Green transformation, starting from a “green ledger”

Introduction: From Made in China to Created in China, from Chinese Speed to Chinese Quality, more and more Chinese brands are going abroad. With the increasing influence of Chinese brands in the global market, the comprehensive evaluation system of Environment, Society and Governance (ESG) has evolved from a simple obligation of information disclosure to a core element of corporate strategic planning and daily operations, becoming a necessary path for Chinese enterprises to enhance international competitiveness and achieve high-quality development.

Environment, Social, and Governance, abbreviated as ESG, have become the gold standard for measuring corporate sustainability.

As of 2021, 95% of large companies have included ESG indicators in their reports and actively set emission reduction targets, not only because this is a manifestation of social responsibility, but also because ESG performance directly affects a company’s market valuation, brand reputation, employee satisfaction, and shareholder trust in management.

However, achieving these ambitious goals is not an easy task, as many companies are facing challenges such as incomplete data collection, frequent errors in manual processes, and incomplete audit trails. These issues not only affect internal compliance, but also threaten external trust.

It is in this context that the “Green Ledger” initiative led by SAP has emerged, which introduces financial level accuracy into carbon calculation, enabling enterprises to accurately track and manage their environmental impact like managing financial data when processing environmental data.

1.Strategic level

A solid sustainable development strategy can enhance a company’s resilience and adaptability, while deepening its connection with consumers. The green ledger provides key inputs for ESG data management and reporting, enabling leaders to track, report, and reduce carbon emissions at the transaction level across the entire value chain, while managing compliance requirements.

2.Compliance level

As global attention to sustainability regulations continues to escalate, from the European Union’s Corporate Sustainability Reporting Directive (CSRD) to strict reporting standards in California, USA and possibly nationwide, companies must report more transparently on the environmental and social impacts of their activities. Green ledgers help businesses easily respond to these regulatory requirements, ensuring that their reports are equally important as financial reports.

3.Financial aspect

Environmental debt has become a cost item that cannot be ignored. On average, carbon debt of enterprises accounts for 1% -2% of gross profit. As nearly a quarter of global emissions are constrained by carbon taxes or emission trading systems, financial risks are increasing. The green ledger links environmental records with financial records to help leaders make wiser decisions, including supplier selection, product greening, etc., in order to reduce overall costs and risks.

To establish an effective green ledger, enterprises first need to address the issue of data accuracy. Currently, most companies lack transaction level carbon emission data and rely on estimates and industry averages, which often deviate from the actual situation by up to 30% -40%.

The solutions provided by SAP, such as SAP Sustainability Control Tower and SAP Sustainability Footprint Management, can help businesses set goals, monitor progress, and report ESG performance in an auditable manner to ensure compliance with global standards.

Through real-time insights driven by cloud technology, enterprises can not only comply with regulations, but also seize market opportunities and continuously drive innovation. The key is that SAP’s solutions can be seamlessly integrated into existing ERP systems, enabling all business departments to consider emission reduction within their scope of responsibility and promoting decarbonization of the entire value chain.

In the current era of change, the green ledger is not only a ledger, but also a reflection of corporate social responsibility and sustainable development vision. It not only enhances the transparency and credibility of enterprises in environmental issues, but also accelerates the process of transforming into a green and responsible corporate form.

Faced with the booming global ESG trend and strict regulatory requirements, companies need a capable assistant to ensure the smooth progress of their sustainable development journey.

As a platinum partner of SAP, Acloudear focuses on building a global digital management framework, helping enterprises accurately integrate carbon data into their operational systems. Through sound carbon management and technological capabilities, it drives the green transformation of “human, financial, and carbon” integration.

Through our green transformation plan and services, your enterprise can not only easily cope with current ESG compliance challenges, but also proactively layout, ensuring that long-term strategies are synchronized with global sustainable development trends, and achieving a win-win situation of environmental and economic benefits!

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This article "Green transformation, starting from a “green ledger”" by AcloudEAR. We focus on business applications such as cloud ERP.

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