AI and data collection could help companies meet climate targets set at the 2024 COP29 conference in Azerbaijan according to SAP’s CSCO Sophia Mendelsohn.
Technology giants are under the spotlight as the urgency for accurate emissions reporting escalates.
Tech companies are expected to deliver solutions that aid organisations in capturing and diminishing their environmental footprints, particularly at a time when AI technologies like generative AI and large language models are spreading at a rapid pace.
The anticipated expansion of AI infrastructure poses considerable environmental challenges as its energy requirements could contribute emissions comparable to those of entire countries.
Recognising this, regions such as Europe, the United States and Asia are now enforcing compulsory climate disclosures for major corporations.
These laws present hurdles for companies that are not equipped with adequate systems to monitor their environmental effects.
However, technology providers have identified substantial market opportunities from these regulations.
Leading businesses such as SAP, Microsoft, Oracle and Salesforce have created solutions that support organisations in tracking their carbon footprint.
Sophia Mendelsohn, SAP’s Chief Sustainability and Commercial Officer, argues that environmental impact data is already present within every organisation’s ERP (Enterprise Resource Planning) system.
KEY FACTS
- SAP provides enterprise software to 88% of Fortune 500 companies
- 50,000 companies must report environmental impact data under new EU regulations from 2024
COP29 created new climate finance frameworks and amplified national emission reduction commitments, but implementation poses a significant challenge for numerous organisations.
The opportunity in carbon markets
Sophia says companies already possess the data needed to measure their environmental impact.
“Sustainability data is available in every organisation’s ERP system, so it’s time to start automating data collection and reporting processes to ease some of the regulatory burden,” she says.
ERP systems – which manage business operations and customer relations – contain information about supply chains, energy usage and materials that could measure environmental impact.
SAP says that tech providers see opportunities in product-level emissions tracking and carbon markets.
“Companies should leverage IT spending to support sustainability initiatives, specifically by applying generative AI to optimise climate solutions and create circular products,” Sophia adds, suggesting that AI tools could help companies analyse their environmental impact and identify areas for improvement.
Setting global standards for carbon monitoring
The development of precise tracking tools follows closely as regulators from various regions impose environmental disclosure obligations.
The European Union’s Corporate Sustainability Reporting Directive (CSRD) mandates that 50,000 companies disclose environmental impact data from 2025.
Comparable mandates are emerging globally.
The United States Securities and Exchange Commission is setting up to introduce similar climate disclosure requirements and Singapore is requiring its financial institutions to report on climate-related risks.
“Sustainability data is available in every organisation’s ERP system, so it’s time to start automating data collection and reporting processes to ease some of the regulatory burden.” – Sophia Mendelsohn, Chief Sustainability and Commercial Officer, SAP.
This push for global conformity in carbon accounting and reduction strategies was a focal discussion at COP29.
Central bank representatives stressed the importance of consistent measurement methods that allow for an international comparison of environmental impacts.
“Effective climate action demands collaboration between Chief Sustainability Officers and Chief Financial Officers, as climate change has evolved from an ethical and environmental issue to a pressing financial imperative,” Sophia says.
“To accelerate progress, we need globally harmonised policies, rigorous carbon accounting frameworks and advanced technology solutions.
“By embedding AI-driven innovation, robust reporting standards and actionable insights into business operations, we can ensure that COP events, such as COP29 in Baku, are remembered as turning points – not just discussions.
“While the challenges ahead are formidable, the opportunities for transformative action are even greater – and SAP is here to lead the way on a low-carbon, circular future.”
