Is ERP good for sustainability -- or part of the problem?

March, 2022
Is ERP good for sustainability -- or part of the problem?

Environmental protection is a primary issue for corporations, non-profits, and governments. Public opinion and pressure from consumers, shareholders, and constituencies drive most of this. 

ERP providers have reacted with specific software and cloud services for environmental sustainability management. But how useful are ERP sustainability tools? 

In this ERP Confab podcast, Brian McKenna, business applications editor at ComputerWeekly, and Jim O'Donnell, news editor at SearchERP, join me to examine the IT industry's environmental effects, both positive and negative. It also offers links to the two websites' thorough coverage of the topics.

What SAP is doing to be the industry leader

SAP, the world's largest ERP company, has led the charge on this problem. At its 2021 Sapphire Now conference, SAP introduced a bevvy of solutions to assist in managing business sustainability initiatives. As with profitability and productivity, CEO Christian Klein advised customers to make sustainability a component of company management. In a piece for Fast Company, he elaborated on that point. 

Given its half-century of providing software to manufacturers and supply chain industries like logistics providers, SAP realises it has a special duty. For example, they obtain raw materials harvested in dubious ways, manufacture items containing difficult-to-recycle heavy metals, and spew pollutants from truck fleets that cross continents. 

In these cases, ERP's involvement in sustainability is clear. Material traceability and rerouting are already possible with supply chain management modules, offering enterprises additional control over responsible procurement. Manufacturing execution systems (MES) may improve assembly line efficiency and save energy. 

All of this implies that SAP's and IFS's newest sustainability technologies can do more than just offer window dressing—or greenwashing, as environmentalists call corporations that don't live the talk.

ESG data is untrustworthy and in desperate need of standardisation.

ERP also helps firms track and report their sustainability efforts. It often acts as a data repository for environmental, social, and governance (ESG) data. This includes how a firm handles LGBTQ personnel and how it adheres to labour regulations and best practises. 

ESG data is useful for both internal management and advising investors on corporate values. The issue is that it is difficult to gather, non-standardized, and open to exploitation.

The unquenchable need for computer resources by the information technology industry

The wider IT sector, of which ERP is a big component, may be harming the environment. 

McKenna adds that the IT business emits around 2% of all CO2 emissions, which is greater than the aviation industry. "The IT business is posing as part of the solution, but it's also part of the issue." 

Data centres consume a lot of water, in addition to energy. (Oracle, on the other hand, promises to use 100% renewable energy in 94 data centres in 10 countries.) AI models require a lot of power to calculate. And IT generates a lot of e-waste. 

But hardware is critical in emission-intensive sectors. Advanced networked technologies like digital twins are becoming more and more common in chemical and petrochemical industrial operations. Sensors and other advanced networked technologies like digital twins are becoming more common.