SAP has committed to promoting green living both in its products and in its own buildings, as it recently made efforts to increase sustainable business practices and reduce the use of electricity. For its own sustainability work, SAP currently uses SAP BusinessObjects Xcelsius Enterprise to meet its goal of reducing its carbon footprint to year-2000 levels by 2020, a nearly 50 percent reduction from SAP’s 2007 carbon emissions. To help SAP customers, particularly financial institutions, measure and reduce carbon emissions for lower energy costs, SAP offers SAP Carbon Impact as an on-demand service. 

Although risks from carbon dioxide emissions will be further mitigated to meet SAP’s own sustainability goals in 2020, residual risks implicitly remain. Using SAP BusinessObjects Xcelsius Enterprise and SAP Carbon Impact does not entirely eliminate the risks of carbon emissions after carbon emission reduction controls have been applied. You can mitigate risks at an acceptable level as set forth in a strategy implemented in an SAP system. For example, the strategic objective should set how much lower the acceptable level should be for each year until 2020. Since the strategic objective could change in response to changing regulations and global climate, the business challenge is to align and execute on changing strategic objectives.

SAP Carbon Impact helps companies track carbon footprint and GHG emissions and measure and reduce the costs of their total carbon output via a Web platform. They can maintain a carbon emissions inventory and get updates on emissions factors, reduction project financial models, and regulatory changes, as well as guidance for conformance to environmental standards.

Carbon Impact Residual Risks

SAP Carbon Impact implicitly addresses residual risks. You need to identify what residual risks exist in SAP systems running on SAP NetWeaver and SAP servers. These servers hold data for a given retention period as mandated by a compliance regulation or corporate policy. For example, carbon emissions may have been already reduced but not significantly before SAP Carbon Impact was applied to help companies reduce carbon emissions. This resulted in reduced energy consumption and energy costs, and less reliance on internal light vehicles and improved the quality of environment (e.g., better air). Eliminating carbon emissions is not possible in all locations because for example, fossil fuels without carbon emission technology, wind energy, and geothermal energy are not available everywhere. For this reason, residual risks may be higher in one location than in others. You need to quantify and document residual risks because these risks may change over a period of time (e.g., climate changes, emerging technologies, and severe earthquakes).

When designing a data center internal to a client company, a commercial building construction and design company can use SAP Carbon Impact to measure and reduce carbon emissions from energy-efficient equipment or materials for the client company’s floors, doors, windows, and rooftop before, during, and after the construction. That includes the rooms with the IT machines running and storing sensitive financial data.

The financial institution should consider parts of computer and server hardware (e.g., circuit boards containing cadmium, lead, or beryllium) that could contribute to carbon emissions when disposed of. Virtualization of servers is another way of reducing carbon emission and reliance on electricity by not buying additional servers or expanding the server room. This is particularly useful in running SAP systems in different parts of the virtualized system. Just make sure a policy of daily backup or failover of the virtualized system is in place to ensure high availability of service and compliance with data retention regulatory requirements. 

For both examples below, the financial institution should maintain a carbon emission inventory of all energy-efficient alternatives to cooling the IT rooms with SAP Carbon Impact.

Example 1. Vault Doors for IT Rooms

The process of making doors from bamboo contributes less to carbon emissions than the processes (including deforestation) of making doors from trees. Residual risks of bamboo-made doors are less than the residual risks of oak doors. However, residual risks for bamboo-made doors are much higher than those for the steel vault doors as the front and back entrances to the rooms containing IT machines run and store sensitive financial data. The steel can withstand heat from the fire better than the floors and doors made from either bamboo or trees.

Example 2. Floors on Which IT Machines Run

One conventional way of cooling the floors on which the IT machines run are the electricity-dependent air conditioners underneath the floors. To reduce the use of electricity, geothermal wells can be thought of as an alternative way of cooling the floors. However, not all financial institutions have the backyard for geothermal wells like SAP’s headquarters does. This means these financial institutions have to look for energy-efficiency equipment alternatives for cooling the floors. 

Even if the financial institution has the backyard for geothermal wells, residual risks of this energy-efficiency alternative may change if geothermal wells dry up in the short term (e.g., two years in lieu of 50 years). In this case, there should be a “failover” to an energy-efficiency alternative, such as cooling water from ice tanks in the basement.

Three A’s for SAP Carbon Impact

SAP Carbon Impact has three functionalities: Assess, Analyze, and Act on sustainability and carbon management capabilities. They are important to financial institutions that must comply with data retention regulations, expand storage capacities to hold data, and manage residual risk data.

Assess Functionality

This functionality can help financial institutions consolidate environmental impact data from disparate data sources into a single repository and organize emissions data based on organizational hierarchies. Some examples of data sources include spreadsheets, financial applications, and homegrown databases.

The financial institutions can determine the total environmental impact, including greenhouse gas emissions, water consumption, waste, and carbon dioxide emissions activities. They can view summarized impact assessments at any operational level, track financial IT emissions, and report emissions by financial, equity, and operational control. They can get support for verification standards, such as ISO 14064, an international standard for monitoring the company’s ability to track performance and progress in the reduction or removal of GHG emissions.

