SAP releases its Integrated Report 2012 – an integrated financial and sustainability report

Hi everyone! And welcome to GreenMonk TV. Today we are doing a special report on SAP’s Integrated Report of 2012.

Now, normally on this site you would be used to me talking about the SAP sustainability report, comes out once a year and they have quarterly updates.

What they have done this year for the first time that something they have been talking about doing for awhile but they have for the first time now they’ve brought out an integrated report which is a combined report combining their financial report for the year with their sustainability report, and you can see up here on the report they have called it their financial and non-financial performance report.

It’s an online report. You can download a PDF of it as well, you can see the link just here, the download is obviously — it’s obviously not interactive in the same way that the site is interactive. You can see the site is at sapintegratedreport.com.

So what’s so different about this report? Well, as I said, it combines both the financial and sustainability performance for the year. There is an About This Report section which talks about the report, it goes into materiality and it also says Why SAP are doing integrated reporting.

They have a Key Facts section which gives as you would imagine key facts, but also flavors summaries, chart generators and connecting financial and non-financial performance will come back to that. It’s interesting. There is to the stakeholders, the usual things, the letters from the CEO etcetera, etcetera, etcetera, independent annual orders report. Stuff you’d expect both in the sustainability report and the finance report, there is the performance for the year with a couple of top-level numbers there, talking about the engagement score for employees at 79% and CO2 at 485 kilotons for the year 2012 which is 5 kilotons above the target CO2 set for itself.

You have Partner Ecosystems, Research and Development, Overall Financial Position, Risk Report, Outlook, Performance Statements, all the kind of things you’d expect in both the financial and the sustainability reports.

You have an Additional Information section which we won’t be going into too much detail on, it’s kind of indexes background, glossary, that kind of a stuff, and then you have a My Downloads center which is new and we’ll come back to that as well.

So in the About This Report section potentially the most interesting thing here is the Why Integrated Reporting, so if I click on that quickly, they give an indication here of the thinking behind integrating the two reports and in a conference call we had with Peter Graf and with Christopher Hütton, the Chief Accounting Officer of SAP, they talked about why they went for integrated reporting and the steps that were involved.

Obviously by having two reports, you are addressing two audiences but by combining them, you bring the two audiences together and you get one report which can potentially address if someone is interested in both financial and sustainability information, now they get it all in one report and they get it interconnected which is more interesting in itself.

One other thing before I come off this page, on several places throughout the site you will see this on the right-hand sidebar here where it asks questions, and you have a chance to submit an answer. So in this case, do we have comprehensive connectivity between non-financial and financial KPIs and you have an option to say, yes, the connectivity is comprehensive, you need to build stronger argumentation for the connectivity, you are lacking key social KPIs, you are lacking key environmental KPIs, you’re lacking key financial KPIs, and before you submit that you have an option as well, and it is an option you don’t have to choose which you have an option to say whether you are a customer, financial analyst, employee, NGO, IT analyst, government or partner.

So you submit that and let’s say I decide that I think SAP are missing some key environmental KPIs. I can say I’m from an IT analyst’s background and I can vote on that and it will come back with a result saying that I am one of only 8.7% of people who think that. The majority of people, 65% of people say, yes, the connectivity is comprehensive.

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So you can also add a personal note to the page and add this page to My Downloads in this part up here. So the Add this page to My Downloads. If I click that, I want to put a personal note at first. So I can type that in there quickly, this is the affirmation to why SAP went for integrated reporting, you can save that note and then you can add that to the — it’s automatically added to the Download Center. Up here you can see the number has gone up from 0, which it was to 1.

There are also links here to the conversation, so the #sapintegrated is brought from Twitter and printed out or displayed on this page here and on several pages throughout the site. So notice that that is About This Report section. It goes into materiality as well and it talks about the report and so on as you would expect.

The Key Facts section is interesting because as you would expect you get the Key Facts about the financial reports the research and developments etcetera, etcetera, employee numbers, percentage of female managers, that kind of thing, Greenhouse Gas Emissions that, and they are done here you can see as you mouse over them, they change color to make it easy to follow the numbers across, the columns. And you can see as I said greenhouse gas emissions, down from last year’s 490 to this year’s 485 but still 5 above target, that’s kilotons, and so on down along.

What’s also interesting though about this – sorry, each of these or most of these are links to individual pages explaining the data, so if I wanted to have a quick look at the greenhouse gas emissions in kilotons click on it there and bang, we are into a page on that. And you can explore the data with our chart generator, we’ll come back to that, I’ll hit the Back button.

The other interesting thing on the Key Facts is the five years summary. This is nice because now as well as changing color when you mouse over, you get a chart displayed, showing you the trends across the last five years, so things like employees and personal expenses, number of employees, year end and full-time equivalents, women in percentage terms, personal expenses, going up there. Research and development expenses, they are spending a lot on research and development, as a percentage of total revenue, seems to have flat line for the last three years as a percentage of operating expenses and so on and so on.

And these data are also available, our trends are available for the non-financial data as well. So very nice, very easy to digest.

