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John: Welcome to another edition of the Impact podcast. I’m John Shegerian, and I’m so honored to have, with us today, Gunther Rothermel. He’s the chief product officer and co-general manager for SAP sustainability. Welcome Gunther to the Impact podcast.

Gunther Rothermel: Thank you very much. Thank you for having me.

John: Oh, well, it’s a real honor to have you on today. We’ve never had the honor or the privilege to have SAP on before. So, this is a first for us. Before we get talking about all the important and impactful things you and your colleagues are doing in sustainability at SAP, Gunther, I’d love you to share a little bit about your background. Where did you grow up, and how did you get on this very important and inspirational journey that you’re on?

Gunther: Yeah, thank you. I actually have a little bit of an exotic background in the sense that I grew up very close actually to where SAP is located here as a headquarter. So, I’m a local person. I grew up here in Germany and I guess I went through the usual education and so on, but then I got this chance to join SAP in numerous different roles. Typically close to a software engineering role. I always felt for the product. I want to develop great products. Then a couple of years ago, when we doubled down even more on our investment into sustainability, I got the chance to lead a unit dedicated to this topic. That, of course, I found an amazing opportunity because then I could combine the engineering side of my heart with this great topic of sustainability. That’s where I landed. So, it’s really an honor to be able to lead such an important topic for a company like SAP.

John: A couple of questions, since you’re based in Germany and you grew up in Germany, in my travels over the last 20 years or so, running my company, which is a recycling company, it’s come to my uh understanding from just seeing wonderful different communities and cultures in one of the places that I do have in some investors from Germany. So, I’ve spent some time in Germany. Germany and other parts of Europe are historically, culturally more into the circular economy and sustainability by culture and by DNA over the last couple of generations. Then we are here in North America. Europe has been leading on these issues for the last 40 or 50 years. Is that sort of your your understanding as well?

Gunther: Well, it’s absolutely true that of course, the topic of sustainability is very important to us in Germany, in Europe in general. Well, it’s always hard to compare nations. We all have different regulations [crosstalk]

John: Sure.

Gunther: …and so on, but you’re right that this topic always played an important role for us. We have always been conscious of the resources we have. It’s also maybe because in some countries like Germany, we don’t have a lot of natural resources like oil or gas and what have you, right?

John: Right.

Gunther: So, maybe we are a little more used to having a look at the consumption of resources.

John: Interesting.

Gunther: So, it’s certainly a very important topic in Europe. That’s for sure.

John: Gunther, for our listeners and viewers who are not familiar with SAP, can you share a little bit about size? How many employees approximately? How many countries are you working in? So they get a little bit of a flavor of how really big and iconic and important SAP is.

Gunther: Yeah, thank you. SAP is a leader in enterprise software. We have more than 100,000 employees worldwide. We operate basically globally. I don’t know, I couldn’t even give you the real number on how many markets we operate, but on a global scale, it’s very important for us that we cater for the different markets. That we also take care of the local parts of our market. So, we are pretty global.

John: Sure. That’s wonderful over 100,000 employees. You’re publicly traded in New York Stock Exchange company too as well.

Gunther: Yeah, absolutely.

John: So, Gunther, we’ve had the honor and the privilege over the last 18 or so years to have so many interesting people on. What we’ve learned over the years is titles can mean different things at different companies. So, chief product officer and co-general manager for SAP sustainability, what’s your exact role in SAP? What are you tasked with doing and what’s your mission?

Gunther: I see myself as a software engineer. I’m a product person. I’m passionate about delivering great software products.

John: Right.

Gunther: So, in the center of my role is the responsibility for a set of products that we go to market with for the sustainability topic. That is expressed via this chief product officer role that I have and as such I’m fully responsible for the engineering, the delivery. Also, the consumption by customers. So, that’s in the center of my role. Of course, as we operate on a global scale, there are additional functions which support the marketing function, the sales and so on. This is where I’m sharing my role with the co-general manager. Her name is Sophia Mendelssohn. A great person, and greetings here by the way to Sophia. I’m more on the product side of the house. She is responsible for our go-to market and that part of the house.

John: Understood. So, when you’re creating your different products and your product strategy, explain how the inter relation between creation of product and product strategy and sustainability intersect?

Gunther: Well, I think that question leads us already a little bit into the space of why SAP is in that domain at all, and what’s our philosophy on what we do there.

John: Sure.

