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Page 1: Sustainability Report 2011 - SAP · Sustainable consumption is no longer optional, it is a necessity. Much of today’s connectedness has been brought about by the emergence of digital

Sustainability Report 2011

This Report represents transcript of the online only version of the

2011 SAP Sustainability Report

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Contents1 About This Report ..................................................................................................................................... 3

2 Purpose .................................................................................................................................................... 4

2.1 Letter from our Co-CEOs .................................................................................................................. 4

2.2 Our purpose and strategy ................................................................................................................. 5

2.3 Stakeholder engagement .................................................................................................................. 6

2.4 Management Approach to Economic, Environmental, and Social Performance ................................... 8

2.5 2011 Highlights: Year in Review ...................................................................................................... 10

3 Our Progress .......................................................................................................................................... 12

3.1 Overview ........................................................................................................................................ 12

3.2 Employee retention ......................................................................................................................... 13

3.3 Women in management .................................................................................................................. 15

3.4 Business Health Culture Index ........................................................................................................ 17

3.5 Employee engagement ................................................................................................................... 18

3.6 Technology for non-profits .............................................................................................................. 20

3.7 Volunteering hours ......................................................................................................................... 20

3.8 Social investment ........................................................................................................................... 21

3.9 Greenhouse Gas Footprint .............................................................................................................. 21

3.10 Total energy consumed .................................................................................................................. 25

3.11 Renewable energy .......................................................................................................................... 27

3.12 Data center energy ......................................................................................................................... 28

3.13 Carbon abatement programs........................................................................................................... 29

3.14 Customer Satisfaction ..................................................................................................................... 31

3.15 Recognition .................................................................................................................................... 32

4 Empowering Customers .......................................................................................................................... 34

4.1 Overview ........................................................................................................................................ 34

4.2 Energy and Environmental Resource Management.......................................................................... 35

4.3 Sustainable Supply-Chain and Products .......................................................................................... 37

4.4 Operational Risk Management ........................................................................................................ 38

4.5 Sustainable Workforce .................................................................................................................... 39

4.6 Sustainability Reporting and Analytics ............................................................................................. 40

5 Creating Opportunity ............................................................................................................................... 42

6 Gallery of stories ..................................................................................................................................... 44

6.1 Soda Village ................................................................................................................................... 44

6.2 Helping students start their own businesses – A volunteer’s story..................................................... 46

6.3 Ashoka Leading Changemakers...................................................................................................... 47

6.4 A unique perspective from the head of SAP Labs India .................................................................... 48

6.5 Sustainability in Italy ....................................................................................................................... 49

6.6 Network for Teaching Entrepreneurship (NFTE) .............................................................................. 50

7 Explanatory Notes................................................................................................................................... 52

7.1 GRI Index ....................................................................................................................................... 56

7.2 UN Global Compact ........................................................................................................................ 67

7.3 Assurance Report ........................................................................................................................... 69

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1 About This Report

SAP’s report has been prepared in accordance with the Sustainability Reporting Guidelines G3.1 ofthe Global Reporting Initiative (GRI), who also confirmed that the requirements of meeting applicationlevel A+ are met. In addition, the report has been prepared by applying the principles of inclusivity,materiality and responsiveness as defined in the AA1000 Accountability Principles Standard.Furthermore, the Greenhouse Gas footprint data is based on SAP’s own internal criteria and on theGreenhouse Gas Protocol Standard.The report has been independently verified by KPMG Sustainability. Reasonable assurance wasobtained on the 2011 data related to Greenhouse Gas footprint, total energy consumption, renewableenergy, women in management, employee retention, employee engagement and business healthculture index. In addition to that KPMG Sustainability provided limited assurance on whether theremaining information in the report is fairly presented in accordance with the reporting criteria as wellas on the alignment with the principles of inclusivity, materiality and responsiveness as defined in theAA1000 Accountability Principles Standard.The report has been created to provide an integrated overview of SAP’s performance relevant to allstakeholders over the long and short term horizon.The content of the report has been based on our evolving materiality analysis based on continuousstakeholder engagement, re-alignment to strategy development and in pursuance of our strategy tointegrate sustainability into our business model, management systems and corporate strategy.For more information on how we define materiality, click here.

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2 Purpose2.1 Letter from our Co-CEOsDear Stakeholders,As SAP moves into its 40th year, the world looks very different than it did in 1972. More than ever, it isa world of connections. Economies are increasingly dependent upon one another. Companies aretruly global, and operate within broader ecosystems that include partners, customers, and evencompetitors. Populations continue to converge in urban areas – where people are living better, longerlives, yet putting immense strain on resources and our climate. Sustainable consumption is no longeroptional, it is a necessity.Much of today’s connectedness has been brought about by the emergence of digital technologies,which continue to evolve at incredible rates. The amount of data on the planet is doubling every 18months. By 2013, more than 15 billion mobile devices will be connected to the internet. Already, 80percent of new software offerings are available from the cloud, making them easy and efficient to use.And over 1 billion people are linked virtually via social networks. These developments represent animmense opportunity. Technology, in particular innovative software such as ours from SAP, can makesense of the digitized world, helping it run better and more sustainably, while improving people’s lives.That is our vision at SAP, and it forms the foundation of our customer-driven innovation strategy.We executed with excellence against this strategy in 2011. More organizations than ever beforeturned to SAP to help them innovate for growth, optimize the use of resources, and inspire people tobe their best. This led to double-digit growth for us in every quarter. We exceeded market expectationswith full-year non-IFRS software and software-related service revenue growth of 15% (17% atconstant currencies). Full-year non-IFRS operating profit reached €4.71 billion (€4.78 billion atconstant currencies), resulting in a full-year non-IFRS operating margin increase of 1.1 percentagepoints at constant currencies to 33.1%. These results are proof that our strategy of growth throughinnovation is winning in the marketplace. Our innovations are not only creating growth in new productareas, but also driving strong demand for our core applications and analytics software.

Running more sustainablyIn 2011, we continued to strengthen our position as a sustainability leader with our own operations.We moved closer to our goal to reduce total greenhouse gas emissions to our year-2000 level by2020. For the fifth consecutive year, we increased our carbon efficiency – measured in emissionscaused per euro of revenue – from 36 grams per euro in 2010 to 34 grams per euro in 2011. SAP alsoworked closely with the World Resource Institute to develop a new standard for looking at emissionsacross the entire value chain – from the hardware that supports our business to the use of oursoftware. These innovations better position us to help our customers integrate sustainability into theirown strategies and operations, thereby multiplying our impact.Our excellent results in 2011 and our sustainability progress would not be possible without ouremployees. SAP continued to strengthen its focus on leadership and employee development. Over thecourse of the year, programs were introduced to further promote diversity in our workforce as well asdevelop our next generation of leaders and talent. These efforts led to a 9% increase in the EmployeeEngagement Index, which measures employee satisfaction and motivation. We also made progress inreaching our goal of 25% women in leadership by 2017. At the end of 2011, 18.7% of leadershippositions were held by women, compared with 17.8% at the start of the year. Almost 90% of ouremployees strongly believe in SAP’s sustainability focus. This result validates our integration ofsustainability in our core business strategy and the culture of the company.

Investing in SocietyCreating a better run world also means using our strengths as the world’s leading software companyto improve people’s lives. Our social investments focus on supporting, education and emergingentrepreneurs with our talent, technology and capital.

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In 2011, we exceeded our goal to positively impact 1 million lives. Our achievements include 105,000hours of volunteering by our employees, and a range of programs designed to empowerentrepreneurs in scaling their ideas. We enabled 863 nonprofits with our software tools, helping themto improve their operations and enhance their impact.

Building MomentumWe have unprecedented momentum moving into 2012. Our customers value our focus on their needsand the non-disruptive breakthrough innovation we deliver. Organizations are shifting their IT spendingto software from SAP because it helps them run better. We are well-positioned to exceed our goal of€20 billion in total revenue, achieve a 35% non-IFRS operating margin, and reach 1 billion people withbeautiful software in 2015.We look forward to continue working with our customers, industry partners, employees, andshareholders as we help the world run better and improve people’s lives.

Best Regards,Bill McDermott Jim Hagemann SnabeCo-CEO Co-CEOSAP AG SAP AG

2.2 Our purpose and strategy

At SAP, our purpose is to help the world run better and improve people’s lives. In designing ourstrategy to realize this purpose, we have looked at two main areas: sustainability and innovation. Wehave incorporated these core pillars into every aspect of our business: our solutions, our ownoperations and our social investments. These enable us to achieve what many have historicallybelieved to be in opposition -- sustainable growth and profitability.We start with ourselves. Several years ago, we established metrics to measure our progress, from ourreduction of carbon emissions to our increased engagement of employees. These indicators reflect anexpansive view of sustainability because we believe that to create change, we must address a widerange of issues, including our workplace culture and how we develop our talent.We continue to work toward a goal of reducing our carbon emissions to their 2000 level by 2020, evenas our business continues to grow. We have also set a target to increase the percentage of women inmanagement at SAP to 25% (from the current 18.7%) by 2017, a reflection of our belief thatsustainability demands a diverse workforce. And we have committed to positively impacting 1 millionlives in countries around the world through our talent, technology and capital. Our strategy is shapedby our commitment to thinking not just about short-term profitability, but long-term impacts.

Integrating sustainability into our business strategyOur focus on sustainability and innovation allows us to seize new opportunities. We see enormousopportunity in our core business and how we serve our customers. Ultimately, our vision translates toimproving people’s lives. For example, on top of managing and analyzing information, our softwareenables companies to save energy and resources. It helps keep toxic chemicals out of a child’s toy,and reduces the risk of factory accidents.In our report last year, we spoke of an important shift – instead of developing a sustainability strategy,we are focused on making our corporate strategy sustainable. We are well positioned to do this, asour core strength has always been to manage resources. Now we are managing resources that areincreasingly constrained, such as energy.Accordingly, we are driving sustainability by innovating in each of our five key categories: applications,analytics, mobile, cloud, and database and technology. One example is our Manufacturing Integrationand Intelligence application, which provides greater visibility into operations in such critical areas assafety, energy usage, unit performance, and inventory, thereby improving companies’ performanceand producing significant cost savings. To read more about our solutions, please see our CEOs’ letter.

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Our solutions are helping our customers integrate sustainability into their own strategies andoperations, so that they can become more profitable while creating positive change. As they evolvetheir practices, they help us realize our own vision and multiply our impact.

The innovation linkOur ability to deliver on our strategy lies with our ability to innovate. Tackling the world’s most complexchallenges demands that we approach problems in new ways. We view innovation as the critical linkto becoming more sustainable. It keeps us continually improving what we offer our customers. Evensetting targets in such areas as diversity and retention reflects a new way of thinking through asustainability lens. To us, attracting and keeping the best talent is fundamental to our ability to seethings differently, listen to shifting customer needs, and continually iterate and improve on what wehave done before.We also recognize the need to be innovative in how we approach creating change. Reaching ourgoals is not straightforward and won’t happen overnight. It involves the complex work of shiftingpeople’s habits and our own business culture. For this reason, a key part of our strategy is to developleaders who can re-imagine the future and inspire others. We aim for every employee at SAP to feel aconnection to our vision, and we are fostering greater collaboration. We are also working to create aworkplace that helps people reach their creative potential, so that they can contribute in new ways andfuel our innovation. Most of all, we view the engagement of our employees, customers, partners andothers in co-innovation as the key to transformation. Our engagement strategy is integral to the designof this report.Whether we are finding new ways to collaborate or enhancing our employees’ health and productivity,we believe this transformation is not just possible, but very much underway at SAP, and we lookforward to sharing our ideas – and hearing yours – as we continue to put our strategy into practice.

2.3 Stakeholder engagement and materialityOur mission is to help the world run better and the first step in this journey is always stakeholderengagement. Engagement helps us understand the technology needs of stakeholders and where thegreatest opportunities for collaboration and co-innovation lie as well. It also helps us understandstakeholder perception on where SAP’s corporate responsibilities lie.

Our stakeholders include:

Employees - Further improving employee engagement has been a high strategic priority for thecompany in 2011. Employees are surveyed annually with regular pulse check surveys throughout theyear. SAP’s supervisory board is comprised of 50% employee representative and managementregularly engages with employee works councils.

Customers - Engaging our customers to ensure their success is the major undertaking of ourbusiness. In addition to the sales engagement cycle we also engage customers through manydifferent industry value networks, co innovation projects and customer councils. We also engage withcustomer organized user groups throughout the world.

Investors - Our investor relations team engages continuously with the investment community throughone to one briefings, investor road shows, quarterly earnings calls and the annual general meeting.Our engagements also include the sustainable investment community.

Partners & suppliers - Key to SAPs growth over the years has been our commitment to collaborationand cooperation with the partner ecosystem. Our partners help us to co innovate solutions, implementsolutions at the customer site and support our operations. Perhaps the spirit of cooperation andengagement is best exemplified by the SAP Community Network platform.

These stakeholders have a direct stake in our business model.

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CEO sustainability advisory panel - The CEO sustainability advisory panel met twice in 2011 with COCEO Jim Hagemann Snabe and other leaders. The panel reviewed SAP’s sustainability performanceand was briefed on our product strategy.

Government - SAP is regularly engaged with government agencies and standards development inmajor markets throughout the world.

Industry Analysts and Influencers - SAP’s Analyst Relations teams engages continuously with theanalyst community. In 2011 alone there were more than 100 dedicated engagement on oursustainability strategy alone.

NGOs - We regularly engage with many NGOs but we have a deeper relationship with two inparticular. SAP Sustainability Performance Management solution for sustainability reporting containsthe GRI framework content licensed by GRI. As part of the terms of licensing the GRI inspects oursoftware to validate the framework is correctly applied.

SAP is also a technology partner to the Carbon Disclosure Project to assist CDP to offer reporterservices such as bench mark analytics and dedicated software for carbon reporting.

These stakeholder groups have a more indirect stakeholding in our business but have significantinfluence in our industry and society.

Issue identification

Through continuous stakeholder feedback, strategy review and megatrend scanning we identified 12major social issues, 6 major environmental issues and 12 major economic issues.

Prioritization Criteria

As we prioritize issues for further consideration we begin by setting criteria which help us to maintainconsistency and continuity, to validate the issues as of continuing relevance and we also test ourreadiness to integrate the potential management of the issue into our evolving strategy andmanagement systems.

Performance Criteria

Next we test the issue against performance criteria which indicates how attention to this issue can alsolead to improved strategic organisational performance.

Response threshold

The response thresholds help us assess organisational sensitivity and responsiveness to the issuesraised.

Materiality Assessment

At the last step we assess materiality and review periodically. Our assessment this year, building onprevious analysis and reflects the changing strategy and profile of our company. We continue toacknowledge the dual responsibility to innovate new solutions for sustainability and strive to be acorporate role model for sustainability performance. Our vision is to help the world run better and ourgrowth strategy to deliver the vision includes continues leadership in our core applications and fastexpansion in the areas of analytics, mobile and cloud. This is supported by our game changingdevelopment in in-memory computing and new database design. The combination of real, real timeenabled by HANA, the expanded insight delivered through analytics and the proliferation & reachenabled by the cloud and mobile adds up to a fundamental shift in technology. The combination inmemory computing, cloud and mobile – for example – is already revolutionizing energy markets byenabling the smart grid.

Our organisational development requirements necessary to deliver this strategy centre aroundemployee management towards strategic human capital development and innovation managementtowards intellectual capital development.

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As enterprise data begins to proliferate in the cloud and on mobile devices we expect security &privacy to a high priority for stakeholders.

The energy and emissions intensity of our solutions relative to our ability to enable customerreductions will continue to be of concern as we pursue our current business model and strategy.

Finally, as our business changes to adapt to fast changing market conditions it is more important tohold on to what always remains constant – our values – which guides our business conduct.

2.4 Management Approach to Economic, Environmental, and Social PerformanceSustainability Governance

Sustainability is an integral part of our corporate strategy. Our dedicated sustainability organization isled by our Chief Sustainability Officer (CSO) Peter Graf. Reporting directly to both Bill McDermott andJim Hagemann Snabe, co-CEOs and members of the SAP Executive Board, Graf is responsible forintegrating sustainability across all of our lines of business. The sustainability organization monitorsour own environmental, social, and economic performance, such as product and processresponsibility, human rights, labor practices as well as work place health and safety. A key focus is thedevelopment of technology solutions to help customers manage the complete spectrum of theirsustainability activities across the entire supply chain.

The sustainability organization is composed of the following members:

· A core team of internal sustainability experts who define and execute SAP’s sustainabilitystrategy

· The sustainability operations team which is responsible for SAP’s sustainability performance· Sustainability partner management· Development and solution management professionals for SAP sustainability solutions· Sustainability marketing professionals· Global and regional field operations pre-sale specialists for SAP sustainability solutions· Global services and support personnel· Sustainability communications and stakeholder engagement specialists· Green IT experts· The corporate social responsibility team which is responsible for managing our engagement in

society

In addition, dedicated staff is responsible for integrating sustainability into their lines of business like in

· Procurement (sustainability embedded in procurement processes like supplier evaluation)· HR (health, diversity, sustainability in key HR processes like leadership development)· IT Operations (environmental and social aspects considered in employees’ IT working

environment) and data centers· Facility Management (environmental building design)· Labs Network (sustainability programs at specific locations)

Sustainability Council

To drive our overall sustainability efforts, we established a Sustainability Council as our internalsustainability governance body. SAP Executive Board members serve on the council, along with aselection of senior representatives from different departments and functions. The council providesguidance, decides on new projects, and approves budget allocations.

Sustainability Policies

Our commitments towards making SAP a more sustainable company are defined in our Policies.

Sustainability Change Management

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Transforming SAP into a role model of a sustainable company requires adapting a new way of thinkingand altering entrenched behaviors. To engage all employees worldwide on the topic of sustainability,we developed a people- and processed-based change management methodology. It combinesorganizational guidelines, modified working processes, and educational sessions. Further, themethodology comprises four relevant components of successful transformation and changemanagement: First, we focus on transparency and awareness creation for a specific topic – oftenrelated to process changes or behavior changes. Second, we keep in mind that the benefits of changeneed to be relevant for the organization and the affected areas and employees. As such, incentivesare part of our overall consideration. Third, we ensure that the relevant behavior or process is role-modeled within SAP, be it by the leadership or individual experience of employees and departments.Finally, we manage transformation and change by ensuring we have the right processes and toolsready to support the change.

As an example, employees learn about facts and figures related to sustainability through dedicatedfocus weeks dealing with a specific subject matters like travel, commuting, or health – to name a few.There are dashboards accessible to every employee bringing to them information about the currentsituation around printing, energy consumption, and commuting. All employees are continuously invitedto share and learn ways of reducing their carbon footprint at the office, be it through the adoption ofnew behaviors, the use of alternative procedures and acceptance of newly established tools andfunctionalities, e.g. the implementation of a centralized power management functionality on everyemployee's computer.

In order to display SAP’s engagement in sustainability on all levels, we conducted the “seniorleadership role models program” in 2011. The program shows that sustainable leadership ensureslong-term success, employee engagement and satisfaction. It proves that taking sustainabilityconsiderations into account makes good leaders to better leaders. Employee health, talentdevelopment, SAP’s values and code of conduct are some of the ingredients that are key tosuccessful sustainable leadership. The program has significantly contributed to embeddingsustainability aspects and decision-making into the behavior of SAP’s leaders who live sustainabilityvalues. In turn, employees experience that our leaders are not only about KPIs and metrics, butespecially about making SAP a great place to work that values its people and cares for their mentaland physical health as well as for their work-life balance, and their career development.

Sustainability Champions Network

A global network of about 110 SAP Sustainability Champions - representing all regions and lines ofbusiness - fuels the execution of our sustainability strategy. Receiving special enablement andsupport, our SAP Sustainability Champions dedicate 10% of their work time to promoting sustainabilitythroughout our organization. By acting as role models and multipliers they give sustainability localrelevance and applicability. The Sustainability Champions network encourages employee involvementand promotes behavioral changes across all offices by:

· Localizing our global strategy and breaking it down into relevant pieces for the localorganization

· Giving sustainability local and regional relevance by initiating targeted campaigns· Raising awareness for SAP’s sustainability focus areas and strategy· Creating transparency on focus areas by educating employees in how everyone can

individually contribute to sustainability· Involving existing global employee engagement groups, activities, and ideas, while also

initiating local activities· Sharing global sustainability best practices for local adaptation· Capturing different geographic, cultural, and line-of-business impacts on sustainability issues· Acting as point of contact to SAP employees for all sustainability matters· Facilitating and consolidating discussions around sustainability topics on global, regional, and

local level

By combining a strong governance model that is backed by senior and local leadership and employeeengagement, we can make our daily operations more sustainable.

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Sustainable Procurement

We believe that we can influence the quality and impact of a product or service throughout its entirelifecycle by adopting sustainable procurement practices. For this reason, the SAP Global ProcurementOrganization (GPO) has dedicated staff to evaluate the economic, ecological, and social trade-offs ofsourcing decisions, to incorporate the sustainability procurement practices into the DNA of the GPOand to contribute to the sustainability objectives.

Our GPO policy contains sustainability criteria and purchasing ethics. We created a sustainabilityterms and conditions annex for the global procurement master agreement template. This sustainabilityterms and conditions annex includes the assertion of the right to receive information from suppliers onlabor rights, health, safety, environmental protection, and other key sustainability issues.

In addition, we created a Supplier Code of Conduct. The Code is based on international standards thatare relevant for our industry like EICC or the UN Global Compact. Now, new vendors are requested toacknowledge and sign the Supplier Code of Conduct. In 2011, we redesigned our Supplier Code ofConduct to specify enforcement, termination, schedules, and audits.

In 2011, for the 2nd time, we sent out a specific sustainability questionnaire to evaluate thesustainability performance of existing suppliers. By the end of 2011, more than 200 of our topsuppliers, with whom we spend an average per supplier of more than €1,000,000, and high-risksuppliers received the questionnaire.

Regions Sent by end of 2011 Received by end of 2011 Response rateEMEA 100 30 30,0APJ 25 4 16,0Americas 82 11 13,4Total 207 45 21,7

Sent Received Response rateSuppliers spend over 50M 1 1 100Suppliers spend 10M - 50M 12 8 66,6Suppliers spend 2M - 10M 70 19 27,1Suppliers spend 1M - 2M 115 14 12,1Suppliers spend under 1M 9 3 33,3

In the long term, we are planning to integrate the sustainability assessment of suppliers into the futuresupplier management program. To support these goals, we created an electronic library of documentsfor procurement.

Local Procurement

We procure our goods and services to a large degree from local businesses in our largest markets. Asa result of today’s global economy, we recognize that some of our suppliers manufacture parts orentire products in facilities outside of the country where we originated the purchase. While the localsuppliers are still the primary beneficiary of our “buy local” policy, some of the financial gains areshared with the economies where the production of the ordered supplies is taking place.

2.5 2011 Highlights: Year in ReviewMarking the fifth year of our sustainability reporting, 2011 featured a number of importantdevelopments. These spanned everything from our carbon accounting to employee engagement towomen in management. This year’s report also reflects heightened emphasis on engagement with ourstakeholders through a range of initiatives as well as the writing of the report itself.

Highlights from 2011 include:

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· We continued to stay on track to reach our goal to reduce our carbon emissions to their year-2000 level by 2020. While our actual emissions rose over 2010, reflecting growth in ourbusiness, they still fell below our target for the year.

