Achieving environmental, social, and governance (ESG) targets can increase a company’s worth beyond the feel-good. When it’s done right, it can increase company valuation with investors, open windows to subsidies, gain favorable supplier ratings with customers, and make companies attract and retain talent.
There is always a complex balance when implementing ESG goals between incentives and penalties to bring about change. One thing is for sure – meeting ESG goals can drive value if it can be done consistently, with automation and minimal costs.
Creating value with Environmental Social and Governance
A McKinsey study reveals 5 ways that ESG creates value.
- Drives top line growth by attracting customers with sustainable products and building community support, retaining existing customers looking for sustainable partners
- Reduces costs across the internal production, logistics and disposal chain
- Eases the potential to earn subsidies and avoid penalties
- Motivates talent acquisition and retention
- Increases the investment value of the company as it is attractive to sustainable investors
Unlock the benefits with ease
PwC Germany saw a need for clients to address new regulations and opportunities.
When presented by the new Supply Chain Due Diligence Act (SCDDA) in Germany, PwC realized their clients would need tools and processes to automate evaluation of suppliers.
PwC set about building an innovative application to check the clients’ value chain. They decided to tap into the SAP Business Network which has connections with over 40 million suppliers around the world. They use integration and analytics tools from the SAP Business Technology Platform along with the PwC best practices to link with client systems and provide a tool to meet the needs of both the goals and the laws.
Automation, integration and consistency make it flow
By the end of 2023, companies in Germany with more than 3,000 employees must have implemented the due diligence obligations under SCDDA. From 1 January 2024, the provisions relating to supplier risk management will also apply to companies with more than 1,000 employees. The objective is to increase transparency in supply chains and to bolster human rights. This law is being closely watched across Europe and the world as a catalyst for change, one that is good for society and helps companies achieve the value of sustainability. This is even more important with the upcoming EU’s CSDDD.
PwC developed the SCDDA specific app – Check Your Value Chain – (CYVC) as an integrated solution with a holistic view of the entire business partner portfolio (tier-1 to tier-n suppliers, own business activities and customers). Through an extensive risk analysis, the business partner portfolio is gradually stratified and high-risk business partners are identified for full SCDDA compliance. CYVC offers the possibility to process large amounts of data (semi-) automatically in a short time frame and identifies risks based on different assessment methods. In addition, the app provides options for defining and tracking measures for high-risk suppliers, as well as documentation and reporting.
Managing risk takes teamwork
The team at PwC developed the CYVC application using SAP tools along with PwC’s best practice risk analysis methodology.
The PwC risk methodology provides continuous monitoring and analysis of 13 thematic areas including child labor and slavery, etc. The software solution evaluates clients’ business partner portfolios no matter their size using diverse internal and external data sources including verified media analysis and supplier certificates for a comprehensive risk analysis.
Built for the future
The application uses the power of the SAP Business Network which has connections with over 40 million suppliers around the world to build transparency, resilience, and sustainability into clients supply chains. Along with the SAP Business Technology Platform (BTP) this easily integrates systems across the cloud to deliver analytics, data visualization, artificial intelligence, automation, risk and compliance modeling. It enables easy connectivity to any transaction systems and the app can be quickly deployed.
The proof – weaving ESG into the fabric of the business for MEWA
A PwC client, MEWA, is an example of a company that is using the new CYVC application along with PwC advisory services. MEWA is committed to being a sustainable business and providing their clients with sustainable textile products that are good for the environment. Headquartered in Germany, MEWA supplies global companies with work and protective clothing, cleaning cloths, foot mats and oil spill mats from more than 40 locations. They are a leader in the European textile management industry.
PwC provided technical support for all aspects of compliance with the SCDDA which came into force on January 1st, 2023. MEWA, like other companies, was facing the huge challenge of manual data gathering and inspection of its more than 3,000 suppliers from all over the world.
PwC helped MEWA to gain a holistic view of their entire business partner portfolio with the help of the SAP BTP along with the SAP Ariba Business Network. The software enables MEWA to monitor their entire value chain and evaluates risk automatically. Business partners are now continuously monitored, transparency is ensured with reduced time and costs.
Reaping sustainable benefits
It all adds up to sustainable business and a strong partnership between PwC and SAP to help clients address their Environmental Social and Governance needs, whether they are regulated through laws or simply for good business.
For their work, PwC has been named winner of the 2023 SAP Innovation Awards, which is celebrating its 10thanniversary
To learn more about PwC’s application and approach, see their SAP Innovation Awards pitch deck and SCDDA Software “Check Your Value Chain” page.
