SAP's IMV Framework: Data-Driven Energy Sustainability

In the corporate sustainability landscape, a major challenge for the energy sector is converting intricate environmental data into clear, actionable insights.

Companies frequently report their emissions in metric tons of carbon dioxide equivalent, a measurement that is not always widely understood, making it difficult to assess the real-world impact of their operations.

To address this issue, German software company SAP has implemented a new impact measurement and valuation (IMV) framework designed to quantify environmental, social and governance (ESG) data into a more accessible format.

Quantifying sustainability decisions

The IMV approach helps translate societal and environmental impacts into monetary units, using ESG data that companies already report.

By assigning a financial value to these impacts, the framework allows companies to evaluate the trade-offs between different sustainability strategies and compare them alongside financial performance.

For instance, the environmental effect of greenhouse gas emissions can be expressed as a cost by multiplying reported emissions by the social cost of carbon, which is currently US$244 per metric ton of CO₂e.

By placing a financial figure on environmental impacts, the IMV approach provides a method for making sustainability measurable and comparable.

This could enable energy firms to create greater transparency around their operations, set clearer priorities for decarbonisation and demonstrate accountability to stakeholders and investors.

Matthias Medert, Global Head of Sustainability at SAP, says: “Sustainable transformation is only possible when we base our decisions on reliable data.

"With IMV, we make sustainability measurable, comparable and actionable.

This enables us to create transparency, set clear priorities and take responsibility.”

Benchmarking performance in the energy sector

After evaluating environmental impacts in financial terms, the IMV approach utilises impact benchmarks to measure performance.

These benchmarks offer reference values, showing how a company’s sustainability performance compares to its industry peers.

For an energy company, this could mean identifying where it leads or lags in areas such as emissions reduction or water usage.

By using these performance markers, businesses can identify where they are ahead of or behind their competitors, helping them to direct resources towards making the largest potential positive impact.

In practice, the IMV framework has supported SAP’s human rights risk assessment and double materiality analysis.

Insights from the approach helped SAP narrow down its most material sustainability topics and critical value chain stages.

This allows SAP to uncover opportunities where improved sustainability performance can bring competitive advantage and highlight risks.

The role of collaboration in credible reporting

SAP has adopted a collaborative method for analysing its sustainability impacts, working with the WifOR institute, a scientific research organisation that specialises in impact valuation.

In collaboration with WifOR, SAP has examined its societal impacts and integrated the findings into its sustainability reporting.

Working with an external organisation helps to ensure that a company’s sustainability strategy is independently validated and credible, which allows for greater transparency in reporting for investors and other stakeholders.

Dr Richard Scholz, Head of Impact Analysis at WifOR, says: “Impact measurement and valuation provides the scientific foundation for sustainability steering, allowing organisations like SAP to understand their impacts holistically and prioritise decisions based on statistical evidence.”

As a result of analysing its operations, SAP identified certain risks in its supply chain related to living wages, enabling SAP to take targeted action.

The human rights team at SAP partnered with procurement, suppliers and stakeholder initiatives to develop and implement risk mitigation strategies.

Data from the IMV framework allowed this action to be focused on countries, industries and vendors with the highest risk.

The analysis also showed that its greenhouse gas emissions indicate progress towards its net zero objective.

IMV analysis allowed SAP to ensure responsible resource use at its sites by identifying water consumption hotspots through local environmental management programmes.

“By focusing on areas where we can achieve the greatest positive business and sustainability impact,” Matthias says, “we ensure that our actions are both meaningful and effective.”