· For the first time, we measured all of our scope 3 emissions, working closely to develop a newstandard with the World Resources Institute. We now have a much clearer picture of both ourupstream and downstream emissions. In addition to embarking on co-innovation with oursuppliers to reduce their emissions, we have launched a product footprint strategy to addressthe emissions caused by the use of our products.

· We set an ambitious goal to increase the number of women in management at SAP to 25% by2017. We began making progress toward this goal in 2011, with the percentage of women inmanagement increasing from 17.8% at the beginning of the year to 18.7% by the end.

· Implementing our new People Strategy, we achieved a large increase in our employeeengagement score, achieving our highest score since 2006. What’s more, nearly 90% of ouremployees said that it was critical for SAP to pursue sustainability.

· Our volunteer hours nearly doubled, exceeding our goal for the year, as our employees spentmore than 100,000 hours in communities around the world.

· We conducted our first two Leaders’ Quests, in which members of our senior leadership teamsventured away from their offices to experience places and people who offer new perspectiveson tackling the world’s challenges. Reflecting our emphasis on cultivating sustainableleadership, additional Quest trips are planned for 2012.

· We moved much further on our journey toward integrated reporting, with our annual reportnow combining financial and non-financial data. This integration extends far beyond our reportto the ongoing process of embedding sustainability into every part of SAP’s business.

· This year’s report focuses on the engagement of all of our stakeholders, with new tools andopportunities to share ideas and provide feedback – from social media options on every pageto a “What matters to you?” feature that asks how visitors view particular topics.

· We had our best year ever in terms of our financial sustainability, achieving double-digitgrowth in every quarter. Our SAP HANA platform, which often increases computing speeds bya factor of 1,000 or more, became the fastest-growing product in our history, generatingrevenues of more than €160 million for the year.

As we move into 2012, we have set ambitious goals to continue to innovate and improve oursustainable performance. While we are proud of our achievements in 2011, we also recognize that wehave more work to do. We are confronting a range of challenges, from increasing our efficiency as ourbusiness grows to fostering cultural change. Most of all, we are working to serve our customers asthey continue on their own sustainability journeys.Our own journey is still unfolding, and we hope you will join us as we continue to move forward.

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3 Our Progress3.1 Overview

Improving our own sustainable performance gives us insight that will help our customers do the same.We have identified key metrics that cover three main areas of impact: environmental, social andeconomic. Each is critical as we work to create a sustainable future for SAP, our customers andsociety.Clicking on the bars below not only reveals our results, but also provides an explanation of how eachmetric is connected to our overall business strategy: What do employee engagement and health haveto do with innovation? Why are we including them in this report? How does sustainability drivefinancial success? The answers reveal how sustainability is becoming integrated into every part of ourcompany – and, more broadly, how it is transforming the world of business.

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3.2 Employee retention

One of the hallmarks of sustainability is that it entails long-term thinking. This principle extends to howwe work to attract and retain talent. In order to reach our goals, we must hold onto the people whomake our success possible. Their ideas, passion and commitment fuel our innovation and help ensureour long-term, sustainable future.To reflect these principles, we have moved away from the indicator “employee turnover” and insteadare focusing on “retention.” Retention better expresses what we are working to achieve: not justmeasuring turnover, but actively managing the retention of talent.In 2011 our retention rate was 93%, consistent with 2010 (In 2009, our retention rate was 94%.). Wedefine "retention" as a ratio that puts emphasis on employee-initiated turnover - in other words, we areseeking to measure how many employees choose to leave SAP voluntarily. We derive our retentionrate by starting with our average number of employees in a given year and subtracting employee-initiated turnover. Then we divide this figure by our average number of employees to get our retentionrate. As opposed to keeping a low turnover rate - which companies generally seek to do - we areaiming to keep our retention rate high. A higher retention rate signifies that fewer employees arechoosing to leave SAP.Managed Retention

2011 2010 2009 2008 2007EMEA 95% 96% 96% 94% 94%AMERICAS 92% 92% 92% 90% 90%APJ 88% 86% 91% 88% 86%Total 93% 93% 94% 92% 92%

Total employee turnover

2011 2010 2009 2008 2007EMEA 6% 6% 8% 8% 7%AMERICAS 10% 10% 17% 16% 12%APJ 13% 15% 13% 14% 16%Total 9% 9% 11% 11% 10%

Focusing on our work environment to keep retention highOur approach to keeping retention high aligns with our efforts to engage employees, providing themwith opportunities to develop and reach their potential. In 2011 we continued to implement our "PeopleStrategy," which focuses on a range of areas related to SAP’s work environment, such as enhancedleadership and career development.Leadership development

Developing employees’ potential often comes down to helping them evolve into leadership roles.SAP’s leadership competencies and 360° Feedback form the basis for SAP’s leadership development.

Our well established “Managing People@SAP” program cultivates skills both in managing individualsand teams. The “Leading@SAP” program focuses on deepening the management perspective, interms of guiding both the organization and other individuals. A new program called “LeadershipFoundations” for newly hired managers or employees in the management career track is currentlybeing designed.

Other initiativesOne example is our expert career path, which is premised on the idea that having influence withinSAP is not limited to traditional managers. In the past, promotions at SAP tended to center around aperson becoming a project manager or a manager of people. Our expert designation recognizes

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employees for specialized skills in such areas as software development or marketing. We are nowexpanding and strengthening our expert career path, because we recognize that moving experts intoleadership roles will be key to our ability to stay on top of trends and drive future innovation.We have rolled out other new programs and opportunities, including:

· Global on-boarding for new employees to create a consistent learning experience to helpindividuals to quickly become productive.

· A new career tool called "Pathfinder," released in January 2011. An interactive tool to navigateSAP career landscape, Pathfinder is designed to create more transparency about careeropportunities at the company.

· Career development workshops for employees to create a career plan, and follow-upcoordination with managers.

· SMARTIES which are half-day onsite workshops designed to help you develop a variety ofkey skills and competencies (e.g. communication, presentation, team work, meetingfacilitation, problem solving, etc.).

· Virtual Learning Series for Employees and Leaders containing a series of programs designedto support employees and leaders at SAP in their professional growth and development.

· Knowledge Centers that provide fast and easy to use access to online courses, books andvideos around six business-relevant topics: fundamental skills, leadership fundamentals,leadership, sales, project management, and Java.

· Global approach to language skill development is currently being piloted with severalemployees and planned to be rolled out globally in March 2012.

· Expert Career Program to grow and develop the Expert Career Role and strengthen the wholefunctional career track.

Throughout all of our programs, we seek to respond to our employees’ shifting needs, and werecognize that these may vary in different regions of the world, as well as among differentdemographics. Some of these regional differences present challenges. China and India, for example,are facing intense competition for talent as businesses expand in those countries.

Working to meet employee needs throughout the worldIn 2012 and beyond, we will continue to focus on understanding what employees most value abouttheir work experience. Meeting their needs entails thinking about a mix of factors, from salary,flexibility, and benefit packages to opportunities for growth and career satisfaction. We are committedto listening to our employees and prospective employees to continually hone our approach toattracting and keeping great talent.In addition, we have been evolving our thinking about how we can track and manage retention evenmore effectively. We have determined that an overall figure may not provide as much insight aslooking at such metrics as retention among employees who have recently joined SAP. For this reason,in the future, we will give more weight to measuring and managing retention of critical employeegroups such as new hires or top performers, which will help us stay competitive and gain a deeperunderstanding of emerging employee preferences.Return to work and retention rates after parental leave, by gender

SAP endeavors to make it easier for employees to coordinate their family and career and open upcareer paths, thus laying the foundations for equal opportunities at work.

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For example, at our headquarters in Germany we support employees (both men and women) whodecide for parental leave with a range of special benefits. This support continues when they return towork after parental leave. We offer them:

· Flexible working hours· Part-time work· Child care facilities· Holiday programs for children· Parent-child offices· Advisory services for parents

Germany only 2011 2010 2009Female employees onparental leave- Thereof workingpart-time

926

-234

731

-283

778

-302

Male employees onparental leave-Thereof working part-time

485

-31

160

-59

157

-47

Female managers onparental leave-Thereof working part-time

6

-0

2

-2

9

-3

Male managers onparental leave-Thereof working part-time

52

-3

9

-2

8

-3

For more information on our employee related data, see our Explanatory Notes.Continued employability and managing career endings

SAP has dedicated staff for workforce demographics. The demographics expert continuously works onimproving processes and designing programs for:

· Sustaining employability as long as possible;· Managing career endings in a flexible way (e.g. part-time options);· Keeping employees connected with the company after retirement.

SAP also participates in external research studies and networks on workforce demographics to shareand learn about best practices in this field.

3.3 Women in management

A diverse workforce is critical to our progress in sustainability, as well as our overall performance. Ourfuture hinges on our ability to innovate, and innovation stems from bringing together and valuingdifferent points of view.Diversity enhances how we solve complex problems, whether these involve our own operations or ourefforts to create environmental and social change. What’s more, a diverse workforce more accuratelyreflects our customers' workforce, enhancing our ability to meet their needs.Diversity at SAP encompasses culture, race, ethnicity, age, gender, sexual orientation, gender identityor expression, and physical or mental ability. Currently, more than 120 nationalities are employed atSAP worldwide.

Working to increase the percentage of female managers at SAP

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A key area of focus for us – and a model for how we approach diversity more broadly – is women inmanagement. Historically, women have been under-represented in scientific and technical fields, andwe have been seeking to increase their presence at SAP. In 2011 we made a formal commitment tomaking SAP one of the leading places where women want to come to build their careers. Namely, theSAP Executive Board announced the goal to increase the number of women in management positionsfrom 17.8% in 2010 to 25% by 2017.We are closely monitoring our progress in reaching our 25% goal. At the start of 2011, 17.8% of ourmanagers were women; by the end of the year, this number had increased to 18.7 %. This resultkeeps us on track to meet our 2017 goal. In 2010, 17.8% of our managers were women, compared to17.7% in 2009.

2007 2008 2009 2010 2011Women managing managers (%) 14.7 14.6 14.9 13.7 13.4Women managing teams (%) 19.8 19.9 19.0 19.5 20.5Total female managers (%) 18.2 18.1 17.7 17.8 18.7

In recognition of the importance of our new commitment, we held a special panel last fall on our 25%goal at our annual Diversity Days. Sponsored by the executive women of the Business Women’sNetwork in Germany, the panel included our co-CEO Jim Hagemann Snabe, along with the Germanminister of justice and other senior business representatives. Attended by hundreds of employees, theevent candidly addressed the challenges that lie behind the statistics, as women navigate full lives andcareers, and how to approach the complex, often subtle issues that can get in the way of progress.In 2011 we looked more deeply into this complexity through research projects and focus groups,began open dialogue about women’s experience in the workplace, and took a variety of tangible stepstoward change. For example, we worked with the Anita Borg Institute for Women and Technology tocomplete a focus-group project with women in our office in Palo Alto. They spoke openly about boththeir opportunities and the challenges they face, leading to recommendations about how to enhancetheir networks, role models, and sponsorship within SAP.While we have more work to do to reach our 25% goal, our progress in 2011 included the addition oftwo women managers as new corporate officers. These women are in a position to influence ourfuture direction by driving company-wide initiatives on behalf of the SAP Executive Board.

Cultivating diversity in all dimensions to enhance innovation and performanceOur focus on increasing women in management is part of our broader strategy to cultivate diversity inall dimensions throughout SAP.Diversity was showcased in the fall of 2011, again at our annual Global Diversity Days - which span upto a full week in our offices around the world, involving more than 10,000 employees at 28 offices in 19countries including India, Ireland, Hungary, China and Brazil. This year’s event focus evolved fromprevious years in specifically highlighting the relationship between diversity and innovation.Beyond this company-wide event, diversity continued to evolve in other ways in the past year:

· Expanding beyond our North American Diversity Advisory Council, a similar council launchedin Latin America.

· We celebrated the 10th anniversary of our Homo SAPiens@SAP employee network, whichsupports our lesbian, gay, bisexual, and transgender community, and we were a sponsor ofthe annual meeting of the Alliance Against Homophobia in Berlin.

· A number of our women managers attended the Grace Hopper Celebration of Women inComputing conference in Portland, Oregon.

· Our SAP Labs India location was a "Gold Sponsor" of that conference in India in December2011.

· Finally, we continued to offer workshops on cross-cultural teamwork in our offices across theglobe.

Looking ahead: Developing a strategy to meet our long term goal

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Reaching our long-term goal for women in management is complex and defies overnight solutions.Despite our focus on this area, we continue to see a discrepancy between the number of women atSAP overall and the number of women who are in management positions – 30% compared to 18.7%.We are addressing this challenge by focusing on more than individual programs but what it takes tocreate cultural change – namely, an emphasis on listening, open discussion, and investing for thelong-term. In this sense, expanding the presence of women in management parallels our other effortsin sustainability, all of which involve examining our practices, thinking in new ways, and involvingpeople at every level of our company to work toward change.Our specific initiatives in 2012 include:

· SAP Executive Board members will produce targets for women in management positions intheir respective Board areas.

· We will continue to emphasize our recruitment, retention, promotion, and mentoring of womenthroughout SAP. Specifically, we are designing ways to enhance women’s networks andbetter connect them with promotional opportunities. We are also working on enhancing ourstrategy to ensure that these efforts create measurable progress.

· We are introducing gender intelligence workshops for managers globally. Designed for jointparticipation of men and women, these workshops examine how to get past genderassumptions to promote greater inclusiveness, communication, and collaboration.

· We are working to build a pipeline of new talent, recognizing the need to lay the groundworkfor change beyond SAP. For example, we are sponsors of the Dare 2B Digital conference inSan Francisco, which seeks to ignite interest in technology careers for young women ingrades 7 to 10. In Germany, we support Girls’ Day, in which companies and universities withtechnical departments open their doors to young women to expose them to possibilities for afuture in IT and other technical areas.

And we intend to continue our commitment to cultivating diversity in all of its dimensions at SAP – bytalking about it, celebrating it, and continuing to treat it as one of our strategic priorities.For more information on our employee related data, see our Explanatory Notes.

3.4 Business Health Culture Index

At SAP, we see a profound link between sustainability and health. We view employees as our mostimportant asset. And while employees’ physical well-being clearly matters, our definition of healthgoes much further. To us, it also includes the health of our workplace – namely, how our employeesfeel at work and about work: Do they have the opportunity to thrive and develop? Is their workengaging, and do they feel valued and appreciated? Does the overall environment at SAP allow themto achieve work-life balance and reach their creative potential?In a nutshell: Is SAP a healthy company in the sense of our future prospects for prosperity andgrowth?Health in the broadest sense of the word supports innovation – which is key to our company's futureand creating a more sustainable world. Sustainability requires new approaches to solving problems. Itis about designing creative solutions for our customers so that they can run their businesses moreefficiently, with attention to the limits on natural resources. It means coming up with new ways toaddress inequities in communities around the world.Pursuing all these goals requires a healthy leadership culture and work environment that supports thehighest levels of engagement, creativity, and productivity. For this reason, our Business Health CultureIndex (BHCI) is based on nine questions from our employee survey that assess how people feel aboutboth their personal well-being and SAP's work environment, including leadership throughout ourbusiness. It measures our success in developing a healthy work culture to sustain long-termemployability and high performance in supporting our ambitious business goals.

Surpassing our health goals for 2011

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Our goal called for achieving a BHCI score of greater than 60%. In 2011, our overall score rose by 6points to a total of 65%, exceeding our target as well as our score in 2010 of 59%. (Our score in 2009was 61%.) We attribute much of the positive change to our People Strategy, which put renewedemphasis on creating positive work conditions. For example, we have enhanced our approach torecognizing employees and cultivating high-functioning teams, even as people face the time pressuresthat are a fact of life in the technology business.We also continued to offer programs that support our broad approach to health at SAP. For example,on the most basic level, we offer massages to employees to alleviate stress. On the next level, weprovide stress management workshops, so people can better achieve work/life balance. On thehighest level, we work to enhance leadership awareness - for example, by providing leadershiptraining for even greater personal and professional development.In addition, in 2011 we continued to run a host of programs focused on health in numerous locationsthroughout the world. Some good practices include our IN$ent for Wellness program in the UnitedStates, which provides rewards when employees take positive steps to improve their health profile; theHealth for Life program in India, with easy access to annual health checks onsite and psychologicalcounseling remotely; and a wide range of health prevention programs in Germany, such as visual andhearing tests, lung volume check, skin cancer screening and so on.We also added a segment on health to our Innovation Days, which are an opportunity for employeesat 18 different locations throughout SAP to take time away from daily pressures to explore creativeideas. In 2011, we included segments that directly addressed how health and innovation are linked.

Addressing the ongoing challenge of stress and work/life balanceOur results also indicated where we still face health challenges. We did not see as much improvementin measures of work/life balance and stress management as we did in other areas.We will be monitoring these issues closely and continuing to look for solutions, including ideas forenhancing our work environment. One important step forward is a decision by the SAP ExecutiveBoard at the end of 2011 to adopt our broad framework for health management throughout SAP. Whatthis means is that SAP's framework follows the United Nations World Health Organization's definitionof health as "a state of complete physical, mental and social well-being and not merely the absence ofdisease or infirmity," and is seen as the sum of concerted actions towards ensuring healthy mindsetand behaviors on an individual and organizational level.This framework will be incorporated into our leadership training, development of talent, and overallapproach to managing our business. It is aimed at supporting our employees and fueling innovation.Our unified approach will enable those who run our health and leadership programs worldwide toshare models of good practice. By working collectively around clearly understood standards, we are ina better position to turn our vision into a reality.In 2012 and beyond, we will continue to work to realize our objectives.

3.5 Employee engagement

Our employees turn our vision for SAP into reality - they enable our long-term success as a companyand play a critical role in helping us work toward a more sustainable world. Our employees are thesource of our innovation. They create our products and help our customers run their businessesbetter. At the same time, they have helped us save energy, reduce our emissions, and use technologyto create economic opportunity for people throughout the world.By the end of December 2011, SAP employed more than 55,000 employees.

CalendarYear

Org Unit* Total number ofemployees (in full-timeequivalents, FTE)

Employees workingfull time (in headcount, HC)**

Employees workingpart-time (in headcount, HC)**

2009 APJ 10,248 10,227 30Americas 11,974 11,880 115

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EMEA 25,362 23,293 2,892Global 47,584 45,400 3,037

2010 APJ 11,741 11,712 42Americas 14,783 14,703 110EMEA 26,989 25,016 2,867Global 53,513 51,431 3,019

2011 APJ 12,591.7 11,527 49Americas 15,473.5 13,692 89EMEA 27,699.8 24,939 2,910Global 55,765 50,158 3,048

CalendarYear

Gender Total number ofemployees (in full-timeequivalents, FTE)**

Employees working fulltime (in head count,HC)**

Employees workingpart-time (in headcount, HC)**

2009 Men 33,998.7 33,461 694Women 13,457.6 12,103 2,052

2010 Men 35,353.6 34,816 696Women 14,067.6 12,622 2,174

2011 Men 37,342.7 36,820 683Women 14,907.5 13,336 2,365

* APJ: Asia Pacific Japan; EMEA: Europe, Middle East, Africa

** Data does not cover Sybase

We achieved our highest employee engagement scores in five yearsOur long-term target is to achieve an employee engagement score of 82% by 2015. In a sign of howimportant we view engagement to the future of SAP, in 2011, we made it one of four company-widestrategic objectives, in addition to customer success, margin and revenue.We measure engagement using our employee survey, which was taken by 70% of our workforce in2011. Our results provided a strong indication that our efforts to further increase employeeengagement have gained traction. Our overall engagement score rose to 77% in 2011, a nine-pointrise over 2010 and the highest we have achieved since 2006. (In 2009 our score was 69%) This resultfar exceeded our goal of 70% for the year, and puts us among the top 10% of companies that docomparable surveys. Even more important, this score reveals positive shifts in a number of areaswithin SAP.Specifically, 88% of those who responded to our employee survey in 2011 said they are proud to workat SAP, compared to 83% in 2010. In addition, 87% said they believe firmly in SAP’s goals andobjectives, and 68% said they are satisfied with their career development opportunities, a 12%increase over 2010. In addition, trust with leadership rose significantly, as did confidence in thesuccess of our products and services. Finally, 72% of our employees said that they were confident inour strategy and direction in 2011, a 9% increase over 2010.We also documented important shifts in how our employees view sustainability and its importance toSAP. For example, 89% of our employees agreed in 2011 that “it is important for SAP to pursuesustainability,“ a 12% increase over 2009. Employees also indicated that they see greater connectionsbetween their own actions and our efforts in sustainability. Our survey showed that 64% agree that “Iactively contribute to SAP’s sustainability goals,” an increase of 17% since 2009.

Our People Strategy brought benefits companywideWe attribute many of these gains to the implementation of our new People Strategy. This strategy ispart of our overall corporate strategy, with a special focus on further developing our leaders andattracting, developing, and retaining the best talent in the market. These efforts came to life in 2011through the strong commitment of our employees, who contributed insights, time, and inspiration todriving engagement.

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In the future, we will continue to look closely at work/life balance and other issuesDespite the gains to our engagement scores, we still have more work to do. For example, ouremployees indicated that achieving work/life balance and reducing stress remain challenges. And wesee opportunities to define sustainability and its role at SAP even more clearly – such as conveyinghow making our company more sustainable allows us to better serve our customers and enhance ourinnovation.In 2012, we will continue to work toward our goal of achieving an engagement score of 82% by 2015.One initiative calls for all managers throughout SAP to identify an area of focus in the coming year thatwill enhance the employee engagement of their teams. We will also be focusing on our internalstructures and processes to make them simpler. Our goal is to operate leaner and faster, with lesswaste, redundant work, and waiting time – but with greater output. In addition, we are working toimprove the most critical processes that affect our employees in the short term, such as travelexpense management and hardware ordering. Our goal is to make these procedures easier foremployees so that they can spend less time on administrative matters and more time on theirprofessional projects and development.We see our efforts to increase engagement as paramount to our success, leading to faster innovation,greater customer value, and better financial results. It is key to building our own future – and achievingour vision to help the world run better.

3.6 Technology for non-profits

Our strategy to create positive change centers on how we can marshal our expertise as a softwarecompany. The need to make the best possible use of technology is not limited to our customers, buthas become a necessity for non-profits as well. Increasingly, they need to collect and analyze data oneverything from their donor base to their impact. And yet many lack funding to devote to their ownorganizational development.In 2011, we provided our technology to 863 non-profits, helping them better manage their volunteers,make smart budgeting decisions and take the data they collect on their services and turn it into acompelling story about how they are improving people’s lives. While representing a 20% increase over2010, our results fell short of our goal to make 1,000 non-profits more technologically competitive, andwe believe we can do even better.We are working on two fronts to increase performance. Among non-profits, we are providing training tohighlight the potential to innovate and run better through technology. Among our internal teams, weare spreading the word about these projects, which are not just about donating our technology bututilizing the skills of our employees to design solutions. Those who have participated describe a deepsatisfaction in helping an organization that is providing a social benefit, as well as an enhancement oftheir own skills from tackling a new challenge.In 2012 we will execute Technology Showcases in which SAP will partner with NGOs to helptransform organizations through technology and innovation. In 2012 our first showcase partner will beEndeavor, a leading NGO devoted to working with high-impact entrepreneurs. We will createdashboards to highlight the economic impact of entrepreneurial activity, where it is succeeding andfacing challenges, and what kind of support is needed in the future.One of our most innovative projects in 2011 took place in India, where our team introduced internetaccess to a village that was struggling to secure government funds for clean drinking water and otherservices. Here we highlight one of the leaders of this effort, who envisions scaling this approach invillages throughout the country. Read about Soda Village here.

