SAP's Peter Graf: 'Sustainability is about making money'

By now, you've probably seen advertisements for greener gadgets, political speeches about greener cars and pitches for greener living.

But for the world's largest corporations, green sense means dollars and cents.

That's what SAP sustainability chief Peter Graf had to say on Wednesday as he outlined the thinking behind his company's latest acquisition, German environmental, health and safety provider TechniData AG.

SAP's acquisition of its longtime partner demonstrates its prioritization on sustainability and its interest in TechniData's regulatory software, which helps companies comply with environmental, health and safety regulations.

According to Graf, the enterprise push toward sustainability is "the biggest transformation in business since the invention of the Internet."

"There is money to be made. There is money to be saved," Graf said. "That's why companies need to engage."

According to Graf, regulations and customer demand are the two drivers of the push toward optimization and sustainability.

Citing several reasons to make a business case -- from using IT to reduce cost and risk to reviewing resources, consumption and the workforce -- Graf said corporations must find and drive out inefficiencies before political or social regulation forces them to.

"If we want to be successful in the future, we have to change the way we operate," Graf said. "It is intrinsically an integration problem, and IT is the key."

Also present for the meeting was Betsy Atkins, former chairman and CEO of Clear Standards, which was also acquired by SAP.

An adviser to several companies including women's apparel retailer Chico's, solar startup SunPower, cigarette company Reynolds American and tech communications firm Polycom, Atkins said boards of directors' interest on compliance and risk management has now transformed into sustainability -- and it's only a matter of time before companies have an "Aha!" moment.

"Now we're in the board room talking about electrical bills," Atkins said with astonishment. "Electrical bills, rather than high-level corporate strategy!"

AMR Research analyst Stephen Stokes, also present for the meeting, said sustainability is growing more significant in the manufacturing industry, with a special focus on carbon compliance.

He identified several trends among Fortune 1000 companies:

• Focus on sustainable design: engineering inefficiency out from the start
• Growing sophistication in strategies: not only pushing sustainability in fixed assets such as buildings, but interest in connecting all IP-addressable assets to the smart grid and bringing risk in-house by generating energy on-site
• Focusing away from carbon: Not just carbon output, but also input
• Heavy ("almost too much") focus on water
• Reconsidering waste as a byproduct resource
• Moving away from carbon credits: Corporations are wary of "paying for one's sins, rather than doing something about it."
• Emphasis on difficult "Scope 3" carbon emissions for the enterprise, which cover waste emissions and business travel

But what's most frightening, Stokes said, is that many companies' solution for sustainability is powered by a rather unsophisticated tool: Microsoft Excel.

"Just 7 percent of Fortune 1000 companies say they're reporting [carbon footprint data] and find it easy to do so," Stokes said.

"Is this a sustainability wake or a sustainability wake up?"

This post was originally published on Smartplanet.com