Sustainability and CSR Reporting: There’s An App For That. A Letter to SAP and the future.

“The best way to predict the future is to invent it” – Alan Kay

Back in 2007 or so I had an epiphany about corporate social responsibility and sustainability. Until then I had been skeptical about CSR – which I felt was the proverbial lipstick on the pig. The guy that did most to persuade me of the value of CSR was SAP’s James Farrar. He introduced me to Transparency International, after which I argued:

Like many others I have tended to view corporate social responsibility (CSR) with a great deal of suspicion. Its just puff, PR and flummery. Corporates try and make us think they have responsibilities and interests beyond profits and share price. Greenwashing, and so on. But spending time with the likes of the BT CSR team, I am realising we have a real opportunity here. The web changes everything, and spiking energy prices and global warming mean that CSR is being reassessed. Talking about efficiency is no longer the game. Now the CFO expects the organisation to actually deliver it. Sustainability is not just a buzzword any more, which means CSR is not window dressing any more either.

CSR is becoming a window itself- an important gateway between the business and us: individuals, customers and stakeholders. CSR becomes another breach in the corporate social membrane. But as Hugh MacLeod says “Nothing pokes holes in a membrane better than a blog.” (for blog we could also read Twitter or Facebook).

IF CSR is already a window, or hole in the membrane, social software can accelerate the dialogue and flow of information.

The realisation that sustainability was beginning to really mean something helped to create a raison d’etre for Greenmonk: open data leads to better outcomes, which meant the redmonk model might make sense in some new contexts.

My vision for more effective CSR:

• Reporting needs to be an ongoing process and conversation, not a once a year event.
• Reporting needs to be more like an app and less like a document.
• Data needs to be freely shared, rather than presented in static form such as in a PDF – organisations should offer sustainability reporting APIs.
• Social. Web technologies allow us to put the social into CSR by engaging with a broader range of stakeholders.
• Sustainability must be tied into general business reporting and strategy.
• Sustainability must be a strategic imperative, not a PR-led effort.
• CSR reporting must be more like an app, and less like a document.

I have to say SAP performed surprisingly well in terms of realising this vision in its last reporting round. Active data, Facebook and Twitter integration and so on. My colleague Tom Raftery was moved to write: SAP’s latest Sustainability Report is teh awesome! SAP customers would do well to view SAP’s work as a showcase for its new products in the space, and consider using the firm’s frameworks in delivering their own 21st century Sustainability Reporting, Engagement and Strategy.

Things had moved into high gear in terms of delivering on that kind of vision when SAP invited me to be Chairman of the outside Stakeholder Advisory Panel last year, having helped with strategy the year before. The process was extremely interesting, and I will be writing it up in the next month or so. Anyway, here is the letter we wrote on SAP’s Sustainability Report for 2009, which I take the liberty of including in full. My advice to you- go check out the report, then see the letter.

Challenging SAP on form and substance

The Stakeholder Panel was invited to bring external perspectives to SAP’s executive management, to inform both the company’s Sustainability Report and its sustainability strategy. We see these roles as highly complementary: reporting is a means to the end of defining and executing a business strategy that is articulated around clear sustainability goals.  We have approached our review with the objective of 1) to enrich SAP’s sustainability strategy through a greater understanding of stakeholder expectations [SAP’s Materiality Matrix] inviting readers to vote and comment on sustainability priorities], and 2) to increase and improve SAP’s transparency, as a means towards greater accountability.  We are therefore pleased that the company has welcomed our input on both the form of its reporting and the substance of its actions.

Overall, the Panel is impressed with the scale and scope of SAP’s ambition for its sustainability reporting. One of the most compelling aspects of SAP’s sustainability strategy is its commitment to merge its values, which reflect a clear ambition to be a sustainability leader, with its corporate goals and core business strategy.  The Sustainability Report therefore serves the role of mission statement, stakeholder engagement tool and roadmap for what SAP has achieved to date and seeks to achieve in future”.

The Panel greatly appreciates SAP’s effort to make the Report more interactive, by opening up new engagement and feedback channels using social Web technologies, such as Twitter and Facebook. This strengthens the connection with stakeholders and opens the way for them to influence the company’s behavior.  This is an aspect of the report which will not only benefit readers, but also promote wider acceptance of this model by other companies considering similar steps.