3.7 Volunteering hours

Our purpose to help the world run better and improve people’s lives comes to life through ouremployees. They bring the same skills, talent, creativity and commitment to their work in the

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community as they do to helping us serve our customers. Our volunteerism is a critical component ofour social investment strategy, multiplying the impact that we can make through our technology andfinancial support. We believe that volunteers provide what nothing else can: a wealth of insights, anability to solve problems, and a sense of purpose in reaching beyond their own lives to touch the livesof others.In our last report, we set an ambitious goal for our employees to spend 100,000 hours volunteering.We exceeded this goal, with our employees spending about 105,000 hours in communities around theworld, from rural villages in India to major cities in Europe. They brought the internet – and greatertransparency in government – to people who had struggled to secure basic services. They sat acrossfrom teenagers who had once been at risk of dropping out of school and helped them grow intobudding entrepreneurs. They used their skills to bridge the worlds of the for-profit and non-profitworlds, by bringing our technology solutions to organizations dedicated to social change. Read moreabout our programs.On this page we also feature the story of an SAP volunteer in New York and a young woman who hadan idea to start her own business. Together, they demonstrated how it is possible to create newsparks of inspiration and a practical path to change. Read a volunteer’s story here.

3.8 Social investment

To create lasting change, our social investments must be strategic. We deploy our capital inconjunction with our talent and technology to foster results that would not be possible through any oneapproach alone.A prime example is our focus on helping to propel emerging entrepreneurs, who have a great idea fora new business but need help bringing it to scale. On their own, funding or technology will help. Buttogether they bring a greater benefit, one that is enhanced further when we contribute our talent. Thiscombination means that an entrepreneur can be positioned to move forward much faster, with accessto expertise, tools to fuel business expansion and efficiency, and funding to help reach the next stageof growth.In 2011, we invested €16.1 million in programs, people and communities throughout the world, anincrease from €12.8 million in 2010. Together with our technology and talent, this capital helped usexceed our overarching goal for our social investments: to positively impact 1,000,000 lives. In 2011,our impact extended to 1,164,348 people – from teenagers in Chicago who were inspired to stay inschool because of a course in entrepreneurship to cashew farmers in Ghana who increased theirincomes through our mobile technology.We will continue to invest in opportunities to improve people’s lives, as exemplified in one of ourprograms in Colombia. eLife takes an innovative approach to working with girls coping with povertyand displacement. It provides training in both life and entrepreneurial skills, inspiring and empoweringgirls to pursue careers or even start their own businesses. To read more, please go here.

3.9 Greenhouse Gas Footprint

Reducing our greenhouse gas (GHG) emissions is fundamental to our efforts to become a moresustainable organization. First, after examining our environmental impact, we determined that ouremissions present one of our most important opportunities to create positive change. As a companythat does not manufacture physical products, we have focused on addressing the activities of runningour business – everything from the operation of our buildings to business travel.Beyond the environmental benefit of reducing our footprint, reducing our emissions brings otherbenefits. By working to become more efficient, we have learned firsthand what it takes to do so. Weare in a stronger position to design software solutions that help our customers thrive in a world oflimited natural resources – thereby creating even greater impact. All of these efforts are consistentwith our mission as a company.

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We have also been challenged to solve problems in new ways, helping us be more innovative. Forexample, we are working on new technologies to support remote consulting. Innovation, in turn, drivesour success, creating economic sustainability for our business, employees, investors, and otherstakeholders. Reducing our emissions further contributes to this economic success by helping usavoid carbon-related costs; in 2011 the reduction of our GHG footprint corresponds to an estimatedcost avoidance of about €25 million.

Staying on track to reach our 2020 goalOur long-term goal is to reduce our emissions to their 2000 level by 2020 in ways that best supportprofitability. In 2011, we continued on our journey to reach this milestone, remaining within the rangewe set for the year to ensure that we reach our target.At the same time, our results in 2011 point to new challenges. After significant emissions reductionsover the past several years, we are now confronting the complications of growth. As our businesssuccess has increased, so have some of the activities that support it, such as the travel we conduct toserve our customers. As a result, our actual emissions in 2011 increased over 2010, even though westayed on track to reach our long-term goal.Our precise target for carbon emissions in 2011 was 500 kilotons, and our final total for the year was490 kilotons. (This measurement includes all scope 1 and scope 2 emissions, along with limited scope3 emissions related to transportation – namely, our business travel and commuting.) In 2011, for thefirst time, we included Sybase in our carbon accounting. Our total footprint in 2010 was 455 kilotons,compared with 480 kilotons in 2009.We also measure our emissions per employee and per euro of revenue, gaining additional insight intohow efficiently we manage our emissions as our company continues to grow. We found that in 2011,our emissions per employee went up by about 4% and, per euro of revenue, went down by 6%.Given SAP’s outstanding financial performance, some of the activities required to support thebusiness, such as travel to serve its customers, experienced an increase in its carbon emissions.Emissions generated by flight travel increased by 50% in 2011 compared to 2010.

To replace travel with virtual meetings whenever possible we are expanding our video conferencingcapabilities. Now, we have more than 40 telepresence in SAP offices all over the world in addition toour standard legacy videoconferencing systems. In 2011, we ran a marketing campaign for increasingawareness and utilization of the telepresence rooms at SAP. In addition, we worked on theinteroperability of standard video conferencing and telepresence systems to further increase theirusage among employees.

Due to commitments to provide a company car to employees after they reach a certain stage in theiremployment at SAP, we had more than 19,000 owned and leased company cars in 2011. To tacklethe impact from employee commuting, we run a couple of initiatives:

· In 2011, we piloted a new commute solution at all locations in Germany to lower the impact ofprivate and corporate cars.

· We entered a partnership with a German energy company to provide electrically powered carsfor our joint “Future Fleet”. At 4 locations in Germany, 27 electrical cars were made availableto employees who used the cars for single business trips or as a replacement for theircompany car. In this project, SAP piloted software to plan, steer and control an electriccompany car fleet.

· We also offer electric or hybrid cars at other subsidiaries around the world, e.g. India,Netherlands, US, and in 2012 in Singapore or Brazil. India, for example, has 32 electric cars inits fleet.

· We offer incentives for using fuel efficient cars and provided eco-driving training to employees.

In Germany, we entered an agreement with Deutsche Bahn (DB), the German railway company, thatall trips booked by SAP are carbon neutral. DB is purchasing additional renewable electricity for thispurpose.

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To lower the carbon emissions for logistics, we purchase the GoGreen service from our logisticspartner DHL and DHL Express. The GoGreen services aims to offset up to 90% of the emissionsemitted for the transportation of our parcels.

Taking an innovative approach by looking at behavioral barriers to change, as well as our scope 3emissionsThe challenges of growth are driving us to become even more innovative about lowering ouremissions. In 2011, for example, we revised our carbon abatement cost curve to take into account theparticular barriers that get in the way of undertaking carbon reduction projects – such as behavioralresistance to driving less often. Learn more about our Carbon abatement programs.We also went much further in measuring our scope 3, or indirect, emissions, based on the newCorporate Value Chain (scope 3) Standard from the World Resources Institute. We recognize that afull picture of our emissions must extend beyond our operations to include the goods and services webuy, the carbon produced in the manufacture of hardware and other products related to our business,the impact of our software as it is used by our customers, and other indirect sources of carbon. In2011 we began a much more extensive measurement of these upstream and downstream emissions.We looked at emissions from all of our purchased goods and services, such as the food in ourcafeteria and emissions related to waste. We also calculated our downstream emissions, meaningthose that arise from our customers using our software. We gained new insights into how we canmake the biggest impact – for example, we learned that beyond the running of our software, we needto address the infrastructure and hardware that surround it. We are now working with our customersand their hardware providers on new ideas in "green IT". (For more details on our green IT strategy,see Data center energy.)For the first time in this report, we are sharing some of the data from this expanded approach tomeasuring our indirect emissions. To see this initial round of new data, which creates a more completepicture of our footprint, see Product footprint.In the past year, we also implemented our "Future Fleet" pilot, which integrated electric cars into ourcompany car fleet in Germany and gave us the opportunity to develop a software prototype for thesmart management of electric company cars. We aim to apply our learnings from this project tointegrate electric cars permanently into our corporate fleet.In addition, we laid the groundwork for future projects that will decrease our emissions, such as"intelligent" buildings that adjust to our energy usage patterns. We continue to invest significantly inrenewable energy, and have been studying our efficiency to identify capital investments that willreduce our emissions long-term. For more detail on these initiatives, see Total energy consumed.

2011 and beyond: Addressing challenges to reach our long-term goalWe will continue to face the challenges of growth and the need to align strong business results withstrong environmental results. One area of focus, for example, is our business flights, which increasedin 2011 and were a significant factor in our increased emissions in 2011. In addition, our buildingprojects are complex, require new approaches, and may take longer than past projects to provide areturn on our investment. We will be pushed to experiment and enter uncharted territory.In 2012, we plan to focus on several key areas: business flights, employee commuting habits,renewable energy and data center projects. For example, we are investing heavily in technology thathelps us reduce business flights, such as tele-presence, the interoperability of tele-presence withregular video conferencing, online meeting platforms, and Web cams.Another key area of focus is mobility solutions that provide our employees with attractive alternativesto driving, such as ride sharing. We also are working to reduce emissions related to the use ofcompany cars. We aim to further integrate e-cars into our fleet and enhance the carbon-efficiency ofour existing fleet. In addition, whenever possible, we will provide alternatives to driving, such assubsidies for using public transportation.

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We do not anticipate needing to purchase offsets in 2012 in order to achieve our reduction target. Ifwe find that such offsets are necessary, our policy calls for making such a purchase only to offset ourscope 3 emissions, and requires that we apply a rigorous set of quality standards.We are committed to taking on the challenges involved in meeting our long-term emissions reductiongoal - not just to address our footprint, but to become a stronger company, to better serve ourcustomers, and to spur new possibilities for change.For more information on our environmental data, see our Explanatory Notes.Product footprint

Over the past year, we have worked closely with the World Resource Institute to create a morecomplete picture of how companies measure their carbon emissions. We helped develop a newstandard that calls for looking at the entire value chain – meaning all the emissions stemming fromwhat a company buys and sells in addition to its own operations.

In our case, this new standard covers everything from the food we serve in our cafeteria to thehardware that supports our business to the use of our software by our customers. In 2011 we wereamong the first companies to work on the development of the new standard through final approval andthen apply it to practice. We undertook a pilot project to measure all of our upstream and downstreamemissions, gaining a much more complete understanding of our environmental impact.

Based on the WRI’s new standard for measuring emissions from our entire value chain, our totalemissions in 2011 were 6’000’000 tons. Of this amount, 15% stemmed from our upstream supplychain, while 4% were scope 1 and 2 emissions. By contrast, 81% of our total emissions stemmed fromthe downstream use of our software. Today only 9% of our emissions have been considered inassessing our progress against our target. We will continue to further improve our data quality so thatwe can proactively manage all of our emissions in the future.

The vast majority of our emissions - more than 80% - stem from the use of our products. Put anotherway, our product footprint is about 20 times the size of our scope 1 and 2 emissions, which includesuch items as the energy powering our buildings or the fuel used in our cars. This new information ishelping us develop better tools for our customers and gives us a strong foundation for deepening ourcarbon strategy moving forward.

A three-part strategy for creating change

In the past year, we have taken on this challenge, an ambitious undertaking that requires us to worknot just within SAP, but across a much larger landscape that includes our customers and theirhardware providers. We have developed three main approaches to address our product footprint.

The first is to design software with a commitment to greater simplification, so that it runs on fewerservers and requires less energy. A prime example is our SAP NetWeaver Process Integration 7.3,which runs on 60% less power.

The second part of our strategy is to work closely with hardware providers to help increase hardwareefficiency. Among our innovations is a thought leadership and networking platform for our customers,partners and hardware providers to share new approaches and promote Green IT. In addition, weoffer a service to hardware providers to benchmark their products, which offers our customers insightsinto the energy efficiency of their server. To learn more about the benchmark, please click here.

Finally, we are working with our customers to optimize the running of their data centers. Even ifservers are highly efficient, energy can be wasted due to weak air-conditioning systems or buildinginefficiencies. SAP runs a high-efficiency data center in Rot, Germany and we intend to share bestpractices with our customers so that they can benefit from our learnings. More details are available inthis video.

What are the possibilities?

Our product footprint strategy is still new, but we see significant opportunities to reduce it, while at thesame time helping our customers save significant amounts of energy and money. Our vision is toimplement the strategy outlined above through an ongoing Green IT initiative. First, we will continue to

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commit to simplification in our software, which has a huge positive TCO impact for our customers. Inaddition, we will work to help our customers gain access to more efficient hardware, as well asimprove their data center operations.

We conducted a what-if analysis based on our findings to date, and found that such a Green ITinitiative could save our customers approximately $5 Billion in electricity costs over ten years and up to9,000 GWh in 2020. These energy savings are equivalent to the power generated by a midsizenuclear power plant.

“Imagine if we could achieve this,” says Timo Stelzer, SAP’s Vice-President of Green IT. “Ourapproach was to think outside the box about what we can do together. We could effectively switch offone nuclear power plant. We decided that we could not take care of our own operations while ourproduct footprint went in the other direction. This is about taking care of the responsibility we have tohelp the world run better.”

Upstream emissions

While only about 15% of our carbon footprint comes from our upstream emissions, this area of impactis still very important. A primary reason is that we have great influence to create change in our ownsupply chain. As a customer of a range of goods and services, we can work with our key suppliers toco-innovate and find new approaches to reducing carbon. We can also take steps in the future toshape areas under our control, such as how we build new offices.

In addition, measuring our upstream emissions has provided important insights for refining our carbonstrategy. We learned, for instance, that how much we spend in a given area does not necessarilyprovide an accurate prediction of the emissions that will result. We now have a solid estimate of ouroverall footprint, helping us assess our true impact and set goals accordingly. What’s more, we havespecific information about where the biggest impact lies in our supply chain. Our purchased goods andservices, for example, represent the majority of our upstream emissions

Our next step is to become even more accurate in measuring these emissions and further develop ourcarbon strategy. To date, we have collected two years of data – from 2010 and 2011 – and havealready made improvements in the process. Still, that data has largely been secondary, meaning thatit is based on industry-specific estimates. Now we are beginning to collect primary data from our 20largest suppliers. With this information in hand, we will be well-positioned to deepen our reductionstrategy. In 2012 we will focus on five key areas of co-innovation: paper, food, DVDs and CDs, rentalcars and external data centers.

“We need to work together with our suppliers,” says Jonas Dennler, Global Environmental Manager,Sustainability Operations. “This co-innovation is what we plan to focus on in the future. Managing oursupply chain is more and more important, and because of the influence we have as a customer, weare in a strong position to create change and ultimately to reduce our emissions.”

3.10 Total energy consumed

Beyond reducing our emissions, we are focused on finding new ways to reduce our overall energyuse. These efforts bring important benefits to our business as well as the environment. They drive usto become more efficient, thereby reducing our costs and positioning us for expected increases inenergy prices. Our savings also allow us to invest more in renewable energy.In addition, we are gaining new insights to better serve our customers, who are increasingly focusedon energy management.We define "total energy" as the consumption of energy in our operations – contributing to Scope 1 andScope 2 emissions – such as the electricity powering our buildings and data centers, the use ofnatural gas in our buildings and the fuel used in our corporate cars.

Our energy usage increased as our business grew - but so did our efficiencyIn 2011, our total energy usage increased from 2010 levels, moving from 845 gigawatt hours (GWh) to860 GWh, due to the growth in our business. Specific findings shed light on trends within SAP. For

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example, while the number of cars in our corporate fleet increased, our fuel consumption did not riseproportionately, indicating that our efficiency standards and incentive programs are working.While our total electricity consumption stayed consistent, our electricity usage in the office declinedsignificantly in 2011, continuing a trend of the past several years. We achieved a 7% percent reductionin electricity usage in 2009 over 2008; a 9% percent reduction in 2010 over 2009; and a 7% percentreduction in 2011 over 2010. These reductions – which we achieved through energy-efficiencyprojects focused on lighting, cooling, heating, and other areas - are especially noteworthy given thefact that SAP's business grew during this period.

SAP’s energy consumption in GWh

2007 2008 2009 2010 2011StationaryCombustionFacilities

144 116 117 129 113

MobileCombustionCorp Cars

371 380 401 399 415

Corp Jets 11 11 11 9 13

ElectricityOffice 187 182 165 152 141

ElectricityDataCenters

180 175 157 144 154

PurchasedChilled &Hot Water,Steam

4 4 11 9 23

TotalEnergy 896 869 862 843 860

New software and intelligent buildings: Our focus on innovationWe have continued to invest in a range of projects aimed at reducing total energy usage throughoutSAP. In 2011, we began using enhanced facility management software that improved our ability tomonitor our energy and carbon in our 350 facilities worldwide. On a quarterly basis, we are now ableto analyze a detailed breakdown of our energy usage. For example, we can now easily compare howmuch energy is used by a building in Asia, with a specific size and heating system, versus one inBrazil. We have also reduced the potential for errors in our data collection and can offer managers indifferent regions of the world a precise picture of where they can make improvements.Other projects reflect our focus on innovation. Now that we have completed the initial phase of energy-efficiency projects, we recognize the need to consider new approaches. One example is our evolutiontoward intelligent buildings, which can be understood by considering our lighting. The first stage inbecoming more efficient was changing our light bulbs. Next, we changed our light fixtures, whichfurther enhanced our efficiency. Now we are changing the controls for our lighting, so that each lightfixture has an IP address, which allows the building to study our usage patterns. In this way, thebuilding can begin automatically managing our lighting, further enhancing our efficiency.Other efforts in 2011 included:

· Re-commissioning our office buildings. This involves poring over original buildingspecifications to look for potential areas in which efficiency has waned over time. The processreveals which equipment needs to be replaced, informing our capital investment strategy. Italso enables us to re-set parts of the facility that are no longer operating at maximumefficiency.

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· Achieving LEED certification for a new building in St. Ingbert, Germany; LEED Goldcertification for the SAP Labs Latin America location in Sao Leopoldo, Brazil; and LEEDPlatinum certification for our office near Milan, Italy, and taking occupancy of a highly energy-efficient building in Singapore.

· Piloting the implementation of the ISO 14001 standard in Italy, Israel, Bulgaria and Markdorf,Germany. This standard is important to a number of our external stakeholders, and bringsimportant internal benefits, as it establishes a systematic framework for our programs.

Addressing challenges in 2012We recognize several areas that need improvement. Our company car fleet increased in 2011 and willmost likely continue to grow in 2012, as did our fuel consumption, underscoring the need to addressmore sustainable mobility options for our employees. In addition to our introduction of electric vehiclesinto our car fleet, we are considering other approaches, such as attractive solutions for car sharing,expanded use of public transportation, or greater flexibility to work from home.We also see further opportunities to improve our data center efficiency. We have a four-prongedstrategy to enhance our approach to green IT. Beyond addressing our own data centers, we arefocusing on the design of our software products, identifying new efficiencies for our customers, andworking with the broader IT community on new approaches. (For more details, see Data centerenergy.)For more information on our environmental data, see our Explanatory Notes.

3.11 Renewable energy

Sustainable thinking demands that we embrace alternatives to traditional ways of operating. Thisprinciple does more than help us create environmental and social change – it fuels new ways ofthinking that enhance our overall performance. One key example of changing how we do business isour use of renewable energy. We aim not just to become more sustainable, but to support anemerging market that is critical to addressing the world’s environmental challenges.Our renewable energy strategy aligns with our broader strategy to become more efficient and reduceour overall energy usage. As a result of our significant reduction in electricity consumption in previousyears, we have been able to purchase more renewable energy, which is more expensive thantraditional sources.

2009 2010 2011

Global 16% 45% 47%

Nuclear 19% 14% 13%

Fossil 64% 41% 40%

Hydro 9% 33% 35%

Wind & Solar 4% 10% 10%

Other Renewables 3% 2% 2%

We continue to invest in renewable energy throughout the worldIn 2011, we continued our investment in energy coming from renewable sources – namely, hydro,wind, solar, and biomass. A number of our locations transitioned to renewable energy sources, suchas Bangalore, which began buying hydro-electric power from a private vendor, as well as Markdorf,Germany. We also generate renewable energy. Our headquarters in Walldorf, Germany, for example,

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has solar panels that feed the local grid and also buys electricity from a local utility that sources fromhydro. Our headquarters is powered about 50% by renewable energy.In 2011, renewable energy accounted for 47% of our total electricity usage, compared with 45% in2010 and 16% in 2009.

Working to expand our strategy and support an emerging industryIn 2012, we intend to deepen our renewable energy strategy, coordinating our efforts companywideand mapping a course for increasing the amount of energy that we purchase from renewable sources.We anticipate that we will purchase more renewable energy in 2012 as our electricity contracts comedue and are renegotiated. As a result, our 2012 target is for renewable electricity to account for about54% of our total electricity usage.As these specific initiatives demonstrate, we are committed not just to shifting our own practices, butto supporting a broader market that aligns with our focus on innovation and finding new environmentalsolutions.For more information on our environmental data, see our Explanatory Notes.

3.12 Data center energy

As a company, we are dedicated to providing innovative solutions through our software. While we relyon the cloud as a primary deployment model for many of our customers, we have made green IT apriority for enhancing our sustainability. Our approach spans both our own operations and our work onbehalf of customers.Specifically within SAP, we focus on three core areas: reducing our energy use, managing electronicwaste (e-waste) responsibly, and fostering dematerialization – or substituting high-carbon activitieswith lower-carbon ones.

Continuing to improve data center efficiency, despite gains to our businessWe have been working to achieve 80% virtualization of our entire IT landscape. In 2011 we remainedon track to reach this goal. We have invested significantly in improving our data center efficiency,investing in server virtualization and cooling systems. In 2011 we continued to increase the number ofour virtual servers from 52% to 65%. (In 2009, 37% of our servers were virtual.) This shift translatesinto significantly greater computing power, but only a minimal addition to the number of our servers.Overall in 2011, our data center electricity consumption increased from 145 GWh to 155 GWh. On aper employee basis, we went from 2,746 kilowatt hours (kWh) per employee to 2,824 kWh peremployee.Working to become a leader in reducing energy, managing e-waste and fostering dematerializationIn addition to server virtualization, we are further reducing our energy usage related to IT throughother initiatives. We implemented a new power management solution that has helped us reduce theenergy consumption of our PCs. We have also reduced the number of PCs per employee throughdesktop virtualization.This shift supports our efforts to responsibly manage e-waste, as our employees use less equipmentand thereby generate less waste. In addition, we have developed and started to roll out a globalprocess for e-waste disposal. Our goal is that 100% of SAP’s e-waste gets recycled or disposed bycertified brokers.Our dematerialization efforts have ranged from increased online conferencing to a major printingoptimization initiative. This initiative includes programming our printers to a default setting for double-sided printing, scanning receipts for expense reports instead of using paper copies, and promoting ourscan-to-mail function, which allows for easy scanning, digitizing and emailing of documents.Within the SAP Corporate Portal, the global IT department has established a printing tracker usingSAP BusinessObjects Dashboards software, to increase awareness for paper usage among SAP

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employees. The tracker demonstrates in dashboard format the progress toward reducing our paperconsumption by 5% in 2011 on global, regional, and country levels.