Gunther: Because look, when you’re familiar with SAP or you’ve heard about it, what you need to know is that the vast majority of business transactions across the globe is touching an SAP system one way or the other. So, a lot of business transactions worldwide are powered by our software. Now, when you look at the topic of sustainability, it’s our absolute belief that we need to embed sustainability in more business processes as we move forward as a society. So, in other words, we want to make sustainability a core part of our business operations. Not just some activity which is done once and then we move on. We wanted to make it part of our recurring day-to-day business.

John: Right.

Gunther: That’s why we believe if we touch all of these transactions, if we have so many precious resources that are managed by SAP systems, we could add a lot of value to our customers and organization by really adding sustainability to that as a dimension, right? So, we sometimes call this, we want to redefine the R in ERP. SAP grew up and became famous for being an enterprise resource planning company, right?

John: Right.

Gunther: This is what we’ve been doing for many years, and now we are saying, “Hey, let’s take this notion of resources to the next level and include aspects of sustainability into this.” Like greenhouse gas, carbon consumption, water consumption, reuse aspects and so on. So, that is our mission and this is where we said, “Okay, let’s bring this into our product stack. Let’s add this to our software so that we can indeed power more sustainable business processes moving forward.” That’s basically what we do with our product stack.

John: So, then give you a couple of examples; do you create then software that allows your customers to track their carbon management, their water management and other important aspects of their sustainability journey?

Gunther: Absolutely. Yes. So, we deliver a set of software products that do exactly what you just said. Manage your carbon footprint, calculate that, share this with your customers and suppliers, but also go broader in the sense of record and manage other greenhouse gasses. But then go broad in terms of the reuse and circularity aspects of business processes. So, that’s part of what we do, but then we take this information. Things like a carbon footprint or other aspects and take this into procurement for example or into finance or into logistics. Make sure we start to use the sustainability aspects in those core business processes as they run across the company. So, that’s the approach we are taking.

John: Understood, and when did you start launching these software products, and how’s the reception been by your client base?

Gunther: Yeah, that’s a great one. I want to say first, SAP has been in this sustainability journey for a long time, many years.

John: Right.

Gunther: At least 10, 12, 15 years, and of course, we as a company, we also want to be an example so to say, in the sense that we want to be a sustainable company ourselves. But on the product side, we have had products out there since years. Especially when you look at more classical parts, like environmental health and safety, management solutions or similar solutions. This we have had for years, but we also doubled down on the topic. I would say four years ago when we decided to even increase our investment and to focus even more on it when we broadened our portfolio and when we added more people to our team so that we simply accelerated our approach. So, I would say since roughly four years, we actually even accelerated our journey there.

John: Understood, and for all listeners and viewers who’ve just joined us, we’ve got with us today Gunther Rothermel. He’s the chief product officer and co-general manager for SAP sustainability. To find Gunther and his colleagues on all the great work they’re building at SAP, you could go to sap.com/sustainability. So Gunther, I’m a client of yours, and I want to now really go all in on our sustainability journey. I want to track it, and I want to make our company just a more responsible corporate citizen. So, I then come to you and I ask you what your stack looks like with regards to software solutions to help me manage all my sustainability issues that I want to tackle. Water carbon management, circularity, everything.

Gunther: Yeah, that’s basically our approach. We want to go for a broad coverage of the use cases. Of course, what matters to us, and when you also asked earlier about the reception of clients, it is important that we help clients on their journey according to their pace. Not all companies are equally set up. Not all companies are already very high on a learning curve. So, we we need to see that organizations are in a different state and they have different goals. So, this is why we want to do this in a very modular way where you could go at the journey in a very incremental style, right? You could say, “Okay. I, for example, want to tackle the carbon topic because I want to report on it or because we have regulations. Like in Europe, we have the CSRD and EU Taxonomy and other regulations, but then you can expand that over time. So, the modular approach matters a lot to us, and this is why we also have different software as a service modules for the different parts.

John: So, you meet your clients where they’re at. Not where you want them to be. Not in some ideal position, but you’re getting them started on a journey. So, like you said some of them might be already well on their journey, some of them might just be beginning. So, you help offer them solutions to meet them where they really are on their journey at that point.

Gunther: Absolutely. This is key because we need to see that all organizations also generate a great return on investment on this topic. I feel and I think a lot of peers that I talked to in the industry see the same. Organizations are moving. There’s way more commitment in the topic than it used to be 3, 4 or 5 years ago.

John: Right.

