Loyalty > Profitability
We believe that positive experiences among our customers can significantly increase business with existing customers, as well as help attract new customers. Both results can lower the cost of sales, thereby increasing our profit.
Carbon Emissions > Profitability
We are using real data from SAP to analyze and prove the financial impact of our carbon footprint, as detailed in the Energy and Emissions section.
Customer Loyalty
Customer Loyalty
Customer loyalty is measured with the Net Promoter Score: Percentage of customers that are likely to recommend SAP to friends or colleagues minus the percentage of customers that are unlikely to do so.
Women in Management > Customer Loyalty
Diversity programs – including those focused on the promotion of women to management positions – have a direct and positive impact on customer satisfaction (Catalyst, 2013).[29]
Employee Retention > Customer Loyalty
Koys (2001) has found evidence that employee turnover has a negative impact on customer satisfaction.[30] We believe this effect stems from the fact that experienced employees work more efficiently, have better product knowledge, and can build trusting relationships with colleagues and customers, so therefore have the ability to better serve customers’ needs.
Carbon Emissions > Customer Loyalty
We believe that lowering SAP’s carbon emissions has a positive reputational effect, thereby enhancing SAP’s standing with its customers.
Customer Loyalty > Growth
Reichheld (2003) found a strong correlation between companies’ Customer NPS results and their revenue growth rates.[31] We support this view, as we believe that loyal SAP customers are likely to recommend SAP products to other companies, which is likely to result in increased sales and stronger revenue.
Customer Loyalty > Profitability
We believe that positive experiences among our customers can significantly increase business with existing customers, as well as help attract new customers. Both results can lower the cost of sales, thereby increasing our profit.
BHCI > Customer Loyalty
From 2014 to 2018, we have been using real data from SAP to an-alyze and prove the financial impact of the BHCI. We have been able to prove a significant positive correlation between the BHCI and customer loyalty. Recent studies, for example by Reed, Goolsby & Johnston (2016) also suggest this correlation.[32]
Carbon Emissions
Carbon Emissions
Our carbon emissions are the sum of all greenhouse gas emissions measured and reported, including renewable energy and third-party reductions, for example, offsets.
Carbon Emissions > BHCI
Many of SAP’s carbon emissions are caused by business travel and commuting, which we believe can have both negative and positive impacts on employee health. Some people may experience greater stress from more travel because they have less time to spend at home, suffer from jetlag, or lose valuable working time; others may enjoy travel because it enables them to experience other places and cultures as well as meet new people. Studies show that business travel potentially increases stress and poses a threat to employees’ mental and physical health, see for example the study by Rundle, Revenson & Friedman (2017).[33]
Carbon Emissions > Employee Engagement
We believe that lowering SAP’s carbon emissions can have a positive impact on employee engagement because loyalty should rise as employees see their company act responsibly towards the environment. However, because lowering emissions also brings certain restrictions, such as on business travel, it may also have a negative impact on employee engagement.
Employee Engagement > Carbon Emissions
We believe that engaged employees are likely to want to help SAP achieve our target in lowering carbon emissions. Yet another possible outcome is that a higher level of employee engagement may lead to more business activity requiring travel, and therefore could lead to an increase in carbon emissions.
Carbon Emissions > Growth
Lowering SAP’s carbon emissions could have a positive impact on SAP’s revenue because customers increasingly ask their suppliers to act sustainably. This reasoning is supported by a study by PwC (2013) confirming the existence of a positive correlation between a company’s environmental performance and financial per-formance.[34] On the other hand, where additional travel is conducted to generate additional business, the resulting increase in SAP’s carbon emissions could have positive impact on growth.
Carbon Emissions > Customer Loyalty
We believe that lowering SAP’s carbon emissions has a positive effect on our reputation, thereby enhancing SAP’s standing with our customers.
Total Energy Consumed > Carbon Emissions
The emissions caused by SAP’s energy consumption add directly to the corporate carbon emissions if they are not reduced through offsets or – for electricity consumption – renewable energy certificates (RECs).
Carbon Emissions > Profitability
We are using real data from SAP to analyze and prove the financial impact of the carbon emissions, as detailed in the Energy and Emissions section.
The information in the section Connectivity of Financial and Non-Financial Indicators is not in the scope of the Independent Assurance Report from KPMG.