Our larger green IT strategy: Operating on multiple fronts alongside our customersOur investment in our own efficiency is part of a bigger strategy to innovate in green IT. We areworking to help our customers and the technology field as a whole forge new solutions by focusing on:

· Product design - Our code specifications enable our customers to use less energy in runningour software. Through the use of streamlined databases, in-memory solutions help reduceelectricity consumption. For example, with SAP NetWeaver® Process Integration technology,up to 60% of present power consumption could be saved.

· Solutions and services - We help our customers detect efficiencies in their own data centersand IT landscape, identifying opportunities to save energy. We offer use of an interactivesustainability map for the SAP EcoHub solution marketplace, which provides a clear view ofthe ecosystem of green IT solutions and services available from SAP and our partners.

· Community collaboration - We are working together with our customers, hardware providersand other stakeholders to promote green IT and cultivate new approaches. One of ourinitiatives is to create a thought leadership and networking platform for customers focused ongreen IT.

· SAP Runs SAP - Most of our customer innovation projects also include our own company as acustomer.

In 2012, we will continue implementing this broader green IT strategy, which will help us navigate arange of challenges. Among these is the fact that we will need to maintain more servers in our datacenters as we offer more solutions in the cloud, a development that will require us to be even moreefficient.In addition, we continue to focus on reducing printing, which is complicated by the growth in ourbusiness and a corresponding increase in printed materials such as customer training materials. Weset an ambitious goal to reduce our paper consumption in 2011 by 5%, building on improvements inthe previous two years which had already achieved a 35% reduction. We achieved a 2% reductionthrough such initiatives as institutionalizing double-sided printing, increasing our virtual trainingsessions, and creating a printing dashboard that provides transparency to all employees about ourmonthly paper usage.One final challenge reflects the complexity of addressing our own internal use of technology. While weachieved success in utilizing less PC equipment, this improvement has been partially offset by ourpurchase of Apple devices (i-devices), which are integral to designing innovative solutions.For more information on our environmental data, see our Explanatory Notes.

3.13 Carbon abatement programsWhat will it take to lower our emissions? Our carbon abatement cost curve helps us map a path to thefuture.

Our carbon abatement cost curve depicts the path by which we can reduce our carbon emissions.Carbon abatement cost curves have mostly been used to map out future carbon strategies for regionsor countries. We saw an opportunity to innovate by applying this tool to our business, and were amongthe first companies to do so.

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The curve depicts a range of projects to decrease emissions - from video conferencing to sustainablecommuting - and shows what each would cost for every ton of carbon that could be avoided. Mostprojects would both reduce our carbon and generate cost savings. Specifically, the vertical bars on thegraph show the cost of each project, with negative values signaling that a project would save money.The horizontal bars show the carbon reduction that would result from each project.

For example, video conferencing would save SAP 648 Euros per ton of carbon emissions, and wouldlead to an emission drop of 33 kilotons of carbon.

Including barriers to change in our calculations: A new stage of innovation

But this is not the end of the story. Over the past year, we concluded that to make our use of this toolmore effective, we needed to innovate further. Our curve, we realized, was hypothetical. It assumedthat carbon abatement projects could be implemented seamlessly. But in the real world, many barriersto change exist, most of them behavioral. For example, many people have a resistance to meetingvirtually through video conferencing. We are unlikely, in reality, to save as much carbon as we would ifpeople changed their behavior overnight.

We created a new version of our curve to reflect this reality. First we assessed the barriers toimplementing each abatement project. To make these assessments, we conducted extensiveinterviews with experts inside SAP.

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Once we had calculated the barriers to change, we created a new curve that reflects the “practicalpotential” of our carbon strategy. In the case of video conferencing, for example, this new curve showsa potential drop in emissions to only 16 kilotons, versus the 33 kilotons on our previous curve. Thelower number accounts for the reality that it will take time to shift our internal culture, as well aspeople’s preferences and behavior.

Overall, our new curve shows a practical potential to reduce our emissions in 2015 by 145 kilotons.This compares to the 200 kilotons that we initially mapped on our hypothetical curve. Our potentialcost savings also go down once we consider barriers to change. Instead of saving 70 million Euros –as estimated on our hypothetical curve – our practical potential is to save 30 million Euros.

It is important to note that even when we look at our practical potential, we still have significantopportunity to create both carbon and cost savings. But we aim to go even further by investing inefforts to overcome the behavioral barriers we have identified. The potential cost savings of ourabatement projects are so significant that even if we spend money to overcome these barriers, theywill still be profitable. As we move forward, we will focus on yet another kind of innovation: how to shiftengrained habits and create lasting cultural change.

3.14 Customer Satisfaction

Our customers drive our sense of purpose and are at the core of everything we do, including our workin sustainability. In order to have a positive impact on the world, we must help our customers do thesame. When they use our software to operate more efficiently or to manage their employees better,we view this as a success on multiple levels, creating a sustainable future for our customers, ourbusiness, and society. Indicating the degree to which customer success is a priority, we have made itone of four companywide strategic objectives, along with employee engagement, margin, andrevenue.Gauging our progress

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Our goal for 2011 was to achieve a customer satisfaction score of 7.7. Based on a 1 to 10 scale, thisscore assesses overall customer satisfaction. We received about 5,300 responses to the survey froma select customer group in 2011 and will be focusing on increasing this participation in the future.Our results showed that customer satisfaction is starting to stabilize, with that indicator going up toreach 7.7 in 2011, compared with 7.6 in 2010 and 7.7 in 2009.

Enhancing how we listen to and respond to customersWhile we achieved our target in 2011, we also focused in the past year on how we can respond evenmore effectively to our customers’ needs. We will continue to monitor our scores on customersatisfaction surveys, but we recognize that our ability to connect with our customers and address theirquestions and concerns matters more. We are committed to providing the answers they need and aremore focused on follow-up than we have been in the past.One major example is the creation in 2011 of our new Global Customer Experience Group, which isdedicated to providing actionable, understandable, and timely insight into the state of customersatisfaction and loyalty, as well as its impact on SAP’s growth. We are introducing a variety ofapproaches, including better customer survey questions, an improved methodology for capturing andevaluating customer issues, enhanced communication throughout SAP about feedback and how torespond, better tools for listening to customers and addressing concerns, and increased accountabilityfor customer satisfaction and loyalty. Linking all of these changes is our emphasis on achieving andsustaining strong customer relationships, which are at the core of responding effectively to ourcustomers’ needs.

Designing new metrics to better gauge customer loyaltyWe will be implementing this new approach in 2012, as we work not just to meet our customers’expectations, but to exceed them. One area that we seek to improve is how we gauge customersatisfaction. We plan to move to a new measure that looks more closely at the likelihood that ourcustomers will recommend SAP, an indication of our potential market growth. This metric, the NetPromoter Score, is used by a number of other technology companies and will also enhance our abilityto assess our performance. We will also continually develop our employees on the use of feedback toimprove customer satisfaction and loyalty and will prioritize investments that address critical gaps inthe overall customer experience.Our goal for 2012 is to continue to treat our customer success as a top priority at SAP, one that isfundamentally linked to our own sustainable future.

3.15 RecognitionLeadership SAP has been recognized for its sustainability leadership. In 2011, we received thefollowing awards and recognitions:

· Carbon Disclosure Leadership Index (Top 10)· Carbon Performance Leadership Index (Top 10)· Dow Jones Sustainability Index (SAP leads the software industry for the fifth consecutive year)· FTSE4Good· Global Challenges Index· Global 100 (Corporate Knights Inc. and Innovest Strategic Value Advisors ranking)· NASDAQ OMX CRD Global Sustainability 50 Index· Oekom Prime Rating (SAP is first among DAX 30 and Euro Stoxx 50)· Nomination for the German Sustainability Award in the category "Most sustainable strategy"

(top 3)· Sustainability Award in the category "Recycling paper"· Inclusion in the Greenpeace Cool IT Leaderboard· Inclusion in the Ethibel PIONEER and Ethibel EXCELLENCE Investment Registers· STOXX® Global ESG Leaders· BCA Green Mark Award (Gold) for SAP Asia PTE Ltd· Among top 50 of Interbrand's "Best Global Green Brands 2011" ranking

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· SAP India a finalist for the "Global CSR Awards 2011" at Cebu City· 2011 World Green Design Contribution Award· Ranking 20 in Newsweek's "Green Rankings"· Computerworld's "2011 Top Green-IT Vendors"· "Best Organic Waste Recycling Champion" award for SAP Lab India Pvt Ltd· Recognition of B.A.U.M. e.V. for bike initiatives at SAP AG headquarters in Walldorf and St.

Leon-Rot, Germany· Sustainable Real Estate Roundtable's Outstanding Corporate Leader of the Year 2011· Commendation for innovative use of Web and social media for the North American

competition sponsored by Ceres and the Association for Chartered Certified Accountants(ACCA)

· Winner of the "2011 Waste Reduction Awards Program" of the California Department ofResources Recycling and Recovery

For more awards recognizing SAP as an employer of choice, see our Annual Report.

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4 Empowering Customers4.1 OverviewHow does software create positive impact? The answer lies with our customers. When they use oursolutions to become more transparent, or energy-efficient, protect workers from accidents and addressrisks in their supply chain, they turn sustainability into concrete actions that benefit workers,communities, the environment and people throughout the world.We believe that serving our customers provides us with the greatest potential to create positivechange. Our solutions focus on five key business areas: energy management, sustainable supplychain, operational risk management, sustainable workforce, and sustainability reporting and analytics.Behind each of these areas are stories about the challenges - and opportunities - that are redefiningthe current era of business. Whether they are evaluating an efficiency project or ensuring that toxicsubstances don’t wind up in a child’s toy, our customers are helping to drive this transformation.In 2011, we saw a huge increase in the number of those customers telling their own story. In over 100settings (webcasts, events, written stories), customers told their own story how SAP is helping themachieve their sustainability goals.

Our sustainability solution portfolio includes both energy and carbon management applications thathelp customers identify energy savings opportunities and reduce their carbon footprint. SAP workswith the Carbon Disclosure Project (CDP) to offer CDP reporters additional insight into their data andbenchmarking possibilities.

We also work with our customers to help optimize their data centers. For example, the SAP PowerBenchmarks help optimize SAP system configurations to minimize power consumption within a datacenter.

Finally we have endeavored to reduce the energy consumption of our own products. For example, thelatest NetWeaver release consumes up to 60% less energy compared to the previous version.

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In addition, SAP Research takes part in a number of projects supporting SAP’s contribution to energyefficiency thought leadership:

Future Fleet: Driving Green at SAP

In 2011, SAP integrated 27 electric cars into its company car fleet. All cars were charged solely withrenewable energy at four SAP locations around Walldorf. Over 500 SAP employees drove more than100.000 km in the course of this field test. SAP Research developed a software prototype toadminister the e-cars and new research results on key issues such as user acceptance and changesin transportation habits were gathered.

FI-WARE: A Future Internet Core Platform

As a partner in the FI-WARE project, SAP is contributing technology to develop future internetapplications for multiple sectors. FI-WARE will enable a number of key sustainability approaches suchas integration of renewable energies, environmental observations, the optimization of transport andlogistics networks, sustainable mobility, sustainable utility provision and sustainable agricultural-food.www.fi-ware.eu

FINSENY: Connecting the Energy Sector

FINSENY focuses on modern smart grids ICT systems, a promising part for the future of energy. Theproject helps enable the delivery of reliable electricity services and ensure the permanent balancebetween energy generation and customer demand through the integration of advanced informationinto the energy system. Project results will contribute to the emergence of sustainable smart energyinfrastructure, and sustainable energy consumption.

CONNECT: From Research to Industries

The question of how to bill the energy consumed by e-cars is among the most challenging ones in thecontext of electric mobility. SAP Research solved this quest in the former research project eIKT, takingthe results to SAP Utilities and SAP Automotive as part of the transfer project CONNECT. Theforeseen solution enables e-mobility providers to bill the exact amount of consumed energy at flexibletariffs dependent for instance on date and time of charging.

4.2 Energy and Environmental Resource ManagementEvery day, the trends driving the need for greater energy efficiency continue to become more urgent.Even in the course of the past year, most companies are faced with a tougher business environmentdue to dwindling resources; increasing and volatile energy costs; a supply that is not always reliable;and increasing regulatory and public pressure. As a result, the management of natural resources --along with the reduction of waste and energy usage -- have become board-level priorities atcompanies across industries and around the world. Investors, partners, nongovernmentalorganizations (NGOs), and other stakeholders are all looking closely at energy use and wastereduction as key indicators for future success.

SAP helps our customers use energy more responsibly providing benefits to both the environment andtheir bottom line. SAP solutions for energy management in heavy industries have helped savecustomers more than half a billion dollars in energy cost. These reductions helped avoid thecumulative emission of 5.7 million metric tons of greenhouse gases, which is equivalent to the carbonsequestered by planting 146 million tree seedlings (over 10 years). EPA calculator - This cumulativecalculation is based on an estimate of individual customer energy savings from the date a customerimplemented.Companies across a wide spectrum of industries are asking how they can reduce their energy usageand lower their exposure to volatility while at the same time increasing their efficiency. We see energyand resource management as a C-level imperative. Behind this urgency lies the reality of a world inwhich the population continues to grow and economic development expands the ranks of the middleclass, thereby putting increasing pressure on resources.Companies are looking for energy and resource management solutions that enable them to:

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· Gain Consumption and Cost Transparency – How are you doing today?· Implement Energy and Emissions Mitigation – How do you improve tomorrow?· Reduce Costs via Supply Portfolio Optimization – How do you work with your suppliers?

SAP is supporting energy users with a set of Energy and Environmental Resource Management(EERM) solutions that enables companies and individuals to proactively manage their energyconsumption.As a result, natural resource management and waste/energy reduction is a board level priority forevery company, with partners, investors, and nongovernmental organizations (NGOs) all lookingclosely at energy use and waste reduction as key indicators for future success. Companies across awide spectrum of industries are asking how they can identify opportunities to reduce energy, decreasevolatility and become more efficient in their use of energy. In short – they want to reduce the externalrisks from their purchase and use of energy.

Moving from board mandates to measureable resultsManaging energy efficiency starts with gaining a real-time view into energy consumption, comparingusage across operations and specific assets, creating target reductions and expected operatingparameters, and taking action when trends and real-time feedback don’t match expectations.

· The SAP Manufacturing Integration and Intelligence application helps our customers identifyand track new opportunities for energy reduction by providing real-time access to energy usedata. This visibility enables performance comparison across assets, plants, regions, andbusiness divisions. Additionally, companies can set thresholds and integrate alerts withunderlying operational systems, such as plant maintenance. The combination of visibility andalerts provides the timely information required to drive down energy use.

· Further, this real-time access to energy use can create email alerts, maintenance work ordersto physically inspect assets, or other actions. Ultimately, this information is integrated into theunderlying process (such as plant maintenance) for enhanced business performance.

· The environmental compliance capabilities of SAP Environment, Health, and SafetyManagement (SAP EHSM) allows organizations to track energy use at a detailed asset leveland gather data/ report environmental compliance to governmental regulatory bodies.

· SAP Carbon Impact OnDemand allows companies to accurately measure their carbon andgreenhouse gas footprint, confidently report to both regulatory and voluntary organizations,and profitably reduce the wastes in their organization. Companies can set carbon reductiontargets, cascade them across an organization, and create their own carbon abatement plan,identifying the most profitable projects and mapping them to the targeted reduction.

· SAP is supporting the rapid technological expansion of energy providers with the SAPAdvanced Metering Infrastructure Integration for Utilities solution and newly released SmartMeter Analytics. As utility companies unlock new data streams from intelligent electronicdevices like smart meters increasing the volume of data by orders of magnitude, our softwareand services help manage and analyze the meter and event data, making it instantly availablefor back-end systems such as CRM, billing, and analysis.

· A key to increase the adoption of more sustainable consumptions behaviors is makingcustomers aware of their current consumption profile and how it compares to their peer group.SAPs Smart Meter Analytics provides the Utilities around the world with the unique opportunityto provide this insight through real time analysis and provisioning of the consumption dataincluding energy benchmarking. Furthermore the analysis of the consumption data allowsutilities to optimize the use of fluctuating, renewable energy source like wind and solar tomatch the real consumption profiles of their customers.

Bringing savings to our customers and millions of householdsWe estimate that our energy management solutions for manufacturers are already helping customersavoid approximately 8 billion kilowatt hours of electricity or approximately 5.7 million tons of carbonemissions, saving U.S. $550 million in energy expenditures. What’s more, SAP customers will deploysmart grid solutions that will help 30 million households use energy more responsibly, saving them anestimated U.S. $390 million for every percent gained in efficiency.

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Many customers including DeBeers and Air Products are using SAP Manufacturing Integration andIntelligence to gain greater visibility into operations such as safety, energy usage, unit performance,and inventory.

4.3 Sustainable Supply-Chain and ProductsConsumers are increasingly demanding more sustainable products – and this is also providing anopportunity for companies to gain competitive advantage. However, according to a recent study in theUnited States, up to 95% of company claims about products green features are false. It is notsurprising because lifecycle analysis is only now being broadly adopted, and managing the actualfootprint from material extraction through production to end-user sales relies upon the exchange ofinformation and coordination across complex global supply chains.Today, SAP helps an estimated 900 million consumers live more safely by providing producers ofintermediate and final products with safety solutions for labeling, documentation, handling and safetydata related to these materials. Intermediate products – such as flavors, fragrances, or basicchemicals – have an enormous impact on consumer safety because they wind up in downstreamfinished consumer products. We estimate that the customers we work with provide materials that endup in more than 1/3 of finished manufactured goods. In turn, these goods are utilized by consumersthroughout the world – or approximately 1/3 of the global population of 6.8 billion.Product safety regulations not only remain in place, but are also proliferating globally. The cost ofadherence is steep, with RoHS (Restriction of Hazardous Substances) compliance alone estimated tocost companies U.S. $32 billion per year. These regulations raise the risk of lost revenue and marketaccess, as well as damage to reputation from recalls.Companies that experience supply chain disruption show decreased financial performance: 7% lowersales, 11% higher costs, and 14% increased inventories. The source of disruptions extends fromnatural disasters and political uncertainty to public pressure against exploitative labor practices,environmental damage, and the presence of banned materials in finished products. Traditional supply-chain management focused on cost, quality, and timeliness must now expand to include sustainabilityas another dimension to be considered.Meeting this challenge requires collaboration to gain better visibility to information and best practicesacross the many players that make a global supply chain work. The Sustainability Consortium and theCarbon Disclosure Project are two examples of NGOs bringing companies together to shareinformation in order to help create sustainability-optimized supply chains.

Our solutions provide competitive advantage – and sustainable outcomesSAP helps run some of the largest and most complex supply chains in the world, offering us a uniqueopportunity to support the shift towards the creation of more sustainable products and services. Oursolutions help meet the challenges of bringing sustainable products to consumers all over the world byhelping to provide greater transparency, supporting compliance to product safety regulations, andminimizing energy consumption and waste:

· SAP EHS Management helps organizations comply with product safety regulations, such asREACH, RoHS, and WEEE (Waste Electrical and Electronic Equipment). We lower the totalcost of compliance by integrating both into SAP software, such as material master data in thebill of materials and by integrating compliance checks into standard enterprise businessprocesses such as purchasing and order management.

· SAP Recycling Administration help manufacturing companies comply with worldwideregulations and retailer mandates on packaging, products and batteries such as wasteelectrical and electronic equipment (WEEE). Companies can increase control and accuracy,lowering compliance costs and fees while increasing competitive advantage.

· SAP EHS Regulatory Content, recently enhanced and designed for and integrated to SAPEHS Management, includes regulatory data, phrases, expert rules and templates for authoringMSDSs and labels. The solution protects revenue, reduces risk of non-compliance andreduces time to market through integrated software and content for global product safety.Customers can go even further to automate their compliance by using our recently enhancedSAP EHS Regulatory Documentation service which can automate production of safety datacommunications to customers.

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· The SAP Supply Chain Management application helps enable responsive supply networksincluding planning and execution. It supports best practices and provides preconfiguredsoftware for enabling collaborative business, accelerating implementation, and reducing costs.

Safer products help people live healthier livesSolvay, an international chemicals and plastics manufacturer, protected revenue and reduced non-compliance and supply chain risks associated with the REACH regulation by using the ProductCompliance solutions from SAP.

4.4 Operational Risk ManagementEvery day, almost a million workers get injured on the job around the world. By some estimates, theimpact of such incidents on the world's economy amounts to 4% of GDP. While many companiesstruggle to react to incidents and comply with reporting requirements, the real opportunity lies inpreventing them from occurring in the first place.SAP helps more than 5 million people work more safely with SAP solutions that manage health &safety processes such as incident management, occupational health and industrial hygiene. Theseprocess improvements help companies more efficiently manage $8 billion in accident-related cost.This calculation is based on an analysis of the total number of employees in companies using SAPEHSM Health & Safety solutions times the Bureau of Labor Statistic average total recordable incidentrate times the average incident cost.The imperative to move from reactive compliance to prevention and risk mitigation is stronger todaythan ever. Government regulations continue to proliferate as operations such as remote drilling andexploration become more complex and dangerous. Simultaneously, brand risk has grown in aninstantly connected world; incidents can become headline news in minutes. Social media shapesperceptions of a company. Now, more than ever, it is critical to go beyond compliance. Companies arealways looking to improve their operations.Having a compliance system for environmental, health, and safety is a necessity; however, being ableto proactively reduce risks while improving operational performance is equally important. Currently,many companies lack the visibility into safety and operational data required for effective decisionmaking. Disconnected business processes cause communication breakdowns and errors. Siloedinformation means lack of access to the right information when and where it is needed to ensuresafety.

Moving from reactive compliance to proactive risk reduction saves lives and moneyTo truly meet this need, visibility into data gathered from environmental, health, and safetymanagement, plant maintenance, asset management, and other supporting processes must bebrought together. Powerful analytical tools then must be deployed to correlate the data and gaininsight from near-misses and accidents, so that concrete prevention actions can be taken to preventfuture incidents. Furthermore, it is critical to direct this information to where you need it most, out in thefield and on the shop floor.Responding to this need, SAP provides solutions that deliver risk and safety information not just whereyou need it most, but when you need it most. With deep integration into core operational systems andreal-time analytics to make sense of the data, SAP solutions help manage operational risk bysupporting a continuous improvement approach to safety and operations, helping both to create asafety culture and to improve your profitability.

· The SAP Environment, Health, and Safety Management (SAP EHS Management) applicationhelps you stay ahead of compliance requirements by integrating EHS tasks into core businessprocesses. By automating occupational health and workplace safety, including incidenttracking and reporting, SAP enables companies to implement programs to assess and controlhazards.

· The newly released (in 2011) risk assessment functionality of the SAP EHS Managementhelps workers proactively prevent incidents and protect people, the environment, and assetsby providing a comprehensive risk identification, analysis, and corrective and preventive actionmanagement capability. This closed-loop system enables companies to move beyond

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compliance toward a proactive and preventive culture that will reduce incidents, save money,and decrease the likelihood of production interruptions or regulatory sanctions.

· The recently enhanced incident management functionality of the SAP EHS Management helpsworkers easily record any type of incident, near-misses, unsafe acts, and safety observationsat the location and time when they happen. Analysis of this wealth of information then enablescompanies to proactively identify root causes of incidents and to take corrective actions toprevent potential adverse events. A mobile recording capability has just been made availableas well to further encourage easier recording of incidents.

