SAP’s Sophia Mendelsohn on Using AI to Scale Sustainability

Software giant SAP is leveraging AI to make sustainability top of mind and part of the bottom line for organizations. With enterprises giving more attention to environmental, social, and governance (ESG), AI might save time for personnel dedicated to such efforts and give them more opportunities to demonstrate the relevance of sustainability to overall operations.

Sophia Mendelsohn, SAP’s chief sustainability and commercial officer, discussed with InformationWeek how generative AI (GenAI) can streamline ESG efforts and put it in perspective at scale for organizations.

There’s been a lot of compute power that has been gobbling up energy before AI became a game-changer. What has been the overall outlook on sustainability and the balance with the innovation space? Is there a certain math formula or approach that is starting to make sense about how to maintain a pace of innovation while also thinking about energy consumption?

So ultimately, I think GenAI is a huge boost to sustainability because what we're going to get is the advantages of it. Obviously, ERP (enterprise resource planning) data -- you can imagine the millions of lines -- what GenAI does is match ERP data with sustainability data. So instead of manually having to map between ERP data and sustainability data for every regulation, GenAI does that for you, frees up, and if you’re familiar with chief sustainability officers’ teams, frees up the chief sustainability officers’ team from manual LCAs, or life cycle analyses, in ESG reporting to doing the actual work of value-adding.

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If you imagine, if you will, in your mind’s eye, on a whiteboard, or a PowerPoint slide, or a graph the value that GenAI brings to sustainability solutions, like the ones I make and sell, goes up with the energy intensity, the energy efficiency and how we ultimately make compute power more efficient, and goes down, like all technology does, on the cost curve. If you look at the energy intake of the first computers versus the laptop today, you begin to feel like we have seen this story before. But what we haven’t seen before is an ability to combine ERP data with sustainability data at a scalable system and ultimately what the technology we're building here is trying to do is scale sustainability.

Is there a feeling that this will lead to an exponential leap in ESG?

I think so. I do, because as your ERP provider, we already have the information you need. Now we’re removing the cost and time commitment to match it to energy intensity, to legacy CO2 footprint and then again with our software, what we can do now, for the first time, is instead of organizing information through the lens of sustainability -- i.e. Scope 1, Scope 2, and Scope 3, or carbon or water -- can actually reformat it from operational control to financial control, and when you put data in the format of financial control, you make it usable to your office of the CFO. Now we’re talking.

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At that point, what happens next? You’re establishing a new paradigm.

When you translate sustainability data to financial data, what you enable are two things. First, the user can quickly, and with much less cost, comply with regulations. Second, you enable the office of the CFO to begin to steer the business, so now they can see the embodied energy, the embodied externality, the embodied risk, or the embodied opportunity for incentives, under the Inflation Reduction Act, by either group level, entity level, region, country, P&L product, customer account.

SAP software technology and GenAI are making your data more accurate, more granular, and more stable. And then SAP software is taking it from operational control to financial control so that’s usable for the people who are making decisions about CapEx and OpEx around the business.

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With GenAI there are questions of reliability, questions about hallucination. Is the feeling that we’re at the stage now where you can really entrust it with these tasks or are there certain further steps that might need to happen?

From what we’re planning to date, and what will be coming very shortly, it’s really important for the user to be able to see what was GenAI generated first, and so making that very transparent, and then where it is GenAI, explaining how. But ultimately, the great part about doing sustainability in your ERP system is that the user, the auditor, the regulator, the investor, the CFO already trusts your ERP data, they already trust your ERP system. So, you’re not introducing a foreign entity to the body.

Do you think this helps sell organizations on the idea of really going in on sustainability?

Yes, I do. I do, because when you show that sustainability surface is traditional about business value, then you no longer have to convince organizations.

Are there other layers, are there other steps -- not just specific to SAP, but from a broader industry perspective -- that if we go down this road would be conducive to sustainability?

We’ve hit a little bit at the highest level, and at the highest level what you’re doing is combining ERP data with sustainability data through native integrations. And then when you do that, what you do, what you would enable for the customer when you do for them is to make sustainability not an ethical or moral issue but ultimately a data game, and when you organize the customer’s value through sustainability data, you’re enabling the customer then to take advantage of GenAI because we know GenAI is only going to be as good as the information you give it.

Are there personal marching orders for what you want to accomplish next?

SAP is going to make sustainability a function, an expected function of an ERP system. SAP is going to define a modern ERP system as inclusive of both GenAI and sustainability. SAP is absolutely going to show that these are both secular and macro trends.