The Chart Generator going in there, gives us charts on revenue and income, liquidity, R&D, financial employees, environment. Just looking at the employees for a second, we can see things like the age groups of employees across the last five years, and you can see the vast majority of employees are in the 32 to 50 years group, all across.

You get the financial performance measures, earnings-per-share, liquidity, cash flows, revenue and income, all the time it’s definitely to expect in a financial report and then use the environmental, the greenhouse gas emissions, energy consumption, renewable energy, a nice story here. Renewable energy in 2009, fossil fuels make 64% going to 41, going to 40 and in 2012 going to 29 and the total renewal energy in 2012 was 60%, made up of 24% solar, 34% Hydro, 2% other; the 2% other is things like biogas. Less in percent for nuclear which is a low carbon footprint as well, which is nice.

So those are all nice details. If we go back over here and look at things like the greenhouse gas emissions, again we see that and you can slice and dice this a number of ways, this is absolute greenhouse gas emissions, you can do it by employee, by euro revenue, and in each case it’s dropping. You can do it by region or you can do it by scope of emissions.

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One thing that is missing, it would be nice if for example we could dig into these just by clicking on any of these and get more information on those.

And the same with the energy consumption, we see for example when it comes to energy consumption that the Data Center Electricity accounts for 19% of the energy consumption. I’d like to know a little more detail about that, how is it done for cloud computing versus other consumption, etcetera.

But still it’s all very nicely presented, very easy to access. And again you can access it across the years, slice and dice it by employee, by revenue that kind of thing as well. So all quite nice there. That’s the Key Facts area.

The Connecting financial and non-financial performance, is a nice little one as well. It talks about how these different kinds of silos of data are actually interconnected. And you can see the ones you’d expect, the financial ones, the revenue and things like that, these top four here have got stars in them and the stars correspond to the fact that those are the kind four key targets that SAP are going after as a corporation, as a company.

If we look at things like greenhouse gas footprint, we can see that that’s interconnected to almost everything. It’s connected to employer ranking because SAP are perceived as a better employer, if they have a lower greenhouse gas footprint.

So someone in the jobs market looking at potential employers, sees that SAP has a lower greenhouse gas footprint than they have a better opinion of SAP and they want to work for them is the theory.

And you can scroll down and you see there is an explanation of each of these arrows here. Similarly the BHCI is the Business Health — I am going to forget what that stands for now. It’s explained down here, Business Health Culture Index and it’s basically a measure of goodness of the company if you want. It’s better explained lower down on the page.

You can see as well the greenhouse gas footprint affects employee engagement for similar reasons; it affects revenue, because lowering your greenhouse gas footprint should have a positive effect on your revenue by lowering your costs.

Customer success is similarly reputational, the inputs into greenhouse gas footprint come from energy consumed, data center energy and renewable energy, as you would imagine.

And you can see the other connections are there as well. Things like Employer Ranking has big connections on Operating Margin, on Employee Engagement, the inputs come from the greenhouse gas footprint, etcetera, etcetera, etcetera, you can follow it all yourself there.

So that’s the Key Facts section. I am not going to go through all of the — I am not going to go through any of the — to our stakeholders one, you can check that by yourself if you are interested. The performance one, again, some nice reports there going to the Energy and Emissions one for example, you can see reports here on Greenhouse Gas Emissions, Energy Consumed, Data Center Energy, Renewable Energy.

And again if you are interested you can add that page to your downloads and the number goes up here to number 2, and there is a link here to the Chart Generator.

On this side — on the left-hand side of the page you see this little tab sticking out here. Clicking on that allows you quick access to some of the other reports that the Waste and Water report that you can just go straight into and you can see the data corresponding to that.

And you can also go to any of the other ones, any of the other things like so, for example, if you are interested in the employees and social investment, that’s there as well. So, lots and lots of information easily available, you’ve got Performance Statements here as well corresponding to those and Excel download of those.

In the Additional Information, not a huge amount there that we’d normally be interested in and again it’s not some things like the GRI index and compact.

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But if we go to the My Downloads Center finally, you can see here there is the two personal reports that I added to the Download Center. You also have Excel tables of various consolidated statements, you have graphics you can bring down, and interestingly for the first time SAP always brought out their financial — or not always, but for last years have brought out the Financial Reports in XBRL format.

Now they are also bringing out their sustainability information in terms of an XBRL report. An XBRL is a machine readable form, so now with their sustainability information will be available in machine readable format and it’s going to be interesting to see how that works out in the coming few months and years and see what people make of it.

Okay, that’s pretty much it. On the conference call — just one more thing, on the conference call that I partook in, Peter Graf made one call out at the end when he was introducing this report where he said that SAP wants to co-innovate with others in the sustainability or financial space on bringing integrated reporting to everyone with the lowest possible cost and the highest possible precision.

So SAP wants to make this kind of technology, this kind of integrated report. They don’t want to be the only ones doing it; they want to make this kind of stuff available to everyone, so kudos to them for that.

And if you’re in the space, the sustainability or the financial reporting space and you’re interested in getting involved in sustainability reporting, get in touch with Peter Graf and see how you can get involved in it.

Okay. Thanks very much!

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