· SAP provides a comprehensive operational risk management solution by integrating SAP EHSManagement, the SAP Enterprise Asset Management solution, the SAP BusinessObjects RiskManagement application, and other SAP Business Suite software. The integrated approachprovides enterprise-wide visibility into where the risks are and then helps companies manageperformance by setting goals, implementing corrective actions, and monitoring performance.By ensuring the most material risks are being controlled effectively, companies can optimizeprocess safety and asset availability.

SAP solutions protect people, assets and the environmentOur solutions are already delivering proven business results. Through our work with customers aroundthe world, we estimate that 5 million people work more safely, and companies more efficiently manage$8 billion in incident-related costs.For example, Global steelmaker ArcelorMittal integrated standardized safety and health processesacross 18 operating locations to achieve a 50% increase in effectiveness of EHS action plans; a 50%improvement in identification of exceptions; and an 80% reduction in the time required to close-outincident investigations.

4.5 Sustainable WorkforceA sustainable workplace depends on the ability to create business success that lasts – and only anengaged, committed workforce leads to that kind of success. Best-run companies are facing newchallenges in attracting, managing, and retaining the talented workers they need in a cost-effectiveway. This challenge is even more acute in the face of changing global demographics. Having adiverse workforce has become essential to compete in today's global economy for a variety ofreasons: customers themselves are more diverse, whether they are large corporations or individualconsumers; society is more culturally diverse, and today’s workforce reflects similar demographics. Acompany that wants to stay competitive simply cannot afford not to draw talent from every possiblesegment of society.SAP helps employers manage a $2.5 trillion payroll investment in their 65 million employees. SAPsolutions assist in recruiting, hiring and managing all employee events including ongoing payroll. All ofthese services are made available through a self-service portal. The calculation is based on the totalnumber of SAP Human Capital Management customers times the average number of full timeemployees times the average annual salary. This analysis does not account for SAP’s recentacquisition of SuccessFactors, which brings an additional 3,500 Human Capital Managementcustomers.

To attract and retain today’s talent, companies must manage their people in a new wayToday’s educated and increasingly tech-savvy workforce has high expectations. One of the topconcerns of today’s employee base is sustainability – whether reducing the carbon footprint, improvingthe environment, or creating social impact and meaningful volunteering opportunities. People arelooking for a purpose in their work and are choosing companies that share similar values. Anecdotalevidence indicates that some workers are increasingly willing to reduce their compensation to work forsustainability leaders.A 2010 study by the Center for Creative Leadership showed that employee perceptions of anorganization’s commitment to community and the environment are linked to their own feelings ofcommitment to that organization. The higher employees rate an organization’s corporate citizenship,the more committed they feel. Workers value freedom and connection. They put a premium on havingaccess to the newest technologies in part because they allow for working remotely and collaboratingvirtually.

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Our solutions anticipate and help manage the new realities of today’s workforceSustainability is a core principle at SAP; it is embedded in our values and is essential to our businessstrategy. A key part of how we define sustainability is building a sustainable workforce and helping ourcustomers do the same.Our solutions help companies move from managing workforce transactions and automating processesto enabling, engaging and supporting their talent throughout the organization. They can help youmanage your people by gaining visibility into your organization’s global workforce, helping you toattract the right talent, develop people, compensate them accordingly, and predict future hiring needs.Our solutions enable our customers to strategically manage all aspects of their workforce both withintheir organization and across their supply chain to plan for the future. This gives them the visibility toconduct scenario planning to optimize their labor force in a constantly changing environment.

4.6 Sustainability Reporting and AnalyticsSustainability has become a core aspect of business. Companies must now manage large amounts ofsustainability-specific data required by reporting frameworks, such as the Global Reporting Initiative(GRI) and the Carbon Disclosure Project (CDP). It is, however, not just about reporting. Companiesare also seeing increased demands for enhanced sustainability performance from diversestakeholders including governments, investors, supply-chain partners, and customers.SAP helps our customers run better and more sustainably. This analysis is based on companies whoare listed on the Dow Jones Sustainability World Index and the Dow Jones Sustainability NorthAmerica Index. Launched in 1999, the Dow Jones Sustainability Indexes are the first global indexestracking the performance of the leading sustainability companies worldwide. The companies on theselists were objectively reviewed against a list of companies running a significant portion of theiroperations supported by systems powered by SAP solutions. The top 10 companies on each index runSAP.Faced with these pressures, companies have responded by providing more transparency in theiroperations. Ninety-five percent of the 250 biggest companies in the world now report theirsustainability performance, up from 80 percent in 2008. More broadly, more than 3,400 companies arenow reporting their sustainability performance with over 1,300 issuing reports based on the GRI, andmore than 3,000 report their greenhouse gas and water performance to the CDP.With so many different reporting requirements, organizations find themselves wrestling with a complexand time-consuming task. Indeed, most still rely on labor-intensive data-gathering and lack automationto collect and coordinate information. These inadequate manual processes hinder efforts to movebeyond reporting to analyze and improve overall performance.

Moving from reactive reporting to proactive performance managementSustainability reporting enables companies to focus their operations in a more structured and strategicway. By measuring their sustainability performance, companies can make improvements tomanagement, thus improving their performance, which ultimately contributes to the competitiveness ofcompanies and to sustainable development globally. We enable companies to proactively managesustainability performance, not just reactively report. SAP solutions for sustainability help companiesnot only automate data collection for credible reporting but also improve performance by providinginsight into performance and by supporting the cascading of goals across the organization.

· With the SAP Sustainability Performance Management application, organizations can reducedata collection costs and errors, measure and communicate performance, and setsustainability goals and objectives for the entire organization. It is the first solution of its kind tobe certified by GRI, and it automates over 85% of quantitative GRI indicators throughintegration to core SAP software.

· SAP also partnered with the Carbon Disclosure Project (CDP) to launch an innovativeEmissions Reporting tool, which allows users to gather and report their carbon emissions.Click to access, CDP Reporter Services.

By fully embedding sustainability across their operations, supply chain, and customer relationships,companies can turn risks into opportunities. Sustainability becomes a business driver, not simply a

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stand-alone reporting effort. Companies deliver on the promise of increasing short- and long-termprofitability by holistically managing economic, societal, and environmental aspects.

Turning sustainability reporting into a competitive advantageSAP works with 10 out of the top 10 companies on the Dow Jones Sustainability World Index. Thisreach gives us tremendous opportunity to impact the world’s leading companies as they further embedsustainability into their business strategies to unlock new opportunities through better insight into theiroperations.For example, our customers have reduced data collection time by over 50%, saving up to U.S. $1million by having a reporting process that they can feel confident in and that will withstand the scrutinyof an auditor. More importantly, our solutions help companies develop more agile operations, such ascutting the time to respond to a request for proposal in half.

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5 Creating Opportunity

A teenager in India who has no access to higher education or prospects for employment. A young girlin Colombia who lacks confidence and doesn’t think of herself as a leader. A team of youngentrepreneurs in Germany who need additional support to get their idea off the ground.All of these are real people we are working to reach through our social investments around the world.We believe that technology and innovation can do more than drive our own success, but help createeconomic opportunity for people throughout the world. These two goals appear to us as one and thesame. Our own sustainable future hinges on our ability to build new markets, cultivate talent, andencourage entrepreneurship that fuels the creation of jobs, economic growth and the demand for ITservices.To address these priorities and maximize our impact, we have refined our approach to focus on howwe can enhance education for underserved youth and propel “emerging” entrepreneurs. Suchentrepreneurs have a great idea for a new business and are poised to bring it to scale, but need aninfusion of capital, technology, mentorship or other support to reach success.To learn more about our progress, click below:Technology DonationsVolunteering HoursSocial Investments

Aligning our efforts with our strengths and business strategyEducation and entrepreneurship align with our core strengths and strategic direction. For years, wehave collaborated with universities worldwide, providing our software and technology training. Weunderstand the needs of tomorrow’s entrepreneurs and can provide them with the technology theyneed to move forward. Increasingly, we are serving small and medium-sized businesses through ourmobile and on-demand solutions, which provide greater efficiency, speed and flexibility to compete intoday’s fast-paced global economy.Our efforts benefit SAP as well as people and communities. As youth become educated, they becomeour potential future employees. They may contribute to our customers or other entrepreneurialventures, thereby building a stronger business ecosystem. In addition, the next generation ofentrepreneurs could evolve into our customers.At the same time, exposure to young people and entrepreneurs feeds our own innovation. Members ofour leadership team in India recently met with local leaders who are improving people’s lives throughnew business models. One organization helps women who have been waste-pickers at Mumbai’slargest dump to develop new skills. “We found outstanding examples of leadership fromunconventional sources,” says a member of our team, who is working to foster the cross-pollination ofideas between such social entrepreneurs and SAP.

Mobilizing our talent, technology and capital to create deeper impactWe have three main pillars for fulfilling our vision: engaging our talent, leveraging our technology, andinvesting our capital. These strategies work in tandem. In citing barriers to success, youth andentrepreneurs frequently point to a lack of technological expertise, role models, and real-worldexperience. We are cultivating skills-based volunteering by tapping our employees to act as mentorsand business coaches. And we are providing our technology so that non-profits have access tocutting-edge tools.In our last report, we set ambitious goals for 2011. These included:

· Enabling 1,000 nonprofits through our technology.· Activating 100,000 employee volunteer hours. We called on our employees to dedicate their

skills, time and commitment to helping us realize our social mission.· Positively impacting 1,000,000 lives through our social investments. We measure this impact

based on our total cash donations, the number of initiatives we have funded, and the numberof recipients of our volunteering, technology donations, grants and other programs.

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Where we are heading: Working to realize our visionWe exceeded two of our goals in 2011 through a wide range of projects in approximately 50 countries.We positively impacted 1,164,348 lives – from teenagers in Chicago who were inspired to stay in highschool because of a course in entrepreneurship to cashew farmers in Ghana who increased theirincomes through our mobile technology. Our employees volunteered 104,333 hours in communitiesaround the world, from rural villages in India to major cities in Europe.

We did not fully reach our goal to enable 1,000 nonprofits with our technology, reaching 863 in 2011.While this number represents a 20% increase over 2010, we believe we can do even better. We areworking on two fronts to increase participation. Among nonprofits, we are providing training to highlightthe potential to innovate and run better through technology. Among our internal teams, we arespreading the word about these projects, which are not just about donating our technology butmarshalling the skills of our employees to design solutions. Those who have participated describe adeep satisfaction in helping an organization that is providing a social benefit, as well as anenhancement of their own skills from tackling a new challenge.

We still have more work to do. Just as our strategy did not emerge overnight, neither will our results.While we have committed to focusing on education and emerging entrepreneurs, we are in a transitionand face the challenge of coordinating programs worldwide. We will rely on strong leadership tomanage our partnerships and teams on the ground as we seek to deepen our impact.We are still evolving how we measure this impact, a complex undertaking that poses a variety ofquestions. What does it mean to impact a life? How do you quantify what is difficult to define? Whilewe improved our methodology in 2011, it could be even more rigorous. In the future, we plan tospecify that more of our social investments, such as our technology donations, align with educationand emerging entrepreneurs.We will also look more closely at the outcomes of our efforts to better understand – and report on howwe are impacting people’s lives. For example, we are developing criteria for such metrics as thenumber of high-quality jobs that have been created as a result of our programs. We will also seek tomeasure benefits for SAP, such as increased sales of our products in our target markets.

New pilots and a focus on the long-term: Our plans for 2012 and beyondCurrently we are looking at the entrepreneurial landscape in India and Brazil, the two countries wherewe will first focus our efforts. We are conducting interviews to understand what it will take for small andmedium-sized businesses to thrive in these regions and are developing new partnerships. In 2012 wewill make strategic investments in India and Brazil, as well as investigate future expansion in otherparts of the world.At the same time, we are pursuing projects to deploy our technology and talent, including:

· We are piloting a sabbatical program for high-performing employees to spend concentratedtime working with entrepreneurs. Small teams of next-generation leaders will travel toemerging markets to work closely with NGOs on social innovation projects.

· We are introducing Technology Showcases in which SAP will partner with NGOs to helptransform organizations through technology and innovation. In 2012 our first partner will beEndeavor, a leading NGO devoted to working with high-impact entrepreneurs.

· We will continue to develop opportunities in which we can deploy all three pillars of ourstrategy - our technology, talent and capital - to heighten our impact.

· We will host several “social innovation jams” in 2012. Centered on the challenges stemmingfrom the global population reaching 7 billion, our first jam in the fall of 2011 engaged teams ofSAP employees and others to generate ideas for spurring economic and educationalopportunities.

Finally, we are committing to work over time. Our social investments reflect the challenge ofsustainability more broadly – to balance short-term needs with long-term thinking. We can only createlasting impact by laying a strong foundation upon which to build in the future. While our vision isambitious, we believe it is fundamental to fulfilling our purpose to create a better-run world.

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6 Gallery of stories6.1 Soda VillageHighlights: A unique project in a small desert village seeks to link residents with the best thattechnology has to offer: faster access to records and services, a stronger system of governance, anda virtual classroom in the center of town.

The challenge and the opportunity: Without computerized records, leaders of India’s rural villagesmust rely on a bureaucracy that can be slow, onerous and lacking in transparency. In addition, withlittle access to education and training, many residents – including the young people who are needed tofuel a healthy local economy – are unemployed or unable to read and write.

Our work so far: We have partnered with Soda Village in Rajasthan to help it marshal technology tosupport its 10,000 residents. Specifically, we have worked with the sarpanch, or leader, of the villageto create an intranet and internet portal, as well as a technology education lab.

The portals make answers to critical questions accessible with only a few clicks – leaders can now seehow much funding is allocated to the village for such services as a community center or eye care.Land records are posted online, and birth and death certificates have become computerized. What’smore, the village portal is linked to state government web sites, connecting residents to vitalinformation. Beyond this access, the e-lab – located in the center of the village where people caneasily walk - offers training in Microsoft Word, Excel and Powerpoint and eventually will expand tooffer courses in a range of subjects. The goal: a virtual education system that is accessible to all.

Impact: Soda Village has become a model for a blending of the old and the new. In this ancient village,the ground water has been declared unsafe for drinking and even agriculture; ensuring access toclean water is one of the pressing needs that first inspired the partnership with SAP. The village’ssarpanch, Chhavi Rajawat, aims to make government more accountable and seeks to tackle herregion’s unemployment and illiteracy rates. Computerization, she says, is really about creatingopportunity and equity. For SAP, such opportunities translate to a more educated workforce, as wellas healthier local economies that may drive demand for our software services.

We are inspired to replicate the Soda model in other villages. Our managing director in India, PeterGartnerberg, envisions bringing a similar project to his ancestral village, Tarn Taran, in Punjab. We willalso continue to work with residents to make improvements in the model and empower them to shapethe e-lab to their needs.

From Berkeley to Mumbai: The personal story behind a project in India

For Peter Gartnerberg, the Managing Director of SAP India, our project to bring greater transparencyand computerized records to Soda Village holds a special meaning. Here he talks about his Indianroots – and why he is passionate about using our technology to help those who live in the country’srural areas.

What is your personal connection to India?

I’m originally from Berkeley, California. On my mother’s side, I have roots in North India, in Punjab. Mygrandfather is Sikh and grew up on a farm. My family still has farms in northern Punjab – they havewater buffaloes and farm a lot of wheat and rice. I have hundreds of cousins. It’s a massive family -tons of people come greet me when I visit. I’m not even sure how they’re all related to me. But themost direct and most important person with me is my wife, Indira – she’s also Indian.

Did you visit India while you were growing up?

Yes, when I was 10 years old. At that age you’re really open to places. Everything is interesting andentertaining. I got on top of any animal I could. One thing I wanted to be as a kid was a farmer, sovisiting my grandfather out in rural India was exciting. I didn’t go through any kind of culture shock.That continues today. I’m very at home in India.

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What do you like most about it?

The people. If you’re working here, there’s so much talent and a real innovative drive. I like the workculture and the challenge of working with really intelligent customers and colleagues. There’s lots ofother things too – the food, the colors, the diversity. It’s an exciting place to live.

How did the Soda Village project come about?

A lot of it was a strong collaboration with Archana Sahay, who leads India’s CSR initiatives, and mypublic sector team, which does a lot of work with the government sector in India. Early on, I said to theteam, “What can we do in rural India?” You’ve got 70% of the population residing in rural areas. Wewere trying to figure out ways to have a huge impact with replicable models.

Did you set out to tap SAP’s strengths?

We asked what we could do with our technology and experience to make a significant contribution to avillage. There are 600,000 villages in India – if we could create a model, we could scale it.

What was the biggest challenge?

A big issue was finding a village where we had someone who was open-minded and could work withus. You have to have a sort of informant who can bridge the gap between what’s going on in a villageand what we can do as a high-tech company. We found the first woman village head with an MBA.She understands technology and the workings of the Indian government.

How did the project evolve?

Her biggest problem was that the village doesn’t have enough water – it can’t be used due tocontamination. Most villages in India receive a lot of subsidies from the government but the processlacks transparency. There are also a lot of issues around land ownership and titles in India – a lot ispaper-based. They had lost all their paper records in a fire. She also wanted to build capacity in thewhole area of computers and the internet – we put a computer lab in the village to help withemployability.

What’s the ultimate goal?

Creating transparency and accountability in these government services through computerized recordscan have a huge impact. Right now so much money gets lost in these disbursement chains. When youmultiply it by hundreds of thousands of villages, it means that the money intended to get someplace ismuch more likely to get there and to be spent as intended. As we expand the project, we’ll use mobiledevices as key access methods to help connect people with supply chains and receive weatherreports and farm guidance. Those services can transform these villages.

So the impact could be huge.

In India you have a kind of mass micro-impact. It may be a lot of small impacts you’re triggering. A lothappens even at the family level, or small businesses and groups. There’s lot of them – billions ofthem. You have to start by figuring out what are those small things you can impact, and then scalethings up.

What else do you envision for the project in the future?

The first thing is we need to work on Soda more to make sure we have a successful model. That willtake some time still. We don’t know everything, and we need to see and adjust. Once we achieve that,we want to look at how to propagate the model throughout India. I obviously want to get it up toPunjab. It’s a pretty advanced state and relatively rich. A lot of the infrastructure exists there already,but they have many of the same governance issues.

Is there a business benefit for SAP?

There’s a great business potential for any company that can figure out how to serve rural India – a lotof companies are trying to do that. There’s no doubt that if we create a successful model, it’s

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something we could market. The Indian government is always looking for ways to serve thatpopulation too. And there are a lot of learnings that would be useful for our clients.

How does it feel to think about serving your own relatives?

We want to do this in all the states of India, but it would give me a lot of satisfaction to see what wecould do in my ancestral villages. That for me is the ultimate definition of success. You love whatyou’re doing and you’re also able to make a contribution to society. That’s a fun job.

6.2 Helping students start their own businesses – A volunteer’s storyIt was one of those moments you don’t see coming. Jennifer Zarcone, who works in our New Yorkoffice, had been invited to an event organized by a nonprofit that works with teenagers throughout theU.S. It could have been the kind of program that people attend mostly to be polite. It could have beenfilled with dry speeches about what it takes to reach today’s youth. It could have been an experiencethat leaves a mild impression, after which you shake a few hands and head back to work.

But it was none of those things. Zarcone walked into the national business plan competition sponsoredby the Network for Teaching Entrepreneurship (NFTE). Instead of speeches, she heard teenagers –decked out in formal attire – pitch their business ideas. Not in shy voices filled with awkward pauses,but in the clear language of revenue projections, growth strategies and marketing plans. They stoodnext to their power points, their faces serious, before hundreds of people, including executives fromsome of the world’s biggest companies who were acting as judges. As the students spoke, peoplelistened – intently.

“I was done,” says Zarcone. “They just had me. When I was 16, I was on the phone for four hours aday and blowing out my hair. I wasn’t starting my own business. I certainly couldn’t stand up in front ofhundreds of adults and explain my business plan. These kids are unbelievable.”

In that moment several years ago, Zarcone knew that she had to get involved with NFTE, and sincethen she has become a dedicated coach to students in the program. “Some of these kids have neverseen an office and don’t even know how to picture what working for a corporation is like,” she says.She and other volunteers have brought groups to SAP for sessions on advertising and branding.“Since we’re a marketing office,” she adds, “it’s a great fit.”

In the last competition, Zarcone worked closely with a Pakistani student named Sidra, who wasstarting a business to sell her Henna tattoos, their expressive designs a marked contrast to Sidraherself. Shy and quiet, she barely spoke and was struggling to write in English. “She had only been inthe city for a few years,” recalls Zarcone, a communications lead who supports our sales team. “Shewas 19 and was this tiny little thing who barely ate. When we first started, she would just nod. By theend she was a lot more confident. She would actually call me and ask for help. She wanted to practiceher presentation over and over again, and her sense of humor came out.”

Twice a week for six weeks, Zarone met with Sidra after work. She helped her think bigger aboutwhere and how she could market her business. “It never occurred to her to have a Facebook page,”she says. “A lot of her business plan focused on school. She didn’t have the confidence to go beyondher little world.”

Sidra won her school competition and made it to the regional round, where Zarcone wasn’t sure howshe would compete next to students who were much more outgoing. “Her presentation was flawless,”she says, a note of pride in her voice. “She knew it by heart.” Sidra won a special award to help herstart up her business with a booth on the boardwalk at Coney Island.

Meanwhile, Zarcone was more hooked than ever. “I like being able to open up a new world to thesekids. I live in New York City – all you see is shiny Manhattan and not the immigrants in Coney Island.As SAP we can open up a bigger world. I come from a small world too. I was the first person in myfamily to go to college. I didn’t know anyone who had. I didn’t have anyone show me different ways tosucceed. I’m just happy to do that.”

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She and others from our New York office recently “adopted” an NFTE class on the lower east side,and will be coaching them on their business plans. Zarcone says the experience has brought someunexpected benefits back at the office. “When you have to simplify something so much, it helps you goback to your work and ask, ‘Can I make this simpler somehow?’ It helped me edit myself.”

She has also gained a new sense of living in New York. “When you live in a city like this where mostdays you can feel like a speck of dust, volunteering can make you feel more a part of it,” she says. “Idon’t know how to describe the satisfaction.”

6.3 Ashoka Leading ChangemakersLocation: Berlin, Germany, and Buenos Aires, Argentina

Highlights: What will it take to inspire and empower the next generation of social entrepreneurs? Wehave partnered with Ashoka to provide young Changemakers with resources to turn their ideas intoreality.

The challenge and the opportunity: Addressing the world’s challenges demands a new breed ofentrepreneurs. Young people often have the spark of a great idea but need support to get it off theground. SAP needs to build a pipeline of talent and foster emerging businesses to ensure itssustainable future. By connecting with the next-generation of Changemakers, we gain access to newenergy and approaches to feed our own innovation.

Our work so far: For over 25 years, Ashoka has led a global movement for social change, driven bythe belief that there is nothing more powerful than a good new idea in the hands of a socialentrepreneur. In 2011 we supported Ashoka to develop their growing network of young changemakersto empower, encourage and enable them to pursue their ideas. At two workshops in Berlin andBuenos Aires, participants met to share and work on their challenges and solutions. One standout:Who knew that rap and being a young changemaker are not mutually exclusive, as one participant inBerlin demonstrated powerfully.

Impact: The young Changemakers gain practical support, inspiration and opportunities to collaborate.SAP benefits by laying the groundwork for new ideas and building a pipeline of talent. We also gainsupport for our own innovation; in Germany, participants helped us co-design solutions for ourCorporate Social Responsibility program, suggesting that instead of funding traditional youthprograms, we could enlist the youth themselves to design new approaches.

