SAP often fails in sustainability reporting

In large parts of German industry, the ESG information stored in the SAP systems is incomplete or incorrect. As a result, many companies are effectively unable to meet the legal requirements for environmental protection, sustainability and ethical management (ESG - Environmental, Social, Governance).

The same applies to the requirements of the new EU regulations regarding material compliance such as Reach (Registration, Evaluation, Authorization and Restriction of Chemicals), RoHS (Restriction of Hazardous Substances), POP (Persistent Organic Pollutants) and Pfas (Per- and Polyfluoroalkyl Substances). In operational practice, it often proves to be problematic or even impossible to obtain or provide all the required evidence, for example from suppliers, in order to record it in the SAP system. In some cases, it is impossible to obtain detailed information about every single substance in a product. In addition, ESG and material compliance are so closely interwoven in practice that the administrative effort required to comply with the regulations is unmanageable for many medium-sized companies.

The consequences are potentially fatal, because many industrial companies therefore violate applicable law without this being noticed due to the incorrect figures in the SAP system. I wouldn't want to be one of the people responsible in a company like that. In my experience, violations of REACH, RoHS and the Pfas regulations are commonplace because incorrect and sometimes completely misleading data is stored in the SAP system.

Violations are the order of the day

The EU Regulation Reach (Registration, Evaluation, Authorization and Restriction of Chemicals) obliges companies to collect and evaluate information on the chemicals they manufacture or import. The EU RoHS Directive (Restriction of Hazardous Substances) restricts the use of certain hazardous substances such as lead, mercury and cadmium in electrical and electronic equipment. Pfas (per- and polyfluorinated alkyl compounds) are a group of over 4,700 chemicals that are used in many products due to their water, grease and dirt-repellent properties, from textiles, food packaging and grill pans to shampoo and cosmetics. Due to this diversity, these "eternal chemicals" are subject to numerous regulations, from REACH to drinking water guidelines and food contact material regulations to plant protection legislation.

AI exposes the fake ESG

All of these substances are potentially hazardous to health and companies must provide clear evidence of how they are handled. Failure to do so could result in heavy fines and possibly even imprisonment. Many industrial companies have "flown under the radar with their fake-facts-based ESG strategy because no one has questioned the data basis. But new AI analyses will sooner or later expose all this false information.

Task force for ESG data

Many plagiarized doctorates went unnoticed for years or even decades until modern analysis techniques made it possible to trace every sentence copied from somewhere. Similarly, in the future, absurd ESG and material claims will be discovered as soon as they are subjected to plausibility checks, for example through supply chain analyses and comparisons with competitors. Just as many a person has had to give up their doctorate, many a person directly or indirectly responsible for ESG or materials in the business world is likely to find themselves in an extremely unpleasant situation in future. Companies that fall under regulations such as Reach, RoHS or Pfas regulations should therefore set up a task force as soon as possible to take a close look at the ESG and material-relevant data in the SAP system. According to their project experience, this should focus on two questions: firstly, the origin and secondly, the plausibility of the data. It is necessary to trace in detail which data comes from which sources and how reliable it actually is.

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