SAP SE (NYSE: SAP) today released its integrated report for 2015, which shows, among other facts and figures, the impact of the company’s economic, social, and environmental performance on its business success.
In 2015, all of SAP’s key sustainability indicators maintained their upward trajectory. Year on year, both the employee engagement indicator and the business health culture index (BHCI) rose from their already high levels, increasing by 2 percentage points to 81% and by 3 percentages points to 75% respectively. The employee retention rate was at 91.8%, remaining within the intended range. SAP reduced its overall carbon footprint by 9% to 455 kilotons in 2015.
The integrated report expresses changes in the performance of indicators in terms of their monetary impact on operating profit, based on a two-step calculation. In the first step, the relevant social and environmental cause-and-effect chains for SAP are identified. Then, real data from SAP is used to translate these cause-and-effect chains into a monetary effect on operating profit. Applying this method to the employee engagement index, SAP calculates that a change of 1 percentage point in that index affects SAP’s operating profit by between EUR40 million and EUR50 million. As the rise in the employee engagement index at SAP in 2015 was 2 percentage points, from 79% to 81%, the gross impact on operating profit was between EUR80 million and EUR100 million.
SAP finds that rises in the BHCI produce even greater gross effects on operating profit than other indicators. SAP uses the BHCI to measure how employees rate their personal well-being, their working conditions, and the leadership culture at the company. In 2015, the index climbed 3 percentage points, from 72% to 75%, producing a gross effect on operating profit of between EUR225 million and EUR255 million. Because for each percentage-point change in the BHCI, the impact on operating profit is between EUR75 million and EUR85 million.
In 2015, the employee retention rate decreased from 93.5% to 91.8%. SAP does not strive for a general retention rate of 100%, as it believes that the current turnover rate supports its ability to innovate. The gross impact of a 1 percentage-point change in employee retention is between EUR45 million and EUR55 million.
In environmental reporting, CO2 emissions are the most important indicator. A reduction of 1% in CO2 emissions saves SAP around EUR4 million in costs. In 2015, emissions fell 9% from 500 kilotons to 455 kilotons. The company reduced CO2 emissions per employee by almost 18%, from 7.3 tons in 2014 to 6.0 tons in 2015, nearly doubling the rate of per-employee reduction year on year. SAP attributes this reduction to a variety of measures, including savings in business air travel and additional investments in CO2 offsetting projects. SAP’s switch to renewable energy resources in 2014 continues to have a positive effect: The company has been powering all of its data centers and facilities worldwide with 100% renewable electricity for the last two years.
“We believe that our economic, social, and environmental performance are inextricably linked. Measures taken in one area always impact the other areas too,” says SAP Chief Sustainability Officer, Daniel Schmid, explaining the 360-degree view that the integrated report provides. “The digital transformation is intensifying these mutual dependencies, as we will also be demonstrating in our free online course Sustainability Through Digital Transformation, starting in mid-April. This year’s integrated report, SAP’s fourth, delivers reliable explanations and information for understanding trends better and for tapping into the wealth of potential they present.”
For the first time, the integrated report also points to the opportunities that information technology offers for attaining the 17 United Nations Global Goals for Sustainable Development. For examples of how SAP and its customers are embracing these goals, go to http://ift.tt/1ObXVGt.
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 The integrated report does not take account of the investments required to facilitate the changes in indicators, so the financial effects described in the report therefore represent gross effects.
 Compared with the 2014 integrated report, SAP has increased the range of gross impact from between EUR35 million and EUR40 million to between EUR40 million and EUR45 million. This reflects an increase in headcount and higher personnel costs per employee. Both factors are included in the calculation of financial impact.
 It makes sense to look at the cumulative effects of factors within a single indicator. However, adding up the effects of different indicators does not deliver reliable information because each of the indicators creates impacts on others. For example, employee engagement impacts employee retention.
 In 2014, the business health culture index stood at 70%. The gross effect of shifts in this indicator was recalculated for the 2015 integrated report to take account of changes that SAP made in 2015 to the design of the employee survey on which the indicator is based.
 An increase in headcount and personnel costs led to the range of gross effects being raised. Set at EUR65 million to EUR75 million, the figures calculated for 2014 were EUR10 million below the current values.
 The ratio of the average headcount (expressed in full-time equivalents/FTEs) minus employee-initiated terminations divided by the average headcount, taking into account the past 12 months.
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