Where we’re heading: We aim to deepen our relationship with the Ashoka Youth Initiative to expandsupport for the program, starting in Germany, then Austria and Switzerland. We will offer a targetedgrants program for the Leading Changemakers to support their leadership and entrepreneurial skills.SAP colleagues will use their professional skills to provide insight and training. We also aim to tap intothe talents of the Changemakers to help shape SAP’s CSR programs, especially for children andyoung people.

In their own words: “The young people brought me so much inspiration and innovation that I did notthink was possible. It’s easy to get stuck with what you know – collaborating with these young peopleis very refreshing. Social responsibility helps bring SAP closer to society – but it also brings the best ofsociety into SAP.” – Gabriele Hartmann, director of Corporate Social Responsibility for Germany,Austria and Switzerland.

“50% of Germany’s youth are interested in social change but stay passive. The LeadingChangemakers design new concepts to make it as fun and easy as possible for youth to becomeChangemakers. In partnership with SAP we now want to set up a program that aims at theprofessionalization of youth Changemaking to maximize their impact and help them turn theirvolunteering into a potential professional career in the field of their passion.” - Dennis Hoenig-Ohnsorg, Ashoka Germany

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6.4 A unique perspective from the head of SAP Labs IndiaV R Ferose has been Managing Director of SAP Labs India since April 2010. Along with othermembers of our senior leadership team, he went on our first Leaders’ Quest last year, encounteringpeople and places far removed from day-to-day life at SAP, such as women who once eked out anexistence as waste pickers at India’s largest dump. Ferose gives voice to how leadership, innovationand sustainability can come together to help us realize our vision of creating a better-run world. Herehe talks about everything from seeing situations differently to why you won’t hear him mention his title.

On who he is……

I’ve been at SAP for 13 years. I started as a developer. My father worked in the Indian railways as asignal and telecom engineer, and I grew up seeing and experiencing multiple aspects of India. It gaveme a great upbringing because every part of the country is completely different from the other. It mademe a complete person.

One thing I learned from both my parents was the power of giving. Even when my parents had verylittle, they always gave part of that little. My personal life has helped me become what I am today. I’ma Muslim and I married a Hindu. This was like war, it’s just not done. It took us 10 years to get married.I’ve thought, “If I can handle this, everything else looks pretty simple.”

On having a heart and taking risk……

When you talk about sustainability, there has to be a certain amount of heart to what you do. Thatdoesn’t mean you’re not a tough guy when you need to be tough. When you give without expectinganything in return, it comes back tenfold. I’m not saying I’m perfect – I’ve always made mistakes. Butin the worst moments some door opens up. That has been extremely powerful.

I’m a huge risk-taker. I think the most successful people have the lowest mortgages. Why? Because,with a huge mortgage, your ability to take risks reduces. Then you work for the bank, not SAP. I live inthe same house I bought as a developer.

On creating change through new business opportunities…..

Sustainability can’t be looked at in isolation. The idea is not just being a good human being, but howdo you translate that into a business benefit? A lot of people don’t get that. Money by itself is notwrong. It’s about how you earn it and what you do with it. The business and the social aspect and whoI am as a person – they all converge. That’s where the magic happens.

One focus of mine has been to bring in differently abled people to SAP – they bring a differentstrength. I was invited once to a company to give a keynote speech – it was the largest BPO (businessprocessing outsourcing center) in India, where all the employees were differently abled. Fifty percentcouldn’t hear.

I asked the CEO to talk to my services heads in HR and facilities about his employees’ capabilities,what they’re good at. It turns out that we generate some of our own electricity and there’s a huge roomwhere no one wants to work because it’s very loud. You know what? We hired the deaf employees.

You now found a business solution in a social context. SAP is getting the benefit. My job is ultimatelyabout connecting the dots. You can solve the problem – that’s what leaders should do, but anybodycan do it.

On reframing a perceived weakness as a strength…..

I met this guy from Denmark and invited him to speak at SAP. His son is autistic and he said, “Thebiggest challenge is these children were never independent because they never got jobs.” They hadtwo challenges -- one is communication skills, and the other is that you have to be a team player. Butthey have a fantastic memory, and they can do the same thing over and over again without feelingbored. He started a company that tests software and builds gaming software. He has hiredemployees with autism and they are outstanding.

The way companies hire is we reject, we don’t select. I’ve asked, “Can we focus on what people aregood at?” This is not doing charity. This guy is making profits. We are working towards the

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employability of persons affected by autism, especially in testing. They don’t make mistakes and haveintense focus. It makes business sense.

On what it takes to learn……

If you want to know something, you should experience it. That’s what our Leaders’ Quest is about.You have to feel it. There’s a difference between experience and exposure. An exposure is when yousit in a classroom and they tell you what to think. I believe in learning from unconventional sources.The best learnings happen when you put yourself outside your area of comfort.

We’ve invited a few women from the slums of Mumbai to speak to our employees. We met them onthe Quest. If you start understanding these women and their challenges, you see that they are morefocused than most of us. They have an infinite ability to fight the odds.

On leadership…..

There are more books on leaders than leaders in the world. Leadership is all about storytelling. When Igive a speech, it’s only stories. I have always talked about my failures more than my successes. In myfirst job, my boss told me I was a misfit in the IT industry. I just was not focused because I was busywith my personal life.

When I speak, I’m least interested in “corporate objectives.” I gave a speech about our goal topromote more women to management, and I spoke about five women in my life who shaped who I am.If there were no corporate objectives I would act the same because I believe in the power of diversity.

I’m being interviewed by someone writing a book on the difference between smart leaders and wiseleaders. People who are smart think they are born smart, and they polarize groups. Wise people bringpeople together, they have a sense of humility. They know how much they don’t know. I’ve never hada signature in my email that says “Managing Director.” I am not what I am because of the title.

On thinking big and changing the world…..

I’m asking, “How do you transform the company?” Honestly, a lot of what I’m doing wouldn’t bepossible in another organization. One example is Charitra – which means character. It’s a product outof Labs in India. We believe that many of the problems in the world can actually be solved if thepeople who have things in excess can be matched with people in need. In India, more people die ofcold than from earthquakes. They don’t have enough clothes living on the street. In my own housethere are clothes I’ve never worn – that is something that solves the problem. We said “Why don’t webuild a platform?” It’s as simple as that – matching the excess with the need. This was the first productcreated in under 90 days at SAP. We now have more than 10,000 users.

How can SAP change the world, big-time? In many ways, the answer is about creating employment –it is not about how much money you give. If I hire four differently abled people, that is makinginvestments for the future. We have to articulate the business value, and it needs to be engrained inthe culture.

I want to create something long-lasting – otherwise you have not created the right culture. I’msomeone who thinks big. I want to make a big difference. But it could be anyone. What is possible andwhat is not is only a thought. If you say, “I can’t do this,” it’s only in your mind. You just haven’t tried ityet.

6.5 Sustainability in ItalyIn January 2011, Tiberio Tesi became the Chief Sustainability Officer for SAP in Italy – the first personto hold this position in one of our regions. He has helped turn Italy into a model for change, setting itsown carbon targets and achieving a highly respected certification in Europe. Here he talks about hispassion, philosophy and what Italy has accomplished so far.

What did you do first when you took on the CSO role?

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I started reading books as well as all the agreements among nations in the past 20 years. I tried tobuild a deep knowledge about what sustainability means. I wanted to know the state of the art, notonly at SAP but outside.

What did you take away from your reading?

There was an article in Harvard Business Review about how sustainability helps companies in theirstrategic positioning. It was about how innovation and sustainability go hand-in-hand. I was fascinated.

How did you start acting on these ideas?

First we had to improve our knowledge among our 600 employees so that they could talk withcustomers. Everyone at SAP needs to understand how we’re contributing to the planet. Anotherelement is to act as an exemplar. I asked, ‘Why don’t we bring together companies that are reallyinterested in sustainability?’ We created a conference last October with zero budget. We started with adream. The aim was to establish SAP as a leader and influencer.

Any other major projects to share?

We did a pilot of ISO 14001 certification, which is a widely recognized environmental managementstandard in Europe. You need to be credible – it’s like if you’re a doctor but then I discover that youdon’t have a degree from a university. This was the minimum requirement to be credible in front of ourcustomers.

What about social sustainability?

We are doing a review of benefits for our employees – one goal is to make them flexible so thateveryone can choose what is right for them. We’re focused on education and career acceleration. Andwe’re looking outside of SAP. One of our projects focuses on helping people with terminal conditions.We need to remember that while we’re focused on great things, there are other realities in the worldtoo.

Where are you headed in the future?

We are continuing to focus on decreasing our CO2. We have set our own targets for Italy. One of ourclear objectives is to involve as many people as possible in the agenda for sustainability.

Why is that important?

We need to create a culture around this. We established objectives for decreasing our use of electricpower, but this is not about programming a machine. We had to involve people.

How does this translate to success for SAP?

We are telling our customers, ‘We will learn with you,’ and we can support you in all sectors related tosustainability. We are creating the conditions for SAP to be a market leader.

6.6 Network for Teaching Entrepreneurship (NFTE)Location: Boston, Chicago, Dallas, New York City, Philadelphia, Palo Alto, Washington D.C.

Highlights: Traditional classes are not enough to engage today’s high school students and preparethem for successful careers. We help fill in the gaps with the lessons of entrepreneurship: how to getinspired, spot great ideas, turn them into action, and weather the inevitable highs and lows ofbusiness.

The challenge and the opportunity: For many students, the difference between staying in high schoolor dropping out comes down to one word: motivation. Whereas typical classes can feel divorced fromthe real world, tackling the challenge of coming up with a new businesses idea is hands-on, requiringfar more than sitting and listening to a lecture or tackling a homework assignment. Thinking like anentrepreneur has proved to be life-changing, especially in low-income communities where manystudents lack a sense of ownership over their future.

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Our work so far: We have partnered with NFTE to bring classes in entrepreneurship to high schools inseveral cities throughout the U.S. Students talk about competitive advantage, ownership structures,marketing, finance, and product development. They must come up with a new business idea and writea business plan – one girl, for example, thought of creating gloves with magnetized tips, so that they’dbe easy to use while typing on a iPAD or iPhone. SAP volunteers offer coaching, bringing students toour offices to help them hone their ideas and prepare for business plan competitions.

Impact: NFTE has documented success in keeping students in school, addressing a drop-out rate thathas reached crisis proportions: one-third of all high school students in the U.S., and nearly half of allAfrican-American and Latino youth, do not graduate. Significantly, more than 80% of young peoplesay that they would have stayed in school if it felt more relevant to their real lives. Research by theHarvard Graduate School of Education found that interest in attending college increased by 32%among students in NFTE programs; other research has showed that 70% of program alumni were inpost-secondary education.

For SAP, the program has equally powerful benefits. By fostering an entrepreneurial spirit in youngpeople and encouraging them to stay in school, we are expanding our own potential pool of qualifiedapplicants for future jobs with our company. Should they start their own businesses, they are alsopotential customers of our software. Finally, our volunteers benefit from coaching students, gainingvaluable skills as they think through problems and articulate their ideas in new ways.

Where we’re heading: We intend to continue our partnership with NFTE.

In their own words: “NFTE New York Metro is immensely grateful for SAP’s support of our New YorkCity programs. Each year, SAP’s footprint grows and the contribution of their volunteers serves as thebackbone to the success of our city-wide business plan competition. SAP’s dedication to NFTE andour students sets a shining example for other corporate partners in New York City. We are proud to beaffiliated with such a tremendous organization that truly goes above and beyond to make NFTE NewYork Metro ‘Run Better.’” - Terry Bowman, Executive Director, New York Metro Network for TeachingEntrepreneurship.

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7 Explanatory Notes

These Explanatory Notes refer to environmental as well as social data in this report, including· the Carbon Footprint reported in CO2 equivalents,· the global energy consumption of SAP,· the share of renewable electricity,· other environmental data,· employee related data.

Environmental dataAll environmental data was reported on a quarterly basis, consolidated and audited once a year for theannual sustainability report. SAP´s carbon footprint is based on a global reporting framework – theGreenhouse Gas Protocol (GHG Protocol). The GHG Protocol is an international accounting tool toreport greenhouse gas emissions.All environmental numbers are based on the metric system. Whenever we state ‘tons’ we mean metrictons.

Reporting Principles“GHG accounting and reporting practices are evolving and are new to many businesses; however, theprinciples listed below are derived in part from generally accepted financial accounting and reportingprinciples. They also reflect the outcome of a collaborative process involving stakeholders from a widerange of technical, environmental, and accounting disciplines.” (Source: GHG Protocol)GHG accounting and reporting shall be based on the following principles:

· Relevance: Ensure the GHG inventory appropriately reflects the GHG emissions of thecompany and serves the decision-making needs of users — both internal and external to thecompany.

· Completeness: Account for and report all GHG emissions sources and activities within thechosen inventory boundary. Disclose and justify any specific exclusions.

· Consistency: Use consistent methodologies to allow meaningful comparison of emissions overtime. Transparently document any changes to the data, inventory boundary, methods, or anyother relevant factors in the time series.

· Transparency: Address all relevant issues in a factual and coherent manner, based on a clearaudit trail. Disclose any relevant assumptions and make appropriate references to theaccounting and calculation methodologies and data sources used.

· Accuracy: Ensure that the quantification of GHG emissions is systematically neither over norunder true emissions, as far as can be judged, and that uncertainties are reduced as far aspracticable. Achieve sufficient accuracy to enable users to make decisions with reasonableassurance as to the integrity of the reported information.

(Source: GHG Protocol)

Organizational BoundariesSAP defines its organizational boundaries using the operational control approach as defined in theGHG Protocol.Operational control is established when SAP has the full authority to introduce and implement itsoperating policies and thus has operational control. The emissions of all operations over which thecompany has operational control and all owned and leased facilities and vehicles that the companyoccupies/operates, are included in the GHG inventory either based on measurements or onestimations/extrapolations where no measured data is available.A portion of leased facilities operate under full-service and/or multi-tenant leases, where the buildingowner/manager pays the utilities directly and SAP does not have access to actual energy consumption

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information. SAP includes these facilities in its definition of operational control, and estimates theenergy consumption.Since SAP has in most instances 100% ownership of the subsidiaries, the difference between thecontrol and the equity approach is only 0.6% based on SAP’s revenue. If further investments inassociates are included, the difference is even smaller, 0.5%.The 2011 Carbon Footprint also includes the emissions from Sybase, a company that was acquired in2010.

Methodology UpdateIn our efforts to continuously improve the data quality of our corporate carbon footprint data wealready conducted last year a comprehensive methodology update to fully adapt the GHG Protocolguidelines. Therefore we already reported last year all our emissions in CO2 equivalents and hencealso include the impact from CH4, N2O and HFC’s in our scope 1 and 2 emissions.During 2011 the focus was on data quality improvement wherefore SAP introduced an improvedquality assurance process for the reporting cycles. Further we defined a system based approach forthe facility data collection and the sign off by the data owner.Below you will find the different parameters contributing to our carbon footprint

Scope 1· Stationary Combustion Facilities: inclusion of CH4 and N2O; stable values (kWh/m2) instead

of actual average consumption are used for extrapolation of buildings where no measureddata is available (55% measured data). In case no specific information was available, naturalgas reported by local sites is assumed to be reported in Lower Heating Value.

· Refrigerants Facilities: Refrigerant data is reported for completeness of the SAP carbonfootprint but HFC emissions are fully estimated (0% measured data) based on the number ofserver units and office space with an A/C system; all refrigerants are assumed to beHFC134a.

· Mobile Combustion Corporate Cars: inclusion of CH4 and N2O; in 2011, twelve countrieshave reported actual fuel data (85% data coverage); for the other countries stable values(liters/car) are used for extrapolation based on the number of corporate cars reported. Thestable values are based on SAP´s 2009 Carbon Footprint data.

· Refrigerants Corporate Cars: Refrigerant emissions are based on a rough estimate of HFCemissions per car and extrapolated based on the number of corporate cars reported (0%measured data).

· Mobile Combustion Corporate Jets: Inclusion of CH4 and N2O (100% data coverage).

Scope 2· Electricity Office: updated CO2 conversion factors and inclusion of CH4 and N2O based on

country specific grid factors; stable values (kWh/m2) instead of actual average consumptionare used for extrapolation of buildings where no measured data is available (85% datacoverage). The stable values are based on SAP´s 2009 Carbon Footprint data.

· Electricity Data Centers: updated CO2 conversion factors and inclusion of CH4 and N2Obased on country specific grid factors; electricity consumption for internal data centers isextrapolated based on the number of server units (70% data coverage). The stable values arebased on SAP´s 2009 Carbon Footprint data.

· Purchased Chilled & Hot Water, Steam: inclusion of CH4 and N2O based on country specificgrid factors.

Scope 3· Business Flights: average emission factors for business flights are calculated based on short,

medium and longhaul flights; extrapolation of CO2 is based on the actual distance travelledand the net (excluding tax) costs. (80% data coverage)

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· Rental Cars: average emission factors from rental cars are calculated based on an actualdistance traveled and these are used for extrapolation based on the costs. (85% datacoverage)

· Train Travel: average emission factors from train travel are calculated based on an actualdistance traveled and these are used for extrapolation based on the costs. (50% datacoverage)

· Business Trips with Private Cars: carbon calculation is based on distance traveled with privatecar. Train and company car trips are excluded from this activity type. (100% data coverage)

· Employee Commuting: a system integrated commuting survey about the distance to work andthe mode of transport has been conducted for SAP global. Response rate for this survey was35% and commuting for other employees was then extrapolated based on remaining numberof FTEs excluding those employees that own a corporate car. Even though the response ratedropped from 45% in 2010 to 35% in 2011, the results are still representative and comparableto last year.

· Parcels: calculation is based on the actual number of parcels sent from the German logisticscenter and extrapolated globally. (100% data coverage)

External Reduction· Renewable Energy: Purchased renewable electricity is not included in the scope 2 emissions

calculations; CO2, CH4 and N2O conversion based on grid specific factors from the origin ofrenewable electricity were used; data is only valid with an official certificate or writtenconfirmation of the electricity supplier (100% data coverage).

· Offsets: Offsets are reported separately based on the amount purchased. For 2011, no offsetswere purchased.

ComparabilityThe GHG Protocol requires that in the case of a structural/organizational or methodology change,companies make adjustment to historic year inventories if it has a significant effect on reportedemissions. SAP uses a significance threshold of 5% for structural/organizational and 1% formethodology changes of total current year emissions. E.g. a structural/organizational change thatincreases or decreases the total inventory by 5% or more will trigger an adjustment of historic years. Astructural/organizational change that increases or decreases the total inventory by less than 5% will beconsidered insignificant and thus no adjustment will be made.The integration of Sybase’s emissions was the only structural/organizational change in 2011 thatrequired an adjustment in previous years.

Data Quality Carbon FootprintError Correction: If a significant error is found in the base year inventory, then it will be corrected. If asignificant error is found which does not affect the base year but has an impact on this year´s or lastyear´s emissions it will be corrected. A significant error is one that overstates or understates thecompany’s CO2-equivalent emissions by 1% or more.No restatement due to error correction of historical data was necessary.

Other Environmental Data· Renewable Electricity: To calculate the percentage of renewable electricity compared to the

total electricity consumption, the sum of purchased renewable electricity and the amount ofrenewable electricity already in the grid was taken.

· Water: Data is based on estimations from sites and is largely extrapolated. For 60% of thetotal space data was provided (estimated) and the remaining data is extrapolated based onsquare meters.

· Waste: Data is based on estimations from sites and is largely extrapolated. Only for 20% ofthe total space data was provided (estimated) and the remaining data is extrapolated basedon square meters.

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Employee related dataWe define the FTE headcount as the number of people we would employ if we only employed peopleon full-time employment contracts. Students employed part time and certain people who are employedby SAP but who for various reasons are not currently working are excluded from our figures. Also,certain temporary employees are not included in our figures. The number of such temporaryemployees is not material.When we calculate data on a per employee base, we use FTE headcount unless stated otherwise.

RetentionWe define "retention" as a ratio that puts emphasis on employee-initiated turnover - in other words, weare seeking to measure how many employees choose to leave SAP voluntarily. We derive ourretention rate by starting with our average number of employees in a given year and subtractingemployee-initiated turnover. Then we divide this figure by our average number of employees to get ourretention rate. As opposed to keeping a low turnover rate - which companies generally seek to do - weare aiming to keep our retention rate high. A higher retention rate signifies that fewer employees arechoosing to leave SAP.We do not differentiate between gender when we analyze retention and turnover rates.

Women in ManagementAt SAP, we differentiate the following categories of managers:

· Managers managing teams: refers to managing teams of at least one employee or emptypositions.

· Managers managing managers: refers to managing managers that manage teams.· Managers managing organizations: is a title assigned to certain employees, they do not

necessarily manage other managers. Mid 2011, SAP decided to no longer use this category.When we use the term “senior management” in the report, we mean managers managing managersand organizations.

Senior management hired from the local communityWe have changed the definition of “hired from the local community”. In the past, we defined thepercentage by comparing nationality to country of hiring. In the 2011 report, we defined thepercentage by checking which senior managers were hired without a relocation contract.

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7.1 GRI IndexGlobal Reporting Initiative (GRI) has pioneered the development of the world’s most widely used sustainability reporting framework. The GRI Guidelines set outthe principles and indicators that organizations can use to measure and report their economic, environmental, and social performance. The GRI has concludedthat the 2011 SAP Sustainability Report fulfills the requirement of Application Level A+.

Fully reported Partially reported Not reported

1 Strategy and Analysis1.1 Welcome address (co-CEO letter)

See Letter from our Co-CEOs.

1.2 Description of key impacts, risks, and opportunitiesSee Our purpose and strategy.

2 Organizational Profile2.1 Name of the reporting organization

SAP AG is listed on the Frankfurt Stock Exchange and the New York Stock Exchange (NYSE) under the symbol "SAP." For more information, see our Annual Report.

2.2 Primary brands, products, and/or servicesSee our Annual Report.

2.3 Operational structure of the organizationSee our Annual Report.

2.4 Location of organization's headquartersSee our Annual Report.

2.5 Number of countries where the organization operatesSee our Annual Report.

2.6 Nature of ownership, legal formSee our Annual Report.

2.7 Markets servedSee our Annual Report.

2.8 Scale of reporting organizationSee our Annual Report and our corporate Website

2.9 Significant changes during the reporting periodSee our Annual Report.

2.10 Awards receivedIn 2011, we received the following awards and recognitions:Carbon Disclosure Leadership Index (Top 10)Carbon Performance Leadership Index (Top 10)Dow Jones Sustainability IndexFor more information see Recognition

3 Report Parameters

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3.1 Reporting periodThe data in this report covers the reporting period from January 1 to December 31, 2011 unless otherwise stated.

3.2 Date of most recent previous reportThe previous report, the SAP 2010 Sustainability Report, was published in March 2011.

3.3 Reporting cycleWe publish our sustainability report annually, in the first quarter of the year. In addition, we report select key non-financial metrics on a quarterly basis.

3.4 Contact point for questions regarding the report or its contentsQuestions or feedback can be sent to [email protected]

3.5 Process for defining report contentSee About This Report.

3.6 Boundary of the reportThe report encompasses global SAP operations and all subsidiaries that were part of the SAP group on December 31, 2011. The data of Sybase, an independent subsidiary of SAP,is included in the financial, HC/FTE data and the key environmental performance indicators. For more information on the data presented in this report, see our Explanatory Notes.

3.7 Specific limitations on the scope and boundary of the reportThe report does not include any qualitative information of Sybase, an independent subsidiary of the SAP group. In addition, Sybase is neither covered in social key performancemetrics nor in the customer satisfaction survey data.

