文/Karen Walker
Software giant SAP is a global leader in many areas of social responsibility. In this interview, Daniel Schmid, the company's Chief Sustainability Officer, discusses SAP's efforts to drive sustainability for international businesses, why he's optimistic about it, and what to do next.
Daniel Schmid
Q: Daniel, you used to be a consulting executive at SAP and then started leading sustainability efforts, why is there this shift?
Daniel Schmid: I got a call from a member of the SAP Executive Board who said, "I've tied you to your leadership style and sustainability, right?" "You can imagine me thinking, 'Then the next question would be: 'How do I manage people within my responsibilities?' How do I take care of their health and safety? Or how do I focus on medium- and long-term success? Then they told me that he wanted me to be an integral part of a new project that the board decided to set up: to define sustainability, to define a new organization, and to articulate its overarching goals. "You need to communicate with all of our stakeholders, customers, investors, employees, etc.," he says. Then his last words were: "Please answer me between 7:30 and 8:00 a.m. tomorrow morning yes or no!" ”
But I've already made a decision. I believe it is a great honor to be SAP's Chief Sustainability Officer.
Q: I think of two things: First, it's wonderful to suddenly get a call from a board member and then hear that the board has made an emergency start to something. Also, he generously gives you an evening to think about it, even if you don't need that much time! At SAP, how do you set goals and methods, even looking ahead?
Daniel Schmid: First of all, we asked a lot of questions to key stakeholders, listening to what they expected from SAP and where we should focus on. Of course, this requires a process.
An early lesson is that this is not the right way for us to execute our business strategy and sustainability strategy, it is too isolated. You need to integrate sustainability into your core business strategy, and we've made significant progress on that. Sustainability is now a core pillar of SAP's business strategy and has systematically evolved into a core business theme for strategy-related clients.
Another important lesson is about reducing emissions. In early 2009, we presented our first emissions reduction target to the Executive Board: to bring our emissions back to 2000 levels by 2020. Do you know what they say? "It's a good goal and it's easy to remember. But we have a growth path and we want the company to be 4 times bigger than it was in 2000 (we've achieved that goal), so it's definitely a very ambitious goal. So how are we going to achieve it? "I told them I didn't know, but such an ambitious goal needed to be backed up by more creativity and a spirit of innovation." You have to allocate your budget differently and think differently. This is beyond our past beliefs, but the Executive Director will make us believe that this is the right path.
Q: I like that they raised your goals fourfold and made a clear commitment to the company to be a leader in the field.
Daniel Schmid: Then we realized that integration was necessary. At the end of 2013, the new mission of the company's strategy was to become the most innovative cloud provider – to provide services through a clean cloud. Therefore, we must combine environmental protection with business strategy.
Q: Can you give an example of what you did?
Daniel Schmid: Since 2014, all of the company's data centers, including collaborative locations, have been hyperscale data centers operated by high-quality green energy. We achieved our original emissions target in 2017, three years ahead of schedule.
The next logical step is to set a medium-term goal to be carbon neutral in our operations by 2025. Of course, with the advent of COVID-19 and the reduction in commuting and business travel, we're seeing a reduction in carbon emissions, but we're also committed not to return to old behavior and set our 2025 target two years ahead. In 2021, we announced that the company will become carbon neutral in both the business and selective range by 2023. Earlier this year, we said that by 2030, our net zero target would cover the entire value chain.
We have more than 400,000 customers worldwide. Many of these customers have successfully run our systems at their premises. Accelerating our migration to the cloud will help us achieve this, as on-premises deployments result in more than 80% of carbon emissions in the value chain.
Q: Green clouds! What else are you doing internally to help reduce your carbon footprint? You mentioned the hybrid office example.
Daniel Schmid: We realized you needed to mobilize the passion of your employees. Anyone who works at SAP loves to work for a sustainable model company. In a recent survey, 94% told us exactly this. We found a caucus and encouraged others with their enthusiasm.
You also have to be more transparent. Not only do we publish financial results each quarter, but our CEOs Christian Klein and CFO Luka Mucic also disclose our sustainability results to the media and analysts. On the same day as the earnings release, our employees have access to our sustainability dashboard. They can see the team's data from multiple dimensions such as geography and organization, and can learn and share best practices from it.
Q: What specific metrics can the team see?
Daniel Schmid: Indicators include environmental and social data. We should not forget the social dimension. This process of transformation always begins with human rights. They will see diversity indicators and retention data, as well as environmental data on carbon emissions from various sources of emissions, such as business travel, rents, office electricity, and more.
Q: In terms of sustainability, this is a huge and urgent need.
Daniel Schmid: Yeah, we need to have a clear shift. We need to change the way we do business, because efficiency alone cannot solve today's societal challenges. We need to do business in different ways. It's that simple. Sustainability is such a great innovation driver and cost driver.
You can now observe the different maturity levels of individual companies, and there are still some companies that need to comply with existing regulations. But there are also more mature-level companies that see a wonderful outlook.
The less energy is consumed, the lower the cost. Less waste means less cost. Higher employee retention means higher productivity and profitability. At the third level, these companies see sustainability as a driver of innovation. These companies challenge their business models in producing and developing products.
These companies are front-runners. They will design products for the circular economy. They created new business models. They have an advantage in the market because we tend to choose more sustainable products and services.
If you have this big picture view, the prospects are wonderful, not only from the risk point of view, but also from the perspective of opportunity.
Q: As we move in the direction of sustainable development, how do you define the stage we are in?
Daniel Schmid: It's a journey, it's a process that we need to accelerate, but I'm optimistic because every day I talk to customers, employees and investors, who are a very important group of stakeholders.
Of course, I want sustainability to be a core business theme 10 years ago, but now it's a core business theme that is highly strategically relevant. It's impossible today's CONVERSATIONS between CEOs without touching on the topic of sustainability.
Because either there is a sustainable business or there is no business. When we've discussed this in the past, I've used words like "sustainability" or "profitability." But it's clear that only companies that integrate sustainability into their core business strategies can achieve long-term success.
That's what drives and encourages me to remain optimistic, but we desperately need change.
Karen Walker is a Forbes contributor whose views are solely personal.