Analysis Functionality

This functionality can help financial institutions evaluate and determine an optimal mix of investment options that will reduce or offset environmental impacts, while meeting sustainability and financial goals. The institutions can model internal reduction projects, such as energy-efficient equipment substitutions or consolidations in internal IT rooms. They can compare the return on investment and reduction flow with carbon offset equivalents.

They can integrate third-party data sources with internal repository of data sources to build consolidated environmental performance dashboards. You can use these dashboards for analyzing emissions trends, identifying the extent of residual risks, identifying problem areas, and helping executives to make decisions on environmental initiatives.

Act Functionality

This functionality helps financial institutions to set sustainability and residual risk reduction goals, and enable reporting from a single repository to voluntary or mandatory registries, such as the Carbon Disclosure Project and US EPA Climate Leaders Program. It supports the implementation of operational plans to meet sustainability goals and ensures compliance with voluntary and regulatory standards.

Visualizing with Dashboards

SAP BusinessObjects Dashboard Builder with SAP Carbon Impact provides a consolidated view of the dashboards. SAP BusinessObjects Xcelsius Enterprise takes a more interactive approach to viewing complex data on the dashboards from Microsoft Office, the Web, Crystal Reports, and other sources. 

SAP BusinessObjects Dashboard Builder and SAP BusinessObjects Xcelsius Enterprise help you visualize what residual risks are and how they have changed or could change over time to meet the goals of reducing carbon emissions. They show how you can mitigate them as a result of new technologies, regulatory changes, and negative effects of climate changes. You can use both with SAP Sustainability Performance Management, a dashboard to track a company’s carbon footprint. It provides key performance indicators to let an SAP client know immediately how they’re doing against typical sustainability performance measures in the dashboards. SAP BusinessObjects Dashboard Builder is part of the SAP BusinessObjects Enterprise Premium license and the SAP BusinessObjects Edge BI software. It is also available as an add-on to SAP BusinessObjects Enterprise Professional. It runs in Windows, Solaris, Linux, HP UX PA-RISC, and AIX. SAP BusinessObjects Xcelsius Enterprise is designed to connect dashboard visualizations to SAP BusinessObjects Enterprise and SAP BusinessObjects Edge BI.  

Residual Risk Performance Indicators

In addition to visualizing sustainability data with dashboards, financial institutions need to determine how well the data can be turned into actionable information, so they can see how well their efforts in reducing carbon emissions are performing. If they use SAP BusinessObjects Sustainability Performance Management in combination with SAP Carbon Impact, they could automatically collect key performance indicator (KPI) data, including those on residual risks from a variety of sources into its library.

Mitigating Sustainability Residual Risks

When you perform risk assessment for the first time, identify which risks have been mitigated to an acceptable level. Identify which risks are residual after you have applied sustainability controls, such as reducing carbon emissions and the use of electricity needed to run IT machines. Prioritize them from high to low. If the residual risks are too high to handle, consider energy-efficiency alternatives with lower energy costs.

Then, identify the current and upcoming environment and energy-use regulations. Geothermal energy regulations are usually at the state level (in the US) and they differ from state to state depending on where your financial institution and its branches are. Other than the US, geothermal energy regulations may begin at the local, regional, or national level depending on the country.

Next, identify which sustainability residual risks might become unacceptable later due to impending changes in environmental regulations or changes in the conditions of the energy-efficiency equipment. For instance, energy-efficient hardware used to run SAP systems becomes worn out after repeated use. In this case, the hardware should be tested periodically to make sure it is performing at a desired level and is not consuming more electricity than necessary.

Likewise, you need to identify currently unacceptable residual risks that might become acceptable later. For example, if the residual risk is currently unacceptable due to the unavailability of new tapes to replace worn-out ones, this risk could become acceptable when new tapes become available from a different source. Change the likelihood of risks by changing one classification to another: highly unlikely, unlikely, may happen, likely, or almost certain. To increase awareness of what each classification means, you can put next to it a likelihood percentage of occurring (e.g., likely: 65-95%).

Repeat the process of risk assessment and change the risk criteria to determine if residual risks can be transferred or shared with other parties who have better resources to handle them, such as sharing of geothermal wells. You can do this by expanding the geothermal well field of standing column wells for heating of buildings and greenhouses.

Always plan for a change in the status of residual risks. For example, residual risks originally determined as high have been marked as low during a risk reassessment when a cost-effective sustainability control becomes available that was not available during the initial risk assessment. Check the status of the risks in the reporting and analytics and risk monitoring work centers in SAP BusinessObjects Risk Management. Document and develop a checklist of residual risks that you could use to check for the change in the applied sustainability controls. When these controls become outdated due to, for instance, new, more efficient geothermal technology, check for alternative, cost-effective sustainability controls from current and potential vendors and in trade media. Apply these sustainability controls to residual risks to check if they could result in acceptable mitigation.

Lastly, be creative in looking for innovative ways of measuring, monitoring, and visualizing residual risks of carbon emissions that would result in less reliance on electricity and trees.