3.8 Basis for reporting on situations that can significantly affect comparabilityIn 2011, for the first time, we include Sybase in our environmental key performance indicators. Also see our Explanatory Notes.

3.9 Data measurement techniques and the bases of calculationsAll data in this report was collected and reported with the help of our own SAP BusinessObjects Sustainability Performance Management analytic application in combination withother non-automated methods. The data was received from different sources: The emissions and other environmental data was collected and analyzed with the help of SAP RealEstate Management and SAP BusinessObjects Explorer. All financial data was collected and reported with the help of the SAP ERP Financials according to the InternationalFinancial Reporting Standards (IFRS) unless stated otherwise. Our shared services data maintenance centers in Prague, Philadelphia, and Singapore collect and maintain all humanresources (HR)-related master data in the SAP ERP Human Capital Management solution for their respective regions. The HR data for this report was aggregated with the help ofthe SAP BusinessObjects business intelligence (BI) solutions by the global HR Reporting organization at our headquarters. Our subject matter experts, who have globalresponsibilities for their area of expertise, are involved in providing and reviewing data and content for this report. For further information on how we collect environmental data seeExplanatory notes.

3.10 Re-statements of information provided in earlier reportsIn our efforts to continuously improve the data quality of our corporate greenhouse gas data, we further improved our methodology to fully adapt the GHG Protocol guidelines. Wehave adjusted our environmental data to include Sybase which was acquired in 2010. For more information, see our Explanatory Notes.

3.11 Significant changes from previous reporting periodsIn 2011 we:Updated the methodology for measuring and explaining customer impact;Updated the methodology for measuring and explaining social impact;Applied the new GHG Protocol Scope 3 methodology.

3.12 Table identifying the location of the standard disclosures in the reportSee our GRI Index.

3.13 Assurance statementPlease see the Assurance Report provided by KPMG.

4 Governance4.1 Governance structure

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See our Annual Report and 20F Report. Please find more information on our Supervisory Board, its composition, its committee and corporate governance practices athttp://www.sap.com/about/governance/index.epx

4.2 Chair of the highest governance bodyThe SAP Supervisory Board is chaired by Hasso Plattner, a nonexecutive officer.

4.3 Unitary board structureOur corporate governance structure is based on German legal protocol; due to German law, SAP has a two-tier board structure.

4.4 Mechanisms for shareholders and employees to provide recommendations or directions to the highest governance bodySee our Annual Report and our corporate Website

4.5 Executive compensationSee our 2011 SAP Compensation Report, (p. 44) which outlines compensation for the SAP Executive Board and Supervisory Board.

4.6 Processes in place to ensure conflicts of interest are avoidedOur corporate governance structure is based on German legal protocol, and we adhere to the rules and principles of the German Corporate Governance Code.

4.7 Process for determining the qualifications and expertise of the advisory board.Our corporate governance structure is based on German legal protocol, and we adhere to the rules and principles of the German Corporate Governance Code.

4.8 Internal statements of mission or values, codes of conduct, and principlesFor our mission and strategy, see our Annual Report.SAP employees are at the heart of a culture that defines the organization and the operating principles for our business. We are motivated to be an amazing company to ourcustomers, ecosystem, influencers and each other through our shared passion for: Success - We measure our success by our customers’ success. We commit to the success ofcustomers, partners, colleagues, and SAP. Accountability - We embrace accountability and execute on commitments we have made to ourselves and others. Professionalism - Weexhibit professionalism by consistently delivering quality work. We act with integrity, treat others with respect, pursue personal expertise, and execute with discipline. Integrity - Weare honest and fair and take responsibility for all our actions. We treat our customers and co-workers with sincerity and respect. Teamwork - We value teamwork because it enablesus to exceed our individual limits and share greater success. We take personal initiative in collaborating to achieve success. Trust - We work for each other’s success and takepersonal responsibility for all of our relationships, be it with customers, partners, or colleagues.SAP's Code of Business Conduct for Employees is a statement of SAP’s commitment to safeguarding our investors and customers against unfair competitive practices, corruption,or misleading statements. The code is binding for all employees and sets the standard for all dealings with customers, partners, competitors, and vendors.

4.9 Advisory board oversight of the organization’s sustainability performanceThe SAP Supervisory Board advises and supervises the SAP Executive Board. More information on how the boards cooperated in 2011 can be found in our Annual Report, p. 30. Itobtains regular, prompt, and comprehensive reports about all essential issues of business, corporate strategy, and potential risks from the SAP Executive Board. By staying inconstant contact with the Executive Board, the Supervisory Board can efficiently organize and perform its governance duties. SAP has a dedicated sustainability organization, led byChief Sustainability Officer (CSO) Peter Graf. He reports directly to both SAP co-CEOs, who are also members of the SAP Executive Board. Our CSO is heading the activities of ourSustainability Council, which governs our sustainability efforts. For more information, please see Sustainability Governance.

4.10 Processes for evaluating the highest governance body’s own performanceSee our Annual Report (Meeting in October).

4.11 Precautionary approach or principleWe support a precautionary approach towards environmental management. While we see little apparent risk for our own operations we do see an opportunity to help our customersanticipate and manage this risk in a more agile and responsive fashion through effective product lifecycle management and sustainable design.

4.12 Externally developed economic, environmental, and social charters or principlesWe endorse the following initiatives to meet our sustainability goals:Transparency International Business Principles (since 2005)United Nations Global Compact (since 2000)

4.13 Memberships in associationsTo better understand and enable sustainable performance on a global level, both for our company and customers, SAP subscribes to and routinely engages a range of third-partyorganizations, including: Alliance to Save Energy, Association of Climate Change Officers, Brookings Metropolitan Policy Program, Business for Social Responsibility, CERES, CSREurope, econsense, Environmental Defense Fund, European Water Partnership, Global Reporting Initiative (organizational stakeholder and GRI certified solutions) , Greenhouse

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Gas Management Institute, International Business Leaders Forum, International Chamber of Commerce, Japan Climate Leaders Group, RESPACT, Sustainability Consortium,Transparency International (member of the Transparency International Business Principles Steering Group), UK Climate Leaders Group, UN Global Compact and UN GlobalCompact LEAD, US DOC NIST SmartGrid Governance Board and Interoperability Panel, US DOE Gridwise Architecture Council, US EPA Climate Leaders, WRI / WBCSDGreenhouse Gas Protocol working groups, Wharton/Initiative for Global Environmental Leadership, World Economic Forum

4.14 Stakeholder engagementTo 4.17 see Stakeholder engagement

Management ApproachManagement Approach to Economic, Environmental, and Social PerformanceSustainability is an integral part of our corporate strategy. Our dedicated sustainability organization is led by our chief sustainability officer Peter Graf. For more information, clickhere.

EC Economic IndicatorsEC.1 Direct economic value generated and distributed

SAP generated more than €14 billion in total revenues in 2011. However, the real size of the SAP-induced economy is significantly greater. We help more than 183,000 companiesof all sizes in 130 countries make their business processes more efficient and agile, enable real-time decision making, and create sustainable new value. We fuel and can changeentire industry sectors with our technology.Through our solid economic performance, we generate financial benefits for our employees, shareholders, partners, and society, all of whom share in the wealth we create:

· Suppliers receive payment for goods and services, providing a significant source of revenue for thousands of companies worldwide· Employees receive salaries and benefits, providing income that also contributes back to their local communities and economies· Shareholders benefit from cash disbursements and increases in stock value· National, state, and local governments receive substantial tax payments to help fund their services

For more information about net sales, revenues from financial investment and sales of asset, operating costs, employee wages, payments to providers of capital, payments togovernments and community investments see our Annual Report.

EC.2 Financial implications and other risks and opportunities for the organization’s activities due to climate changeSAP considers climate change to be one of the most critical issues facing society and our ability to build a sustainable future. This was also defined as a key sustainability issue. It isalso a topic that was defined as a key sustainability issue for us by our stakeholders. For this reason, it is our top environmental focus. As a technology company, we believe thatSAP can profoundly impact climate change and our holistic approach to manage carbon emissions has been very successful. Since the peak year of 2007 we reduced our carbonemissions by 18%.Material risks and opportunities related to climate changes are systematically identified and our strategy is built on two pillars: we strive to become a role model for sustainableoperations and we aim to be the leading solutions provider to enable our customers to become more sustainable. The risks and opportunities screened at SAP cover a broadspectrum ranging from risks to our operations arising from regulation (e.g. Green IT), higher energy prices or physical risks (like natural disasters) to opportunities in our operationslike cost savings and market opportunity with our customers.As a technology company, SAP does not foresee material financial risk from climate change regulation, physical impacts, or other risks. There is some risk of Green IT regulation,higher energy prices due to the embedding of the cost of carbon, and an obvious correlation between energy use and carbon emissions. However, we acknowledge carbonemissions as a proxy measure for inefficient operations and excess spend, and as a basis of our strategy SAP developed its specific abatement cost curve tying carbon to financialsavings. Based on the abatement cost curve SAP evaluated more than 20 carbon reduction projects, which are categorized in 3 main areas:

· Awareness: SAP is a people powered company and by increasing knowledge and visibility about sustainability topics to drive behavioral change we create momentum thatsupports our goals.

· Efficiency: Innovative technology leads to higher carbon efficiency and financial savings. More efficient data centers and facilities (as described in Total Energy Consumed)or more efficient vehicles are good examples.

· Transformation: SAP is changing our business to enable employees by providing more ecological alternatives. With more than 40 telepresence rooms and 500+videoconference rooms our employees don’t need to travel as much. We are also moving into cleaner sources of energy globally (52% renewable electricity) as well asproviding benefits such as more and more charging stations for electric vehicles at our offices.

The information technology industry contributes approximately 2% of the global carbon footprint, a figure expected to reach 3% by 2020, according to a study by McKinsey &Company. As such, SAP strongly believes that our largest potential impact on climate change is through providing technology that will help our customers manage more effectivelytheir operations and environmental impact (the other 98% of global GHG emissions). By increasing the efficiencies of their supply chains and operations, we effectively lower the

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GHG emissions of our customer base. For this purpose, we have created a sustainability solutions roadmap and brought solutions to the market that help our customers to reducetheir environmental impact. SAP anticipates significant market opportunity as enterprises of all sizes seek to measure and reduce climate related risk. SAP anticipates that theaddressable market for our solutions will be worth a total of €7.5B between 2009 and 2014 based on a joint study with McKinsey & Company.

EC.3 Coverage of the organization’s defined benefit plan obligationsPlease see our Annual Report.

EC.4 Significant financial assistance received from governmentWith our 2010 Annual Report we have stopped reporting these numbers as assistance received was not material. Assistance received was not material.

EC.6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operationAs a software company, most of our supply chain expenditure is for purchasing services in the consulting and development areas; the goods we purchase are primarily in the areasof IT equipment, car fleet management as well as facility management. For more information, see Sustainable Procurement.

EC.7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operationWe recognize that teams comprised of employees from different cultures and backgrounds contribute valuable understanding of our complex international markets. Therefore, westrive to attract and retain the best and brightest talent from our local communities. In 2011, more than 90% of senior managers were hired locally. SAP will continue its efforts toengage and invest in the talent from the local workforce pool.

EC.8 Development and impact of infrastructure investments and servicesSee Creating Opportunity.

EN Environmental IndicatorsEN.1 Materials used by weight or volume

As a software company, SAP does not have a physical production process. Therefore, this indicator is not material. However, we found ways to reduce the use of packaging in theshipping of our software products. In addition, we set goals to track and reduce materials that we use to keep our own operations running. To reduce our product packaging footprint,we ship some of our offerings on Blu-ray disc (BD). The BD format can store over five times more data than a DVD that was previously used. As a result, we cut back the use ofresources for material and freight since 2010, an important contribution toward protecting the environment. In addition, we offer the possibility to download our software andhandbooks.Internally, we began tracking materials that we purchase and stated clear reduction goals. For example, we set the target to lower the printing paper consumption by 5% in 2011.This target was very ambitious considering that we had already achieved a 35% reduction in the previous two years. In 2011, given SAP’s growth of our business and employeebase, some of the activities required to support the business, such as printing for customer training materials experienced an increase. However, we further reduced the number ofpages printed per employee. To achieve this result, we institutionalized double-sided printing and reduced the number of printers. More training sessions were hosted virtually, andwe offered course materials online. Furthermore, we educated and encouraged our employees to reduce paper use and increase paper recycling. By setting up a printing dashboardwe could provide transparency to all employees on our printing paper usage on a monthly basis. As a result, we achieved a 2% reduction in pages printed.To reduce our product packaging footprint, we ship some of our offerings on Blu-ray disc (BD). The BD format can store over five times more data than a DVD that was previouslyused. As a result, we cut back the use of resources for material and freight since 2010, an important contribution toward protecting the environment. In addition, we offer thepossibility to download our software and handbooks.Internally, we began tracking materials that we purchase and stated clear reduction goals. For example, we set the target to lower the printing paper consumption by 5% in 2011.This target was very ambitious considering that we had already achieved a 35% reduction in the previous two years. In 2011, given SAP’s growth of our business and employeebase, some of the activities required to support the business, such as printing for customer training materials experienced an increase. However, we further reduced the number ofpages printed per employee. To achieve this result, we institutionalized double-sided printing and reduced the number of printers. More training sessions were hosted virtually, andwe offered course materials online. Furthermore, we educated and encouraged our employees to reduce paper use and increase paper recycling. By setting up a printing dashboardwe could provide transparency to all employees on our printing paper usage on a monthly basis. As a result, we achieved a 2% reduction in pages printed.

EN.2 Percentage of materials used that are recycled input materialsAs a software company, we do not have a physical production process. Therefore, this indicator is not material.However, we started setting goals and tracking the use of recycled materials that we use to keep our operations running, such as printing paper. Currently, SAP’s own digital printmedia center and all our external German print suppliers use FSC certified paper. We are now evaluating whether we can introduce paper that is FSC certified and has a 60%portion of recycled paper for all externally produced print products. In 2011, we used this kind of paper for the production of the 2010 Annual Report, the biggest print product of SAP.For our efforts, we received the German sustainability award for the usage of recycling paper (“Deutschlands recyclingpapierfreundlichstes Unternehmen”).

EN.3 Direct energy consumption by primary energy sourceIn 2011, SAP consumed about 1,950 terajoules (1,940 in 2010) / 540 GWh (540 in 2010) in direct energy. For more information, see Total energy consumed and Renewable energy.

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EN.4 Indirect energy consumption by primary sourceIn 2011, SAP consumed about 1150 terajoules (1,100 in 2010) / 320 GWh (305 in 2010) in indirect energy. For more information, see Total energy consumed.

EN.5 Energy saved due to conservation and efficiency improvementsWe identified three key areas to save energy: SAP facilities, information technology infrastructure, and data centers. For more information, see Total energy consumed.

EN.6 Initiatives to provide energy-efficient or renewable energy-based products and servicesWe provide both energy efficiency solutions, tools to optimize our customers' data centers and have strived to reduce our own solutions' energy consumption.

EN.7 Initiatives to reduce indirect energy consumption and reductions achievedAt this stage, it is difficult for us to quantify the reductions in the energy requirements of our software and services. But we are developing a methodology of how to measure oursolutions' environmental footprint at our customers' sites.Our efforts to reduce indirect energy consumption focus on business-related travel and employee commuting. For more information, see EN.29 and Total energy consumed.

EN.8 Total water withdrawal by sourceAs a software company, SAP's operations are not water-intensive. Therefore, this indicator is not material.We estimate that we used approximately 875,500 m3 (869,000 in 2010) of water worldwide in 2011. While our operations are not water-intensive, we continue to use water asefficiently as possible. For example, we use run-off water, also known as gray water, for irrigation and toilets in Walldorf, Germany. We use waterless washroom fixtures and installedpressure reduction valves and reduced flush toilets in our offices in Brazil, Canada, India, Israel, Singapore, Switzerland, and the United States.Note: Water data is based on estimations and extrapolations.

EN.11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areasSAP does not have any buildings in protected areas or areas of high biodiversity value outside protected areas . Therefore, this indicator is not material. Nevertheless, we have set inplace activities to protect biodiversity at our premises.

EN.12 Description of significant impacts of activities, products, and services on biodiversityUntil now, we have not identified significant impacts of our activities as a software company, products, and services on biodiversity. Therefore, this indicator is not material.

EN.16 Total direct and indirect GHG emissions by weightIn 2011, our total direct and indirect GHG emissions (scope 1 and 2) by weight were about 285 kilotons CO2. For more information, see GHG Footprint

EN.17 Other relevant indirect GHG emissions by weightIn 2011, our total other indirect GHG emissions (scope 3) by weight were about 255 kilotons CO2. For more information, see GHG Footprint.

EN.18 Initiatives to reduce greenhouse gas emissions and reductions achieved. See GHG Footprint.

EN.19 Emissions of ozone-depleting substances by weightDue to the nature of our business as a software company, emissions of ozone-depleting substances are not material to SAP.

EN.20 NOx, SOx, and other significant air emissions by type and weightDue to the nature of our business as a software company, NOx, SOx, and other significant air emissions are not material to SAP.

EN.21 Total water discharge by quality and destinationAs a software company, our operations are not water-intensive. Water discharges stem primarily from operating our office buildings. Due to the limited impact, we do not measureglobal water.

EN.22 Total weight of waste by type and disposal methodDue to the nature of our business as a software and service company, our operations are not waste intensive. Therefore, this indicator is not material.We estimate that we generated approximately 10 kilotons (2010: 11 kilotons) of waste in our offices, operating facilities, and product packaging worldwide in 2011. To reduce waste,we are supporting comprehensive recycling programs for office and catering materials. For example, the energy of leftovers (organic waste) in the Walldorf cafeteria is recovered foruse in an external composting plant. At the SAP Labs Bangalore, an “Organic Waste Converter” has been installed in order to recycle all organic waste into odor free homogenizedcompost. SAP Labs received the “Best Organic Waste Recycling Champion” award for these efforts. In addition, for 2011, SAP Labs Palo Alto was named a winner of the WasteReduction Awards Program for the 3rd consecutive year. The California Department of Resources Recycling and Recovery thus recognized our efforts to divert waste away fromlandfill into recycle and composting centers in Palo Alto.We also use cardboard and paper to package our software compact discs instead of plastic when customers request a physical disk instead of electronic download. In general, ouremployees use recycled paper whenever possible. We have guidelines and standard processes for the re-use and disposal of information technology (IT) equipment, such ascomputers and printers. In 2011, we launched a global disposal process for our IT equipment to ensure 100% environmentally friendly disposal through certified brokers.

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EN.23 Total number and volume of significant spillsDue to the nature of our business, spills are not relevant for SAP and are therefore not registered.

EN.26 Initiatives to mitigate environmental impacts of products and services and extent of impact mitigationA measurable impact of SAP's software and services relates to energy and emissions only.Our focus is to reduce the energy in our own buildings and data centers that are utilized through our work and to reduce the resources we use to mitigate the environmental impactof our services. We are also working on optimizing the energy consumption of SAP software. In 2011, we calculated our product carbon footprint for the first time. Moreover, we willcontinue to develop and roll out our portfolio of Green IT solutions and services.

EN.27 Percentage of products sold and their packaging materials that are reclaimed by categorySAP provides customers with software and services. Paper packaging is primarily used for storing and shipping software disks, which require minimal packaging. This packaging isnot reclaimed.

EN.28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulationsMaterial litigation and claims are described in our Annual Report.

EN.29 Significant environmental impacts of transporting products, other goods, materials and members of the workforceThe key sources of our environmental impact through transportation are air travel, our corporate car fleet, employee commuting, rental cars, and business trips with private cars.Logistics, such as mail and software downloads, only have a minor impact. Due to the fact that most of the scope 3 emissions are travel-related, we implemented a global travelagency policy, guided by sustainability principles in 2009.

LA Social IndicatorsLA.1 Total workforce by employment type, employment contract, and region, broken down by gender

Workforce by employment contract is proprietary information at SAP. By the end of December 2011, SAP employed more than 55,000 employees.LA.2 Total number and rate of new employee hires and employee turnover by age group, gender, and region.

A breakdown of new employee hires and employee turnover is proprietary information at SAP. See Employee retention.

LA.3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operationsWe are committed to attracting, retaining, and developing top talent. In support of that goal, we endeavor to offer a flexible and rewarding work environment. We provide local,regional, or global benefits to all of our eligible employees and aim to protect employees and their dependents against financial risks of health care, disability, death, and retirement.

LA.4 Percentage of employees covered by collective bargaining agreementsCollective bargaining agreements are made only in countries where legally required; in the majority of countries, SAP does not have collective bargaining agreements with unions.As published in our Human Rights Commitment Statement, we respect the rights of our employees to organize and to be represented by trade unions and other bona fiderepresentatives of employees in accordance with local laws, and we engage in a constructive dialogue with employee representatives.Since 2006, our employees in Germany have been represented by a works council, comprising the SAP group works council, the SAP Germany works council, and the SAP AGworks council. The council consists of elected union members and non-union members. It has the right to be consulted by the SAP management on topics that define the workenvironment and work processes for our employees. This includes human resources initiatives, talent development, payment and benefits, equal opportunities, changes in work orinformation technology processes, privacy protection, as well as the protection of health and safety conditions. The SAP management is committed to collaborate and communicatewith the council’s representatives on corporate management decisions. Other works councils exist in Belgium, France, Ireland, the Netherlands, Spain, and the United Kingdom. Inaddition, in late 2011, representatives of the European countries voted in favor of a European Works Council at SAP. This body must be informed or, in special cases, consulted withrespect to important transnational issues by the employer. It will be founded in spring 2012 and represent colleagues from all European SAP subsidiaries.In addition, we appointed a global ombudsperson, an independent and neutral authority who is the main contact persons for our global employee base to address issues and settledisputes. Her work includes the investigation of staff complaints and the mediation of fair settlements. The ombudsperson also helps the SAP Executive Board analyze HR-relatedcomplaints and think about ways to address potential issues before they incur. In addition to support the corporate culture and to optimize conflict processes we have established aprogram named “conflict management system CMS@SAP” in order to implement a systematic approach in solving conflicts.

LA.5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreementsThere is no global minimum notice period in place for operational changes. We provide timely information and consult with employee representatives whenever and whereverrequired.

LA.6 Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health & safety programsAt SAP AG, there are no formal joint management-worker health and safety committees. Instead, our works councils have health and safety committees that work with the official

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SAP organizations. In some countries like France or Belgium we comply with legal requirements for joint health and safety committees.

LA.7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by genderWe are working on a project to come to a common methodology (results available in about 2-3 years).We do not track injuries, diseases, lost days, or absenteeism with a globally harmonized methodology at this time. In Germany, we measure the incident rate with the '1000-Mann-Quote' (TMQ). This is calculated as: (Number of reportable incidents×1000 employees)/Number of full-time equivalents. In 2011, the TMQ was 4,1 (2009: 3.8; 2010: 3.0)We also measure the accident rate per 1 Million working hours. In 2011, this value was 2,6 - i.e. per 1 Million working hours there were 2 reportable accidents (2009: 2.6; 2010: 2.0)

LA.8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseasesWe have developed a holistic and comprehensive program to meet the health and wellness needs of our employees. Its focus is on requirements of employees with sedentary,highly demanding intellectual jobs. Our health services include: Medical, social, and psychological services, work-life balance and stress management training, vaccinations andtravel-related health care, ergonomic and safe workplace evaluations, personal and confidential advisory services, confidential counseling hotline (also available for family members)In addition, we established a global pandemic task force, communications platform, and pandemic hotline to inform employees worldwide about precautionary measures,vaccinations, and the treatment of infectious diseases.

