SAP announced that it has joined Value Balancing Alliance e.V. (VBA), a nonprofit organization addressing the need to rethink the value contribution of business as it pertains to different types of capital.
Its objective is to create a standard for measuring and disclosing the environmental, human, social and financial value companies provide to society.
“Along our 10-year sustainability journey at SAP, we have consistently embraced the idea that social, environmental and economic performance are interrelated,” said Daniel Schmid, chief sustainability officer, SAP. “Being part of this alliance will allow us to work with like-minded companies to create the foundation for widespread implementation. It’s another step for us to live up to our vision and purpose to help the world run better and improve people’s lives.”
VBA was founded in June 2019 by eight international companies: BASF SE, Deutsche Bank AG, LafargeHolcim Ltd., Novartis International AG, Philip Morris International Inc., Robert Bosch GmbH, SK Holdings Co. Ltd. and SAP. It is supported by Deloitte, EY, KPMG International Cooperative, PwC, the Organisation for Economic Co-operation and Development (OECD), leading universities and stakeholders from governments, civil societies and standard-setting organizations. VBA will make its work available to the public, targeting widespread adoption by other companies.
Together with the other members of the VBA, SAP aims to transform the way businesses measure and value their overall societal impacts, dependencies along the value chain and monetary effect on a company’s value. A smart integration of impact measurement and valuation (IMV) is envisioned to bridge the gap.
The shared objectives of Value Balancing Alliance are to:
- Standardize calculations, ensure comparability of methods, establish a pilot for management accounting and publicly provide outcomes within three years
- Increase transparency of business decisions and creation and loss of value
- Work with external bodies to develop and extend accounting frameworks
- Shift the priority from maximizing profit to optimizing value creation
SAP has been an early adopter of integrated reporting, participating in the pilot program of the International Integrated Reporting Council (IIRC) in 2013. The following year, it became one of the first German companies to publish an integrated report, giving equal importance to financial and prefinancial value creation and demonstrating how they interrelate. A unique feature is SAP’s connectivity map and approach to quantifying the impact of social and environmental performance on its operating results.