Gunther: That’s great to see. We hardly have any conversations these days anymore where the discussion is like, “Do I really need this?” The discussion actually is, “What exactly am I supposed to do in which sequence, right?

John: Right?

Gunther: So, that’s more, I think in that sense, the conversation shifted and that’s great.

John: Go on. I’m sorry, going to go. I’m sorry.

Gunther: Yeah, and that’s why it’s so important, like you nicely phrased it, where we say, “Pick the customers up where they are. Help them realize benefits out of a particular topic. Then move on to the next one, and make sure that when this incremental approach is realized, they grow in their ability and visibility on their sustainability activities as they go.

John: Let’s talk a little bit about sustainability used to be the key word, 10 years ago, but now we’re dealing with a lot of other key topic phrases that are heavily involved with sustainability. So, for instance the emergence in the growth of ESG and the need for ESG reporting. Talk a little bit about what SAP does for folks that not only needs sustainability reporting, but the intersection of sustainability and ESG.

Gunther: Yeah, we see this term ‘sustainability’ in a very broad sense. So for example, when we enable our clients to cover key regulations like they exist in Europe, but also more and more in the US and other parts of the world. Of course, this activity typically goes beyond just the ‘E’ in ESG, right?

John: Right.

Gunther: So, the social dimension is very important. We have a lot of supply chain due diligence acts in Europe, for example. So, we see it broad and we want to enable our clients to really look at the full set of E, S and G and beyond. When you think of this once further, then it’s clear, there is a new data domain emerging and a new world of information on this topic of ESG that we need to enable. Because of the last sentence here, only if you look at this in a holistic way as an organization, will you be able to first optimize your own ambitions, but then also comply with regulations.

John: That’s right. Talk a little bit about the importance, Gunther, in the sustainability reporting world and the ESG reporting world of transparency. Not just transparency, but what we now are calling radical transparency. How important is that, and then how does SAP empower your clients to really be as transparent as they possibly can?

Gunther: Yeah. I think you mentioned a key aspect of sustainability because we all are following the news and we see that there are still doubts on numbers that are reported, and there is the need for a higher transparency. So, having a great visibility into both your own internal status and ambitions on sustainability, but also the external world around you is key. So transparency is key. Now, at the same point in time, I wanted to say that we need to get better at generating reliable data. So, reliable data that your stakeholders trust. Reliable data that you can report upon and be sure about it. Now, this is where we take, and sometimes we say we want to treat sustainability data like retreats financial data. Now, of course, this might be the case because we are an organization that has a heritage of supporting finance, but for us, if we treat sustainability data, like finance data, this will over time also increase the reliability of this data. So, for example, I believe more and more sustainability data will be audited by major entities, right?

John: Right.

Gunther: Because you are subject to audits. So, how can you provide reliable data into these audits? Only if you have the right checks and balances, and if you apply principles that we know from finance which are proven also through the world of sustainability. So, I think that’s a key place where the world can make a big progress if we come to such a reliability. Like we know it from the financial world, in the world of sustainability, I think that’s a major and great step forward.

John: I fully agree. Years ago, Gunther, when people said, “Oh, to a corporation organization, you need to get on a sustainability journey. They always equated a sustainability journey with costing them money with being a negative to their bottom line, but in actuality, what we’ve learned is actually much different. When done correctly, a sustainability journey can make an organization A, more profitable and B, more resilient. Is that your feeling at SAP when you’re empowering your clients with your software and your module software solutions so they can get on their journey and they can expand their journey. Is this only leading to more profitability and more resilience for that organization?

Gunther: Absolutely. No doubt about it because what we are seeing is when you look in different industries, like automotive or chemicals, you see that actually there’s a transformation going on in these industries, right? Where, of course, these organizations need to decarbonize their offerings. They need to reduce waste and the business cases for that are actually getting stronger and stronger because if you’re not doing it, you get harder access to capital. You also have to pay more in terms of taxes, and so on especially in Europe.

So, the business case is getting clearer and clearer. Also, what you said is some organizations, of course, take this as an opportunity to differentiate themselves to be quicker. To lead in front of their competition and then of course, be more resilient in their marketplace. So, that is absolutely changing. Unfortunately, there are still some organizations who look at sustainability only from a compliance angle, but more and more are seeing it like you just said where they see this as an opportunity to win and to differentiate.