Promoting Software for Corporate Sustainability

Of particular note is the fact that SAP has now unambiguously embraced the role of enabler. As a software company, SAP has a relatively modest direct environmental and social footprint, although we note the rising energy demands associated with the rise of cloud computing on which SAP will increasingly rely. We welcome SAP’s commitment to developing business solutions that can enable significant improvements in its customers’ sustainability performance, which it is pursuing through its enabler strategy [SAP’s Solution Map] outlining the company’s vision for software technology to enable a more sustainable enterprise]. SAP’s co-CEOs, Bill McDermott and Jim Hagemann Snabe, have emphasised the enabler strategy to key customer audiences, to reinforce the importance the company places on this aspect of its business.

Yet while this focus on the enabler strategy is welcome, SAP can further strengthen how it reports on it. The 2009 Report is thorough and transparent about SAP’s own direct environmental footprint – notably in travel and transport. But we believe that the next frontier is for SAP to measure and report on how it has enabled its customers first to reduce their negative impacts, and ultimately to increase their positive impacts, on society and the environment.  This will present a much more meaningful and complete picture of what SAP’s broader impacts are, and will also demonstrate the value that it adds to its clients, thereby strengthening the case for building its business around delivering sustainability solutions.  The 2009 Report is a good start: it includes links to case studies of SAP customers who have improved their sustainability profile.  But SAP should leverage its interactive data-driven approach to measure, report and indeed take credit for, the sustainability impacts of its customer base.

Language matters in innovation, providing a framework for thinking about how to solve problems. While the report often speaks in terms of optimizing efficiencies, sustainability can, and should be, an aspiration towards a restorative economy that enables abundance.  SAP should turn its attention to enabling its customers – and readers of its report – to evolve from managing down their negative impacts, such as emissions, health & safety incidents or ethical breaches, towards making a net positive contribution to society and the environment.  At present, SAP is serving as an agent that enables clients to modify their existing business models through incremental steps. Ultimately, however, SAP can act as a catalyst for customers to transform themselves by re-inventing their business models around new opportunities to increase economic benefit within planetary boundaries.  Defining new metrics to capture these positive effects, rather than just measuring and managing social and environmental ills, is where the real challenge and opportunity lies for SAP and its customers.

Assessing a new kind of Report
This Panel’s activities have been structured to accommodate a traditional static report, even as SAP has sought to introduce a dynamic and interactive reporting model.  This is a very positive step forward for sustainability reporting, but it poses a challenge for the external review process, which cannot operate on a continuous basis in the way SAP intends for the report. The Panel does not have a monopoly on external comment on the report, as SAP has enabled readers’ comments on both its report and its strategy via the report site. We welcome SAP leadership here, as an exemplar for corporations seeking to more deeply engage with stakeholders on sustainability issues.

We also see areas where SAP can improve its reporting. While SAP has done excellent work in presenting data visually through charts and graphs, sometimes less is more. SAP should aim for accessibility and digestibility, rather than aiming to present all possible information.  In addition, much of the language in the Report reflects the technology culture of the company, or, alternatively, makes heavy use of the jargon of corporate sustainability practitioners.  This may make it meaningful to certain specialists, but much of the language is impenetrable to the ordinary reader, giving the impression of SAP talking to itself rather than engaging with outsiders.

Summing Up and Conclusions

Finally, while SAP has pushed the boundaries of inclusiveness through its use of new media, it should also take care to ensure that the report is fully accessible.  In many parts of the world where SAP and its clients do business, Web access is not generally available. Therefore the report may not be as available to those readers.

We applaud SAP for its innovation in reporting format, and for the clarity with which it has articulated its two-part sustainability strategy.  We look forward to continued innovation, and more detailed information in the future about how the strategy is being implemented, and how its enabler strategy is delivering not only business results, but also sustainability impact.

I have a lot more work to do in terms of documenting the process, and explaining how I see CSR evolving. But that’s the nature of the beast.

disclosure: SAP is a client though I was not directly paid for being on the Sustainability Panel.