Index of Inactivity measuring SAP’s #Sustainability Leadership of UNGC

SAP’s 2010 Sustainability Report – UN Global Compact – The 10 Principles – Ranking by IBCM

• In the context of SAP’s 2010 Sustainability Report, IBCM has analyzed their report in particular, UN Global Compact – Principle 1 ~ 10
• Each Principle has several issue areas under different notations such as HR, LA, EC, EN etc. and each one of the issue areas are covered totaling 68.
• Inactivity Based Cost Management [IBCM] has ranked each Issue area by its method. For detailed information on the methodology please see http://wp.me/p18MVb-6h“

• Activity has a cost incidence whereas Inactivity has a cost consequence that IBCM ranks each substance to its status and provides an Index of Inactivity so that Cost Consequence of not performing is studied for remedial measures.
• IBCM provides a common platform for all that is tangible sentient as well insentient, in form of a substance where “The Quality of a substance cannot be separated from it, nor the work associated with it.” Any substance has identical creative process with unique action process.
• IBCM defines Governance as a dynamic force with three set criteria: 1. Real-time monitoring, 2. Study of Cost Consequence and 3. People Participation, that shall be taken into account for this study.
• In the context of SAP’s UN Global Compact this principle is applied in differentiating the substance that is created and action that is followed.
• Table Index of Inactivity given hereunder is part of the analysis that is available for download SAP_SustainabilityReports_2010_IBCM_evaluation of SAP_UNGC.pdf http://bit.ly/eSbVdc. Principle 1 to 10 with 68 issue areas made available by SAP Sustainability Reports of 2010 are analyzed to arrive at the following Table of Index of Inactivity.
  

SAP’s 2010 Sustainability Report – Index of Inactivity – Findings and Recommendation:

1. Findings:

• Index of Inactivity: Overall Index is 46.76%. The entire % of Inactivity is borne by the Resource Owner – SAP.
• Principle 10 Anti-corruption heads the active performance with a stunning 100% without a shred of inactivity in its portfolio.
• The inactive elements in Human Rights are the maximum of nearly 42% of the total that need attention.
• Since the study is restricted to the available information made public by SAP the study has its limitation.

1.01 Recommendation:

• The Table Index of Inactivity has five columns: People, Technology, Managerial Force, Operational Force and Finance. In UNGC the very significant aspect of Public Reporting that SAP has made public is the Article 10 of UNCAC Public Reporting where it has direct relevance to Article 13 of UNCAC Public Participation. Principle 10 where SAP has made good inroads into establishing Sustainability Leadership must seriously consider implementing said Article 13 Public Participation, that is not evident from the study.
• IBCM defines Governance as a dynamic force that need a real-time monitoring and reporting that SAP may look into the statement: “The Audit Committee of the Supervisory Board also screens the compliance program on a regular basis: Once a year it checks on the status of compliance at SAP. At every Audit Committee meeting it screens the submissions that came in through the Whistleblower tool.”ⁱ
• “Technology” Resource Area as indicated in the Table Index of Inactivity is designed to fulfill the criteria set for Governance by IBCM – Real-time monitoring that SAP has immense capability by its “Sustainability Reporting and Analytics” that has been “Moving from reactive reporting to proactive performance management” ⁱⁱ This would maintain the Leadership of Sustainability.
• The other three Resource Areas Managerial Force, Operational Force and Finance contribution towards Sustainability Leadership would become more pronounced when adherence to Human Rights and Labor Rights where there seems to be a lesser participation, is specially looked into. Inactivity other than Anti-corruption, SAP should pay attention so that Corporate Social Responsibility is evenly distributed between the 4 issue areas and no doubt the challenge be taken as set by Principle 10.

1.02 Recommendation: 2

• There are five areasⁱⁱⁱ the 1. Energy & Environmental Resource Management, 2. Sustainable Supply-Chain and Products, 3. Operational Risk Management, 4. Sustainable Workforce, 5. Sustainability Reporting and Analytics, SAP has brought into the attention under Sustainability Leadership under customer-impact.
• They are strictly product brochures that SAP is capable of delivering as much as they have used under their own roof. The 4 issue areas SAP has encountered successfully to a large extent, whether they have relationship with sustainability of profits for SAP is a moot point for public debate but the customer-impact of using SAP’s modules and deriving benefit out of it rests purely with the customer as they are bound to calculate Return on Investment of SAP’s modules. They should, as the credit if any on their profits, on account of sustainability of UNGC 10 Principles would go to the customer account and not SAP’s.
• ERP packages that SAP had brought out were of high priced ones that many companies had struggled to implement with pay-back periods extending beyond their calculation. One of the end users had reluctantly mentioned, “instead of investing in a $300k for this we could have saved a lot by using the $1k package that we had been using.”
• The reason why it is mentioned here is that Sustainability Leadership of UNGC is not restricted to a few thousand companies [about 9000 only] today but has to be implemented for each and every corporate around the world. If UNGC packages become like ‘king has no clothes syndrome’ of ERP packages, then there would be a definite delay in implementing UNGC in various companies globally that had already taken 11 years to cruise through. Besides the end user of UNGC should include Governments too that cannot be initiated without Corporate first implementing it.

Conclusion:

SAP’s UN Global Compact is a veritable study towards Sustainability Leadership. If one looks at the implementation of very many clauses, 68 of them in all that pertain to SAP, has been done without a high cost whatsoever. Which one of the clauses costs anything and what is the amount involved? Sustainability of values do not cost a tuppence but a singular focus on achieving what the society demands as SAP has without doubt shown the Leadership that the rest can follow.

Companies that desire to go ahead with UNGC, even those who have been under the impression of 1. high costs, 2. It pertains to only big companies and 3. need for sophisticated Technology-advanced software packages are needed to implement, should revise their thinking and focus on implementation. It is very simple to implement.

SAP has done a yeoman service in implementing Principle 10 Anti-corruption that other companies particularly big-ones can compete to get the Ranking of 5. All ranking given are comparable one with the other between SAP and any other organization, by each clause. SAP has surely on the lead on Principle 10 and by going through the clauses of Principle 10 there is a convincing opinion that they would sustain the Leadership in this.

Jayaraman Rajah Iyer

Kodaikanal, 29 March 2011