Process mining and execution management vendor Celonis has released its Sustainability Report for the full year 2022, which details its plans to achieve Net Zero, to help limit global warming to no more than 1.5 degrees Celsius, as called for in the Paris Agreement.
As we know, companies are under pressure to be more transparent about their carbon emissions, which is forcing a focus on not only operations that are under their control, but also to look at the impact of their extended value chain. Accurate granular data is key, as are new systems and processes that prioritize reducing carbon impact.
None of this is easy and given the competing economic pressures currently gripping organizations, there may be a temptation to let environmental priorities slip. Key to ensuring this doesn’t happen is consistently publishing transparent goals that can be measured, as well as making ‘climate’ a board-level agenda.
We at diginomica have written about this before, but it’s worth reiterating that having a sensible and coherent climate impact strategy can also be good for business. We are increasingly seeing buyers making decisions made based on ‘values’ that extend way beyond price - of which sustainability is a key metric.
Which is why companies such as Celonis should be highlighted for good practice - where they showcase not just the good, but the bad too (areas for improvement), and outline measurable goals for us to monitor progress. This level of transparency will hopefully encourage others to do the same, as well as provide a template for why transparency is effective.
Commenting on the company’s sustainability report, Celonis co-founder and co-CEO Alex Rinke said:
For us, taking action means delivering real change internally, and real value externally. Internally, we invest heavily in achieving net-zero for Celonis, building a diverse and inclusive team, and promoting sustainable operations.
We believe that this moment in history is a moment of opportunity. And that process mining can provide a real solution to some of the world’s biggest problems. Now is the time for the process obsessed. Those who can see the way out, who are up for the challenge. Who can, who will, who are changing the world, one process at a time.
This is challenging
Celonis rightly notes in its report that sustainability is one of the biggest challenges globally, where it states that it is a “complex interplay between companies, society and politics” with no one clear solution.
However, the vendor adds that the actions of any layer will be felt by all. Celonis began thinking about its sustainability initiatives in the form of a ‘Materiality Matrix’, which highlights the most significant opportunities for impact for both its internal and external stakeholders. It has grouped these into four areas, which include:
Climate and environment
Sustainable business execution
Information security, data privacy and competitive behavior
Diversity, equity & inclusion and talent & culture
The sustainability report focuses on all four, but for the purposes of this report we will just be considering the climate, environment and sustainable business execution sections.
Celonis has two groups internally that lead on these agendas and they report directly to the executive team, providing updates on strategy and key performance indicators. Plus, on a quarterly basis, the sustainability team gets feedback from the entire company on whether its approaches are working.
Diving into the data
Celonis’ FY2022 report looks at data from 1st of February 2021 to 31st of January 2022. And for what it’s worth, Celonis has committed to set near and long term science-based targets in line with the Science Based Targets initiative (SBTi) Net Zero Standard, which is considered the most ambitious framework for climate target setting. It aims to submit these official targets to SBTi in 2023.
Celonis transparently shows that between 2020 and 2021 its total emissions in tons CO2e have increased. It provides the data both with procurement (scope 1 to 3) and without procurement (scope 3.01). The graph below illustrates the increase:
In 2020, Celonis emitted 9,336 tCO2e globally over all Scopes, resulting in 9.3 t* per employee based on an average of 1,000 employees. In 2021, its emissions increased to 22,195 tCO2e.
Celonis says that the increase can mainly be attributed to the doubling of its headcount over the year, the opening of several new offices and the re-opening of the economy in 2021 after 2020, which resulted in increased travel and commuting activities.
Breaking it down, Celonis’ total emissions per scope can be thought of as:
- Scope 1 (0.7%) - direct emissions from the company-waned fleet and cooling refrigerants
- Scope 2 (1.0%) - indirect emissions from offices, including electricity and district heating
- Scope 3 (98.3%) - indirect emissions from its value chain, including electricity consumption through website usage and additional electricity consumption through software usage
Breaking this down even further, the report states:
Taking a look at our emissions per scope, it becomes evident that our main emission hotspots are Procurement (67%), Business Travel (11%), and Employee Commuting and Remote Work (11%).
Focusing on impact
Knowing that procurement, business travel and employee commuting and remote work are the company’s biggest pain points when it comes to emissions, Celonis has provided an action plan for each to reduce emissions over the coming years.
For instance, for procurement, Celonis said:
We will segment and prioritize vendors according to their carbon emissions and climate aspiration levels. Then make procurement decisions based on this categorization.
In 2022, we have already set up a Supplier Code of Conduct and Supplier Rating Process and implemented IntegrityNext and Ecovadis to monitor the sustainability performance of our suppliers
Additionally, we are working on enhancing data granularity in calculating our Procurement emissions to help our decision-making in the decarbonization of our supply chain.
For mobility, Celonis is pushing carbon-reducing travel modes, has switched from offering cars to employees to transportation allowance, and has set a goal to reduce its fleet to zero cars by 2030.
On office energy consumption, the report states:
Our goal is to power all of our offices globally with renewable electricity. A large part of this includes sourcing renewable energy sources equivalent to our global electricity consumption. Although offices make up only a small portion of our footprint, the current energy crisis brings energy consumption into focus for any company.
In addition to this, Celonis has said it increased the share of spend on less carbon-intensive servers in 2021 compared to 2022. The chart below illustrates how this has changed:
It’s clear that Celonis has work to do in moving towards its net zero target in 2050, but it’s even more obvious that the company is taking this seriously and not shying away from the challenge. Providing transparent data and measurable objectives is priority number one - and it is asking its employees and customers to hold it accountable.
Equally, Celonis is taking this challenge to the market with its products too - as we highlighted at the end of last year - with the launch of new applications that make carbon reduction decisions easier for its buyers. Process mining and execution management is a section of the market that is uniquely positioned to operationalise sustainability into companies’ processes. And from my conversations with Celonis, it is taking this seriously.
The sustainability report is worth reading in full and kudos to Celonis for its wide-ranging, but granular, approach to tackling carbon emissions. We will be watching this closely and looking to other vendors in the market to follow suit.