Leading enterprise resource planning (ERP) providers are actively enhancing their product suites to enable customers to assess and manage the environmental impact of their operations. This initiative is largely driven by rising climate change regulations as well as the recognition that minimizing carbon footprints can yield significant business advantages.
At Epicor’s inaugural European customer event held in Prague last June, Steve Hare, a business systems analyst for UK manufacturer Optima, emphasized the importance of sustainability as a competitive differentiator for the company. “We’re seeking to stay ahead of forthcoming legislation and believe that sustainability provides us with a competitive edge,” he remarked.
Epicor, a specialized ERP provider for the manufacturing sector, used the event to announce a partnership with sustainability data firm Climatiq. This collaboration aims to integrate Climatiq’s carbon intelligence and footprint calculation engine into Epicor’s suite of products.
For companies like Optima, this aligns perfectly with their sustainability goals. Hare stated that Optima is “on a path to achieve net-zero emissions by 2030,” emphasizing extensive efforts in their operations, including solar power, recycled water utilization, electric forklifts, and electric delivery vans. “Sustainability is undeniably a key differentiator for our business,” he added.
The demand for sustainability tools continues to rise, helping companies gather essential data for governance and reputation management. Although this demand has birthed new sustainability-focused platforms, major ERP players are also stepping in. Epicor is among the leading providers now equipping clients with capabilities for real-time carbon calculations and emissions tracking.
Other prominent ERP providers, including SAP, Oracle, Microsoft with its Dynamics 365 suite, Infor, IFS, Workday, and NetSuite, also offer various sustainability tools and services. This trend underscores the increasing significance of carbon data capture—not only for governance and reputational matters but also as a critical element of long-term business strategies that improve supply chain efficiencies and operational performance.
### Measuring and Managing Sustainability Data
Liz Herbert, vice-president and principal analyst at Forrester Research, notes that there is synergy between ERP systems and sustainability data measurement and management, though the relationship can be complex. Organizations aiming to manage sustainability effectively must “measure, make decisions, and take action across diverse areas that ERP systems may touch, such as suppliers, sourcing, logistics, manufacturing, and employee travel.”
Herbert points out that ERP systems often do not serve as external reporting tools, which can hinder performance in key measurement areas like supply chain emissions and infrastructure.
“Every organization has its unique combination of solutions running the enterprise, including ERP,” Herbert explains. She advises customers to consider several questions when evaluating whether an ERP solution aligns well with their sustainability data management needs.
“How comprehensive is the ERP’s scope compared to the total sustainability metrics required? Does the ERP solution encompass all or most necessary data? Is the ERP system utilized as the reporting tool? If not, do the reporting tools in use provide sustainability solutions? Sustainability tools are also emerging from financial planning and analysis, as well as corporate performance management providers, which may differ from the ERP system,” she elaborates.
Herbert also suggests considering dedicated governance, risk, and compliance (GRC) tools for sustainability management, noting that while GRC tools overlap with ERP solutions, they stem from a different focus and are supplied by different vendors. The decision largely hinges on how much an organization relies on its ERP system as an all-encompassing business suite.
“The more integral the ERP suite is to an organization, the more valuable the sustainability solution from their ERP provider is likely to be,” Herbert asserts, adding that customers should also scrutinize the specifics and pricing of these solutions, which vary significantly among vendors.
### Sustainability Reporting Standards
The UK anticipates the adoption of the International Sustainability Standards Board’s (ISSB) S1 and S2 standards next year, culminating in the release of the UK Sustainability Reporting Standards (SRS) in March 2025, which will set the foundation for future regulatory demands.
As PwC highlights in its sustainability reporting guide, navigating a landscape filled with rapidly evolving and potentially overlapping requirements poses significant challenges in identifying and consolidating the necessary data while applying appropriate materiality judgments on what to disclose.
Gurpreet Kaur, a director at PwC UK, observes that “we’ve reached a reporting tipping point where businesses must transition from assessment to action. While much work lies ahead, there’s also substantial potential for gain. Taking action sooner positions companies to embed compliance systems and gain a competitive edge.”
