SAPSAP’s building in Newtown Square, Pa., has “green” roofs that funnel rainwater for landscape irrigation and the flushing of toilets.This post is sponsored by SAP.
“Sustainability” has become a business buzzword lately, but many people don’t know exactly what it means.
organisations trying to become sustainable need to do more than separate their recyclables from their garbage. Dr. Peter Graf, who became SAP’s first chief sustainability officer in 2009, tells us the true leaders in the field are those who look at the financial, environmental, and social implications of business processes all at the same time.
Graf recently spoke with us about the challenges of becoming sustainable, as well as the path he took to embracing sustainability in both his professional and personal life.
Peter GrafInterview conducted by Business Insider’s Patricia Chui. This conversation has been lightly edited for clarity and length.
Business Insider: What does sustainability mean to you?
Peter Graf: Sustainability is an end goal in which you could theoretically run your organisation, its supply chain, and its products indefinitely. It’s a big vision about how can we set up our organisations, our supply chains, and our interaction with customers in a way that optimizes the economic equation [and] the environmental and societal outcomes at the same moment.
BI: Why should businesses become sustainable?
PG: First and foremost, sustainability has proven to be a source of innovation, so it can help you increase your revenues. Second, by being more clever and effective about the use of your resources, you can save a lot of money. The third point is that you can reduce your risk. The public doesn’t condone environmental damage or societal unfairness. If you operate an oil rig and you produce a lot of pollution, people avoid your gas stations.
Revenue, cost, and risk are the drivers for sustainability. The big challenge is to help the company understand that transformation is required, and there’s a strong business case behind the transformation — in fact, a stronger business case than many other things the company could do.
The leaders in this transformation see sustainability not as a necessary evil but as an opportunity to compete. And they develop an integrated thinking. The decision to create a warehouse somewhere has implications that are financial, environmental, and social. The trick is, you need to look at all of them at the same time.
BI: When companies try to become sustainable, what is the hardest part of the process for them?
PG: Many companies are not approaching sustainability from the core of how they create value. Sometimes people go after the lower hanging fruit, but transformation in the core of the company is not happening. For example, if you’re in the food industry, or in the consumer goods industry, it’s all in the supply chain. If you don’t start figuring out how to make your supply chain more sustainable, and if you don’t really care where you put your buying power, then everything else you can do is not going to be as relevant.
Every industry is being redefined right now, as people start to grasp how sustainability creates value for them. That’s difficult, because that means change at a level that is really at the core of the organisation.
SAPSAP Labs in Palo Alto has 16 charge points for employee-owned electric cars such as these.BI: What are the most interesting innovations in sustainability that we’re seeing now?
PG: We’re using more and more big-data capability to drive the sustainability of business processes. We’re going to see the use of mobile technology to deliver information and decision-support to people wherever they are: at the point of sale, at the plant, at home. We’re going to see software offered in the cloud. That means there is a lower barrier of entry, which makes software accessible to more people.
BI: What steps has SAP taken to become more sustainable itself?
PG: As I mentioned, sustainability happens if you put it to work where your company creates value. For SAP, this means embedding the ability to manage a sustainable business deeper and deeper into our software systems. If we do this right, we will be able to manage energy and water and other natural resources as effectively as we manage financial or human resources in enterprise systems today.
You can only be credible as a provider of sustainability software if you transform your own operations. Therefore, we have virtualized our data centres and put the latest technology in, so they are cheaper to operate and consume much less energy. We have put in new lighting systems and new cooling systems. We have implemented telepresence and videoconferencing rooms to allow people to have meetings virtually. We’ve increased our purchase of renewable energies to 60 per cent. All in all, we’ve saved more than $285 million over the last four years.
On Monday we are publishing our very first integrated report, which means we do not report our sustainability performance separately from our annual report. Instead, we are creating one online experience that documents both our financial and non-financial performance in 2012. This allows us to explore the connections between our financial, environmental, and social performance. We see this as a big step in our journey to move from having a sustainability strategy to having a corporate strategy that is sustainable.
BI: How did you get interested in this field?
PG: The most dangerous question people can ask themselves is “Why?” “Why am I doing what I’m doing?” When I turned 40, I envisioned myself sitting at the fireplace as an 80-plus-year-old talking to my grandchildren. When they asked, “What did you do in life that you’re really proud of?” I wanted to be able to say more than, “I sold a lot of software.” I wanted to be able to say, “I helped to make the world a better place to live in.”
I developed a growing desire to pursue a common purpose in both my private life and at work. And that’s why I jumped at the chance to lead sustainability at SAP, because it gave me the opportunity to have a big impact on how the business world operates.
My family began to embrace more sustainable practices at home, too. We now own an electric car; we produce our own electricity with solar panels. Through updates of our home, we’ve cut our electricity consumption in half. We are also proud parents of four foster children that live in four different countries around the world, whom we support with school and health care. In my eyes, you cannot create a transformation of culture if you’re not living what you want to see.
Dr. Peter Graf is the chief sustainability officer at SAP. Learn more about SAP’s sustainability efforts >>
Dr. Peter Graf and other sustainability executives will discuss SAP’s newly integrated Annual Report in a webinar on Monday, March 25, at 11 a.m. ET. You can RSVP here.
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