How to Approach Sustainable Retail with SAP

Today’s retailers face mounting sustainability pressure from all sides: extended producer responsibility (EPR) regulations, ESG reporting requirements, rising energy costs, and increasingly sustainability-conscious consumers. The opportunity is to move beyond siloed green initiatives and weave sustainability into the operational and financial fabric of the business.

SAP provides the tools and architecture to make this possible, enabling retailers to plan, implement, measure, and improve sustainability the same way they manage sales and margins.

WAYS TO APPROACH SUSTAINABILE RETAIL WITH SAP

Digital Foundation

A sustainable retail strategy needs a clean, connected digital backbone to enable easy adoption of new sustainability features. SAP S/4HANA for Retail acts as the transactional core, storing articles, vendors, purchase orders, and deliveries along with the sustainability attributes needed for reporting.

Custom logic and integrations should be handled via SAP Business Technology Platform (BTP), while SAP Customer Activity Repository (CAR) works to unify sales, inventory, and demand data. SAP Business Data Cloud or Datasphere can then serve as the governed data layer where sustainability attributes, such as recycled content or emission factors, can be harmonized with operational facts. For process efficiency, SAP Signavio provides further visibility into waste and rework.

Product Lifecycle

Sustainability begins at the design and sourcing stage, long before a product reaches shelves. SAP Responsible Design and Production helps retailers track packaging specifications, recycled content, and market-specific EPR regulations, while SAP Product Footprint Management can calculate cradle-to-gate emissions for each product, ideally using supplier-provided data for accuracy.

These product carbon footprints (PCFs) can then be stored in the article master so that buyers and merchandisers see them alongside cost and margin data. Environmental attributes such as organic certification or Fair Trade status can also be incorporated into assortment planning, ensuring that sustainable products are prioritized in space allocation and promotional strategies.

Supply Chain and Logistics

Transportation and distribution operations often account for a large share of a retailer’s emissions. SAP Integrated Business Planning (IBP) allows demand and supply planners to simulate scenarios that factor in emissions and service-level constraints.

In warehouses, SAP Extended Warehouse Management (EWM) can optimize slotting and picking to reduce travel distances, while tracking waste streams to improve diversion rates. SAP Transportation Management (TM) calculates emissions per shipment and supports mode shifts from air to ocean or rail, helping reduce carbon intensity. Reverse logistics flows in EWM and TM can also be configured to prioritize recommerce and refurbishment or donation over disposal, feeding data back to merchandising teams to address recurring quality or sizing issues.

Physical Stores

Physical stores remain central to the customer experience and can be a major driver of energy consumption and waste. Integrating building meters and energy systems into SAP Datasphere allows retailers to monitor usage and feed summary data back to S/4HANA for cost allocation. In grocery, for instance, predictive maintenance for refrigeration and lighting reduces leaks and inefficiencies, while real-time inventory accuracy—achieved through CAR and S/4HANA—minimizes overstocking and shrink.

Fulfillment

Omnichannel fulfillment can be particularly resource-intensive, but SAP tools help make it more sustainable. Leveraging CAR and Available-to-Promise (ATP) functionality, orders can be routed to the nearest location with the least environmental impact. In SAP TM, delivery orchestration rules can weigh emissions alongside cost and SLA, and greener delivery slot options can be surfaced to customers at checkout, providing both transparency and choice.

FINAL THOUGHTS

With a strong foundation, sustainable retail with SAP can become a measurable, scalable practice. By embedding environmental and social considerations into daily processes and decision-making, retailers can de-risk compliance and strengthen customer loyalty, all while making measurable progress toward sustainability goals.