John: Gunther, since you’re the chief product officer and also the co-general manager for SAP Sustainability, what initiatives are coming up or programs in the future that you’ve created now, that you and your colleagues have created that you’re going to be launching in 24 and 25 that you’re really excited about?

Gunther: Lots of different activities but let me pick a few ones where we are really proud of and very keen on rolling it out further. So first, the need for transparency as always already mentioned. So, we have a key product which we call the SAP sustainability control tower. This is a common data foundation that enables customers to report and steer their ESG activities. That product is out and live and kicking and sees a great adoption, but there is a lot more functionality. Also, more coverage of regulations that we support there in 2024, in particular CSRD in Europe, but also other regulations. So more coverage of upcoming regulations is certainly one big theme that you will continue to see.

The second topic we already also touched upon, which is the decarbonization of a full value chain because if we, for example, want to decarbonize the automotive industry, it’s not one organization that can do this alone. You’ve got to do this with your suppliers. You’ve got to do it with all of the OEMs and so on. So, we are also rolling out more functionality that enables organizations to share our sustainability data between the participants. So for example, there’s a sustainability data exchange module. There’s also a module which we call SAP green token, which enables the tracking of fuming material across a supply chain. So, that second part is more visibility into the supply chain and the sustainability data exchange across all participants.

John: Understood.

Gunther: Then thirdly, and that’s the one where we received great feedback. This is a longer term vision, which we coined with this term of ‘the Green Ledger’. Now, I think we all have some association when we think of a ledger, right? Like, we know it from finance and the idea is we take those principles like I already quickly mentioned, and say the principles of a financial ledger and apply this to sustainability. So, we are building a green ledger for carbon, for example, where you apply the same principles, and that’s something we are very excited about as well. This will also be part of our finance module moving forward taking sustainability deep into our product suite.

John: One of the greatest challenges right now for large organizations that are worldwide brands like your brand, the harmonization of regulations. Isn’t it kind of difficult if you’re a worldwide big brand and you’re operating in Europe, Asia and in North America and in South America, that they have such a different set of regulations everywhere when it comes to sustainability and ESG reporting and other things of that such, isn’t that sort of a big challenge right now for most organizations?

Gunther: Oh, it’s a big one. It’s a big challenge. I even have a team that does nothing else than dealing with new regulations.

John: Wow.

Gunther: In the sense of analyzing the new regulations, analyzing what it means to our software and what do we need to cover, and then feed that into our development process so that we can cover it moving forward. It’s a major effort because there are literally hundreds of regulations coming up. I just give you one example where in one of our products, we call this range of regulations in the space of extended producer responsibilities. That, of course, is very local. It’s even different in Germany between France and other countries. It’s crazy. Plastic taxes and so on. So, it’s a long list of things.

John: Right.

Gunther: Now, for us, it means a lot of effort, and a good part of my team is actually busy doing this coverage of regulations. But I would say at the end of the day if we do this, well, this is also a big value for our customers because then they don’t have to do it. We take parts of it away.

John: That’s right. That’s a huge advantage to using your software then.

Gunther: Yeah. Absolutely.

John: That’s good.

Gunther: So, we need to keep that ball rolling actually. Every week something new is coming up [crosstalk]

John: That’s right.

Gunther: …and we need to stay on top of things.

John: Well, Gunther we’re going to keep the ball rolling where we want you to come back, continue to come back on the Impact Podcast to share the journey in sustainability at SAP. For our listeners and viewers who want to find Gunther and his colleagues and also find the great software products that they have to help you on your ESG or sustainability journey, please go to www.sap.com/sustainability. Gunther Rothermel, thank you so much for joining us on the Impact Podcast. Great work that you and your colleagues are doing in sustainability at SAP. Most importantly, thank you for making the world a better place.

Gunther: Thank you so much for having me and for this great conversation. Thank you.

John: This edition of the Impact Podcast is brought to you by Engage. Engage is a digital booking platform revolutionizing the talent booking industry. With thousands of athletes, celebrities, entrepreneurs and business leaders, engages the go-to spot for booking talent, for speeches, custom experiences, live streams and much more. For more information on Engage or to book talent today, visit letsengage.com. This edition of the Impact Podcast is brought to you by ERI. ERI has a mission to protect people, the planet and your privacy. It’s the largest fully integrated IT and electronics asset disposition provider and cybersecurity-focused hardware destruction company in the United States and maybe even the world. For more information on how ERI can help your business properly dispose of outdated electronic hardware devices, please visit eridirect.com.