SAP’s Integrated Reporting is a Big Success

SAP recently released its first integrated report for financial and non-financial performance in 2012. The company had issued sustainability reports for several years, but decided now is the time to share SAP’s entire performance record in one document. The company has acknowledged instead of talking about a sustainability strategy, changing economic and social landscapes now dictate that SAP embrace an overall sustainable strategy.

What makes SAP’s report stand out is the care the company took to truly interweave all the factors behind the software giant’s most recent performance. As SAP’s Senior Vice President and Chief Accounting Officer, Christopher Hütten, pointed out during a conference call yesterday morning, the easiest step the company could have taken was to just connect the two reports together, what the financial data showed, followed by the environmental, social and governance reviews. Another alternative would have been to cobble together various content to have the report flow more smoothly.

SAP instead took the most difficult step, which was to make transparent connections between various sections of the report to show the interdependencies between the financial and sustainability information--and therefore demonstrate that one really cannot be discussed without the other.

And that meticulous care is what makes SAP’s report a model for future integrated reports as this new way of corporate disclosure picks up steam.

If you do not have time to read the entire detailed PDF report (this is a German engineering company at a core level, so of course, no stone is left unturned), visit the Key Facts page and review its lucid explanation about how various performance indicators affect one another.

Economic, social and environmental indicators are all arranged in a circle on the Key Facts page. Click on one button, and you immediately see that all these factors are connected, with a concise explanation given below. For example, take Data Center Energy. Considering SAP’s business, this is an integral, and costly, part of SAP’s operations. Click on the Data Center Energy button and you immediately see the obvious connection to greenhouse gases and the firm’s total energy consumed. But to counter the argument that energy efficiency is cost-prohibitive, SAP explains the link to the company’s operating margin, which strongly correlates to reduced and smarter energy consumption.

Another indicator most companies would overlook is SAP’s Business Health Culture Index, or BHCI. This score gauges SAP employees' readiness to embrace change and how it ties into the creation of both a more flexible and welcoming work environment for women and employee retention. But happier employees have lower absentee rates, and a satisfied workforce has less turnover and reduces the costs of recruiting new talent. Healthier and motivated employees are also more productive and generate more revenue. And, of course, there are caveats. SAP’s BHCI score has both a negative and positive effect on the company’s total greenhouse gas emissions. For every employee who thrives off of business travel and the opportunity to meet new people and take on new projects, others endure greater stress and can even burn out.

SAP’s integrated report not merely a rehash of the company’s success and shortcomings during the last fiscal year. View this report more as a conversation between the company and its stakeholders. Complementing the materiality report and letters from SAP’s co-CEOs are polls asking for feedback and boxes where readers can offer their views via social media tools such as Twitter.

Once again, SAP shows the way in how to make the business case for sustainability. Explore the new world of integrated reporting due to SAP’s leadership here.

Based in Fresno, California, Leon Kaye is the editor of GreenGoPost.com and frequently writes about business sustainability strategy. Leon also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable Brands, Inhabitat and Earth911. He will speak at San Francisco State University on climate change, the media and business on Wednesday, April 3. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).

[Image credit: SAP]