Gerry Finnon, business systems and ERP manager at Audiotonix—a manufacturer and supplier of audio equipment that recently provided mixing desks for Taylor Swift’s tour—highlights the significance of sustainability reporting. With a diverse supplier network, Audiotonix aims for clearer oversight of its carbon impact. “We must report carbon data for all our products and materials. While some suppliers have this information, many do not, posing a challenge for us,” Finnon explained.
He hopes that Epicor’s partnership with Climatiq will facilitate addressing these carbon reporting needs by leveraging existing operational data. This reflects Herbert’s argument about the extent to which customers utilize ERP systems and how integrated sustainability tools could seamlessly enhance their existing frameworks.
Similarly, the BT Group, a UK-based telecommunications giant, has been an SAP customer since 2019. Late last year, BT implemented SAP’s Sustainability Data Exchange (SDX) to collect, trace, and share carbon data throughout its supply chain.
Sarwar Khan, senior manager of global digital sustainability at BT, noted that SDX has provided the capability to “gain an accurate, comprehensive understanding of our Scope 3 emissions.” This integration means that BT can connect supplier carbon data to the products and services that enterprise customers purchase, enabling informed sustainability decisions backed by reliable data.
A significant benefit, Khan added, is that BT’s customers do not need to implement separate carbon accounting platforms for emissions data, fostering transparency and accountability concerning carbon impacts.
“The journey to net zero is fundamentally collaborative, and we aim to embed this principle into our sustainability reporting processes,” said Khan, highlighting the difficulty of tracking supply chain emissions (Scope 3), where data can often be fragmented or siloed. Many businesses rely on estimates or assumptions, lacking the detailed information needed for impactful environmental action.
Khan asserts that SAP SDX is “a perfect fit,” showcasing how ERP providers can deliver significant value to their clients. Recognizing this, ERP suppliers are consistently unveiling new partnerships and modules.
For instance, IFS recently announced a collaboration with PwC to develop a Sustainability Management module for IFS Cloud, slated for release at the end of November. Earlier in March, Oracle introduced Oracle Cloud EPM for Sustainability, designed to help clients measure, manage, and track sustainability initiatives while complying with new reporting standards.
### Business and Sustainability
Lindsey Rowe, head of purpose programs and sustainability at SAP UK and Ireland, states, “the future of business is inextricably linked to sustainability.” She observes that what was once an ethical consideration has evolved into a strategic priority, fostering innovation, cost reduction, and risk mitigation.
This is the crux of the matter. Numerous reports from leading consultancies highlight the financial and strategic advantages of measuring, analyzing, and managing sustainability across operations and supply chains. Organizations frequently cite increased efficiencies and resilience against inflation and fluctuating energy prices. However, disconnects can arise, often due to inadequate communication and relevance in reporting.
Recent findings from EY indicate that improved reporting can better engage companies and attract capital investment. There exists a “trust gap” that necessitates attention; research shows that investors and companies frequently do not share a unified vision regarding long-term sustainable value or whether current reporting provides sufficient insight into that strategy.
The report revealed that “78% of investors believe companies should invest in sustainability issues pertinent to their business, even at the cost of short-term profits. In contrast, only 55% of corporate finance leaders are prepared to adopt this viewpoint.” Furthermore, it noted that “80% of investors contend that many companies fail to effectively articulate the rationale behind long-term sustainability investments, complicating their evaluation of such investments.”
To tackle these challenges, clearer reporting and contextual analysis are essential. For ERP suppliers and their clients, this landscape presents a unique opportunity to strengthen relationships and enhance the value derived from existing data analytics. Customers face the ongoing challenge of selecting the appropriate mix of tools to address their needs, often opting for familiar solutions that build upon their existing foundations.
Yet, minimizing complexity in software tools is only beneficial if comprehensive coverage is provided by current agreements. As the regulatory environment rapidly evolves, organizations must ask themselves how confidently they can rely on their ERP suppliers to keep pace with and address the challenges on the horizon.