LA.10 Average hours of training per year per employee by gender, by employee category.Training data is not tracked by employee category and gender.We are dedicated to providing ongoing training to all employees. Our approach to learning and development centers on the right balance between different learning methods –meaning that development stems from learning on the job, special assignments outside day to day responsibilities, collaborating with colleagues, and challenging projects; as well asbeing coached and mentored by either managers, peers or colleagues. In addition, we provide wide range of formal offerings organized through a centralized learning managementsystem. Within our formal offerings, in 2011, SAP granted an average of 11.5 days of training per employee. This is an increase from the year before which is greatly appreciated bySAP employees and reflected in the recent high scores in the People Survey regarding People Development (increase by 12% from 2010 to 68% in 2011).

LA.11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endingsOne critical component to employee engagement is learning and development. These areas are key to our sustainability goals, which demand the ability to create new paradigms,stay on top of trends. Possibilities include instructor-led classes, eLearning courses, online books, virtual classrooms, and online videos. Employees can address everything from softskills to SAP-specific topics to build and support the skills they need in their individual roles. Up to now, about 35% of all employees have used online training materials. Meanwhile,social media allows them to connect and communicate with each other, facilitating the fast-growing area of peer learning. Employees often learn best through conversations withothers, and we have created a peer learning community where they can readily share ideas with a specific group of peers through "lunch ’n’ learn" sessions, formalized peer learninggroups, and book clubs.

LA.12 Percentage of employees receiving regular performance and career development reviews.The annual performance review process closes only after the editorial deadline of this report.SAP plans and reviews individual employee performance on an annual basis. At the start of the year, employees and their managers agree upon individual objectives. At year-end,they review these objectives and discuss the progress made toward achieving them.

LA.13 Composition of governance bodies and breakdown of employees per category according to indicators of diversity.We do not track minorities for legal reasons. See Women in management.

LA.14 Ratio of basic salary of men to women by employee categoryAt SAP we evaluate jobs based on their value in both the external labor market and internally to SAP. Qualified recruits are paid in accordance with the knowledge, skills andexperience they bring.

LA.15 Return to work and retention rates after parental leave, by gender.There are legally different determining factors of parental leave, which is why it is currently impossible to report the data in a globally harmonized way .

SAP supports employees in coordinating their family and career. For example, at our headquarters in Germany we support employees (both men and women) who decide to takeparental leave with a range of special benefits.

HR Social Performance: Human RightsHR.1 Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights

screeningSAP does not track investment agreements or contracts that include human rights criteria. As stated in our Human Rights Commitment Statement, we respect and support the valuesof the Universal Declaration of Human Rights.

HR.2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions takenSee EC.6.

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HR.3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trainedSAP considers it more material to track the number of employees that received training, not the duration of training.Our training programs for employees cover the spectrum of aspects of human rights in separate classes. This includes training for security, privacy, anti-discrimination, workscouncils, and first aid training. More than 17,000 employees have been trained.

HR.4 Total number of incidents of discrimination and actions takenSAP considers the number of incidents proprietary. SAP has a long-standing policy of non-discrimination in all aspects of our dealings with employees. We are committed toproviding a work environment free from unlawful harassment. Any employee who feels he or she is being subjected to conduct that violates this policy is encouraged to report theconduct to his or her manager, human resources officer, or the compliance office.For all SAP managers and HR representatives in the United States discrimination training is mandatory. In the United States, reports regarding harassment and discrimination mustbe escalated to global compliance. Prompt, thorough, and objective investigations are conducted upon receipt of complaints and, if it is determined that prohibited discrimination,harassment, or other conduct has occurred, appropriate remediate action is taken.We appointed an ombudsperson, an independent and neutral authority who is the main contact person for our global employee base to address issues and settle disputes. Her workincludes the investigation of staff complaints and the mediation of fair settlements. The ombudsperson also helps the Executive Board analyze HR-related complaints and think aboutways to address potential issues before they incur. To date, there is no global system for evaluating the number of discrimination incidents and actions taken.

HR.5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rightsIn the software industry, other human rights issues, like accessibility, security, privacy are material.Based on a human rights impact assessment and our dialogue with stakeholders, we created a global Human Rights Commitment Statement.

HR.6 Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child laborIn the software industry, other human rights issues, like accessibility, security, privacy are material. See HR.5.

HR.7 Operations identified as having significant risk for incidents of forced or compulsory labor, and measures taken to contribute to the elimination of forced or compulsory laborIn the software industry, other human rights issues, like accessibility, security, privacy are material. See HR.5.

HR.10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.In 2009, SAP conducted its first global human rights impact assessment with Business for Social Responsibility (BSR). Based on this, we launched a Human Rights CommitmentStatement that expresses our respect and support of the values of the Universal Declaration of Human Rights and the International Labour Organization's (ILO) Declaration onFundamental Principles and Rights at Work by integrating human rights considerations into our standard business practices.We are committed to applying the United Nations “Protect, Respect and Remedy” framework for Business and Human Rights going forward. We are collaborating with peercompanies in working groups convened by econsense or BSR to better understand how we can uphold our corporate responsibility to respect all human rights and how we can bestcarry out human rights due diligence.

HR.11 Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanismsSAP considers the number of grievances proprietary information; we do not collect the number of grievances that are filed on a global level.We offer our employees different channels for raising concerns or seeking solutions for difficult situations at the workplace. They can consult, for example: HR business, Workscouncils, The Ombudsperson, Colleagues from the mediation pool. We do not track the number of grievances that are filed through these mechanisms.

SO Social Performance: SocietySO.1 Percentage of operations with implemented local community engagement, impact assessments, and development programs

Local community engagement programs are established at 100% of our major locations. For more information about our programs and how we measure our impact, see: CreatingOpportunity; Volunteering hours; Technology for non-profits; Social investment

SO.2 Percentage and total number of business units analyzed for risks related to corruptionWe review all of our business units for potential bribery or corruption issues on an ongoing basis. We performed a thorough risk analysis of all subsidiaries in 2006. In 2008, basedon this risk analysis and all new data available regarding fraud allegations or incidents, several subsidiaries were targeted for an in-depth audit and assessment of compliance withregard to SAP’s zero tolerance policy for bribery and corruption. After a country ranking based on quantitative criteria, in 2010, the Global Compliance Office carried out multiple riskassessments based on local input in the regions. As a result of these risk assessments suitable mitigations strategies like trainings (classroom and web-based) as well ascommunication from the top and awareness programs were conducted. This was continued in 2011.SAP conducts business dealings with integrity. All employees sign our Code of Business Conduct when they join the company. SAP's Code of Business Conduct for Employees is astatement of the company's commitment to safeguarding our investors and customers against unfair competitive practices, corruption, or misleading statements. The code is bindingfor all employees and sets the standard for all dealings with customers, partners, competitors, and vendors. No employee will suffer demotion, penalty, or other adverseconsequences for refusing to pay bribes even if such refusal may result in the enterprise losing business.The code covers: Prohibiting bribery and corruption in all its forms including facilitation or grease payments, gifts and business entertainment limits, full, fair and accurate accounting,

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conflicts of interest, confidentiality, anticompetitive practicesFor the appointment and remuneration of sales agents SAP has an internal Third Party Sales Commission Policy. All agents, consultants, or other third parties who shall be engagedto assist with a sales opportunity must be required to enter a written contract with mandatory contract provisions, e.g. anti-corruption clauses, established in that policy. Before anycontract with a third party sales agent is drafted an automated integrity check must be completed and the internal approval processes must be adhered to.The Code of Conduct and all other related policies as well as our anti-corruption program are overseen by the Global Compliance Office. The Global Compliance Office is anextension of the legal department. It consists of Global Compliance officers based at the headquarters and decentralized ones in our most important markets. In addition, there arelocal compliance officers for each local subsidiary; they escalate cases to the global compliance officers when necessary.The Global Compliance Officer regularly reports to the CFO on a quarterly basis and to the entire Board on an annual basis on the status of compliance. Matters of significance arebrought to the attention of the Executive and Supervisory Board on an as-needed basis.The Audit Committee of the Supervisory Board also screens the compliance program on a regular basis: Once a year it checks on the status of compliance at SAP. At every AuditCommittee meeting it screens the submissions that came in through the Whistleblower tool.

SO.3 Percentage of employees trained in organization’s anticorruption policies and proceduresIn 2011, almost 25,000 training sessions were performed in live classrooms or through online conferencing sessions on anti-bribery and antitrust issues as well as on SAP's Code ofBusiness Conduct. The training is mandatory for our sales workforce, which is considered to be at greatest risk for exposure to corruption.Additionally, many employees attended online trainings on this subject. In addition to the classic training sessions, there are several other ways how we make employees aware ofour policies and anti-corruption standards: Awareness calls conducted by the Compliance Office; Emails from local managers to their subsidiaries; All policies, guidelines and furtherinformation are available on the SAP Corporate Portal in local languages.In the United States and APJ employees have to re-acknowledge the Code of Conduct every year; this process is being rolled out to select countries in EMEA.

SO.4 Actions taken in response to incidents of corruptionSAP received and responded to all reports of potential bribery and corruption. No allegations regarding corruption were substantiated in 2011. Employees have different avenues toraise concerns (when they think that there has been a breach of the Code of Conduct): Helpline; Incident Reporting; Compliance mail inbox; Contact to local / global complianceofficers; Whistle blower (primarily audit and financial accounting), anonymous reporting possibleActions we would take in case of incidents of corruption: Written warning; Termination; Worst case: immediate termination of contractInternal checks and balances: Separation of duty in all areas; SAP has policies and guidelines that detail the Code of Conduct related to specific Lines of Business or businessactivities, e.g. there are guidelines for: The protection of Intellectual Property; Revenue recognition; Group accountingThe reporting to the board serves as a basis for regularly monitoring and continuously improving our anti-corruption program.

SO.5 Public policy positions and participation in public policy development and lobbyingSAP executives advise governments and administrations around the world on IT topics, trends and developments. To help realize the potential of IT for businesses and our societyoverall, we are members of several leading industry associations, amongst other the US Chamber and the national Association of Manufacturers, OFII, TechAmerica, theAssociation of Climate Change Officers, BITKOM, the Federation of German Industries (BDI) and Digital Europe. In 2011, SAP also joined the Alliance to Save Energy.In terms of policy positions, in 2011, SAP launched a first White Paper “Smart Grids for Europe” in Brussels, which outlines benefits of Smart Grids and provides recommendations toEU policy-makers. In order to provide greater transparency, SAP is also registered in the European Register for Interest Representatives.

SO.6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by countryIn principle, we do not to support any political parties. This policy applies to all of our locations.Some employees in the United States continue to exercise their right to create a Political Action Committee (PAC). The SAP Americas PAC is an independent, registered and strictlyregulated organization that allows our employees in the United States to support political candidates on a local, state, and federal level. Consistent with US law, SAP AG exercisesno control or influence in the SAP America PAC. PAC expenditures are available on the FEC website, here.

SO.7 Total number of legal actions for anticompetitive behavior, antitrust, and monopoly practices and their outcomes. For material litigation, see our Annual Report.

SO.8 Monetary value of significant fines and total number of nonmonetary sanctions for noncompliance with laws and regulations. For material litigation, see our Annual Report.

SO.9 Operations with significant potential or actual negative impacts on local communitiesWe have not identified any operations with significant potential or actual negative impacts on local communities. However, our community programs have a positive impact on thecommunities where we work and live.

SO.10 Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities.We have not identified any operations with significant potential or actual negative impacts on local communities. However, our community programs have a positive impact on thecommunities where we work and live.

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PR Social Performance: Product ResponsibilityPR.1 Life-cycle stages in which the health and safety impacts of products and services are assessed for improvement and the percentage of significant products and services categories

subject to such procedures.SAP provides software and services to customers. For these products, we have global process and product standards that every product needs to adhere to. These standards arenot linked to health and safety. We follow standards that are specific to software.

PR.3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information.SAP provides software and services to customers. For these products, we have global process and product standards that every product needs to adhere to.We strive to provide the highest quality standards for our software solutions and services. Every employee has a responsibility for quality assurance in developing software andproviding services. Our quality standards as laid down in our Quality Policy are supported by local teams, and a central, independent quality governance body. SAP has three centralquality management systems (QMS) in product development, support and IT. The QMS are certified according to SAP ISO 9001:2008).For the positive sustainability impact of our software solutions and services, see Empowering Customers.

PR.5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. See Customer Satisfaction.

PR.6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.SAP has strict internal guidelines on protecting the privacy of employee, corporate, and customer data and applies the same standards to its external marketing activities.In 2009, we established a global permission-based marketing policy. It is aligned with local laws. It clarifies permission rules and guidelines for the marketing of our software andservices. To support the implementation of the new policy, we updated our processes and systems to capture, maintain, and use permissions correctly. This included the definition ofbest practices on how to collect, store, and use customer and prospect information in marketing activities that can be applicable for all of our sales regions.We provided global rules for third party engagement, external data rental, and outbound calling, as well as opt-in and opt-out practices. The policy covers promotional activities for allof our lines of businesses, going beyond marketing.Variations in local laws in some countries required significant consensus and employee involvement to drive the new policy. Our marketing teams were trained on the new policy andwe heightened the overall awareness of SAP employees to respect and comply with privacy rules.

PR.8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer dataNo incidents were brought to the attention of SAP's data protection and privacy office in 2011.

PR.9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and servicesMaterial litigation and claims are described in our Annual Report.

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7.2 UN Global CompactStatement of continued support for the UN Global CompactPrinciple Statement of continued support for the UN Global Compact. See the Letter from our co-CEOs.

Human RightsPrinciple 1 Businesses should support and respect the protection of internationally proclaimed humanrights.

· LA4 Percentage of employees covered by collective bargaining agreements.· LA6 Percentage of total workforce represented in formal joint management–worker health and

safety committees that help monitor and advise on occupational health and safety programs.· LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-

related fatalities by region.· LA8 Education, training, counseling, prevention, and risk-control programs in place to assist

workforce members, their families, or community members regarding serious diseases.· LA13 Composition of governance bodies and breakdown of employees per category

according to gender, age group, minority group membership, and other indicators of diversity.· LA14 Ratio of basic salary of men to women by employee category.· HR1 Percentage and total number of significant investment agreements that include human

rights clauses or that have undergone human rights screening.· HR2 Percentage of significant suppliers and contractors that have undergone screening on

human rights and actions taken.· HR3 Total hours of employee training on policies and procedures concerning aspects of

human rights that are relevant to operations, including the percentage of employees trained.· HR4 Total number of incidents of discrimination and actions taken.· HR5 Operations identified in which the right to exercise freedom of association and collective

bargaining may be at significant risk, and actions taken to support these rights.· HR6 Operations identified as having significant risk for incidents of child labor, and measures

taken to contribute to the elimination of child labor.· HR7 Operations identified as having significant risk for incidents of forced or compulsory labor,

and measures to contribute to the elimination of forced or compulsory labor.· PR8 Total number of substantiated complaints regarding breaches of customer privacy and

losses of customer data.Principle 2 Businesses should make sure that they are not complicit in human rights abuses.

· HR1 Percentage and total number of significant investment agreements that include humanrights clauses or that have undergone human rights screening.

· HR2 Percentage of significant suppliers and contractors that have undergone screening onhuman rights and actions taken.

· HR3 Total hours of employee training on policies and procedures concerning aspects ofhuman rights that are relevant to operations, including the percentage of employees trained.

· HR4 Total number of incidents of discrimination and actions taken.· HR5 Operations identified in which the right to exercise freedom of association and collective

bargaining may be at significant risk, and actions taken to support these rights.· HR6 Operations identified as having significant risk for incidents of child labor, and measures

taken to contribute to the elimination of child labor.· HR7 Operations identified as having significant risk for incidents of forced or compulsory labor,

and measures to contribute to the elimination of forced or compulsory labor.

Labor RightsPrinciple 3 Businesses should uphold the freedom of association and the effective recognition of theright to collective bargaining.

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· LA4 Percentage of employees covered by collective bargaining agreements.· LA5 Minimum notice period(s) regarding operational changes, including whether it is specified

in collective agreements.· HR5 Operations identified in which the right to exercise freedom of association and collective

bargaining may be at significant risk, and actions taken to support these rights.Principle 4 Businesses should uphold the elimination of all forms of forced and compulsory labor.

· HR1 Percentage and total number of significant investment agreements that include humanrights clauses or that have undergone human rights screening.

· HR2 Percentage of significant suppliers and contractors that have undergone screening onhuman rights and actions taken.

· HR7 Operations identified as having significant risk for incidents of forced or compulsory labor,and measures to contribute to the elimination of forced or compulsory labor.

Principle 5 Businesses should uphold the effective abolition of child labor.· HR1 Percentage and total number of significant investment agreements that include human

rights clauses or that have undergone human rights screening.· HR2 Percentage of significant suppliers and contractors that have undergone screening on

human rights and actions taken.· HR6 Operations identified as having significant risk for incidents of child labor, and measures

taken to contribute to the elimination of child labor.Principle 6 Businesses should uphold the elimination of discrimination in respect of employment andoccupation.

· EC7 Procedures for local hiring and proportion of senior management hired from the localcommunity at locations of significant operation.

· LA2 Total number and rate of employee turnover by age group, gender, and region.· LA13 Composition of governance bodies and breakdown of employees per category

according to gender, age group, minority group membership, and other indicators of diversity.· LA14 Ratio of basic salary of men to women by employee category.· HR1 Percentage and total number of significant investment agreements that include human

rights clauses or that have undergone human rights screening.· HR2 Percentage of significant suppliers and contractors that have undergone screening on

human rights and actions taken.· HR3 Total hours of employee training on policies and procedures concerning aspects of

human rights that are relevant to operations, including the percentage of employees trained.· HR4 Total number of incidents of discrimination and actions taken.

EnvironmentPrinciple 7 Businesses should support a precautionary approach to environmental challenges.

· EC2 Financial implications and other risks and opportunities for the organization’s activitiesdue to climate change.

· EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved.· EN26 Initiatives to mitigate environmental impacts of products and services, and extent of

impact mitigation.Principle 8 Businesses should undertake initiatives to promote greater environmental responsibility.

· EN1 Materials used by weight or volume.· EN2 Percentage of materials used that are recycled input materials.· EN3 Direct energy consumption by primary energy source.· EN4 Indirect energy consumption by primary source.· EN5 Energy saved due to conservation and efficiency improvements.· EN6 Initiatives to provide energy-efficient or renewable energy based products and services,

and reductions in energy requirements as a result of these initiatives.· EN7 Initiatives to reduce indirect energy consumption and reductions achieved.

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· EN8 Total water withdrawal by source.· EN11-EN14 Strategies, current actions, and future plans for managing impacts on biodiversity.· EN16 Total direct and indirect greenhouse gas emissions by weight.· EN17 Other relevant indirect greenhouse gas emissions by weight.· EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved.· EN19 Emissions of ozone-depleting substances by weight.· EN20 NO, SO, and other significant air emissions by type and weight.· EN22 Total weight of waste by type and disposal method.· EN26 Initiatives to mitigate environmental impacts of products and services, and extent of

impact mitigation.· EN27 Percentage of products sold and their packaging materials that are reclaimed by

category.· EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-

compliance with environmental laws and regulations.· EN29 Significant environmental impacts of transporting products and other goods and

materials used for the organization’s operations, and transporting members of the workforce.Principle 9 Businesses should encourage the development and diffusion of environmentally friendlytechnologies

· EN2 Percentage of materials used that are recycled input materials.· EN5 Energy saved due to conservation and efficiency improvements.· EN6 Initiatives to provide energy-efficient or renewable energy based products and services,

and reductions in energy requirements as a result of these initiatives.· EN7 Initiatives to reduce indirect energy consumption and reductions achieved.· EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved.· EN26 Initiatives to mitigate environmental impacts of products and services, and extent of

impact mitigation.

Anti-CorruptionPrinciple 10 Businesses should work against corruption in all its forms, including extortion andbribery.

· SO2 Percentage and total number of business units analyzed for risks related to corruption.· SO3 Percentage of employees trained in organization’s anti-corruption policies and

procedures.· SO4 Actions taken in response to incidents of corruption.· SO5 Public policy positions and participation in public policy development and lobbying.· SO6 Total value of financial and in-kind contributions to political parties, politicians, and

related institutions by country.

7.3 Assurance ReportTo the Executive Board and Shareholders of SAP AGIntroductionWe have been engaged by the Executive Board of SAP AG to provide assurance on the information inthe ‘SAP Sustainability Report 2011’ (further referred to as ‘The Report’). The Executive Board isresponsible for the preparation and fair presentation of the information in The Report. Ourresponsibility is to provide assurance on the information in The Report.

ScopeOur engagement was designed to provide:

· Limited assurance on whether the information in The Report is, in all material respects, fairlystated in accordance with the reporting criteria;

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· Limited assurance on whether SAP’s descriptions of their alignment with the AA1000Accountability Principle Standard (2008) in The Report are, in all material respects, presentedin accordance with the criteria set out in AA1000APS (2008);

· Reasonable assurance on whether the 2011 data on the Greenhouse Gas Footprint, totalenergy consumed, renewable energy, employee retention, women in management, BusinessHealth Culture Index and employee engagement are, in all material respects, presented inaccordance with the reporting criteria;

· Reasonable assurance that the financial figures on operating margin and revenue are properlyderived from the audited financial statements.

The web pages that have been part of the scope of our engagement are marked with ‘IndependentlyVerified by KPMG’.The scope of our engagement conforms to the requirements of a Type 2 assurance engagement asset out in the AA1000 Assurance Standard (2008) of AccountAbility. A limited level of assurance underISAE 3000 is consistent with a moderate level of assurance under AA1000AS (2008).Procedures performed to obtain a limited level of assurance are aimed at determining the plausibilityof data and are less extensive than those for a reasonable level of assurance.

Reporting criteriaSAP AG applies the AA1000APS (2008) criteria for the three principles of inclusivity, materiality andresponsiveness as described in sections GRI 4.14-4.17.SAP AG applies the Sustainability Reporting Guidelines of the Global Reporting Initiative (G3.1)supported by internally developed guidelines, as detailed in sections GRI 3.1 to 3.11 of The Report. Itis important to view the performance data in the context of this explanatory information. We believethat these criteria are suitable in view of the purpose of our assurance engagement.

StandardsWe conducted our engagement in accordance with the International Standard for AssuranceEngagements (ISAE) 3000: Assurance Engagements other than Audits or Reviews of HistoricalFinancial Information, issued by the International Auditing and Assurance Standards Board.This Standard requires, amongst others, that the assurance team possesses the specific knowledge,skills and professional competencies needed to understand sustainability information, and that theycomply with the requirements of the Code of Ethics for Professional Accountants from the InternationalFederation of Accountants to ensure their independence.

ProceduresOur procedures included the following:

· An evaluation of the results of SAP AG’s stakeholder consultation process and processes fordetermining the material issues for SAP AG’s key stakeholder groups;

· A media analysis and internet search for references to SAP AG in the reporting period;· Interviews with relevant staff concerning the sustainability strategy, communication and

management of these in the business, and for other staff responsible for providing theinformation in The Report;

· Reviews of the systems and processes for information management, internal control andprocessing of the qualitative and quantitative information in The Report at corporate level;

· Collecting and reviewing internal and external documentation to determine whether theinformation in The Report is supported by sufficient evidence;

· Assessing the reasonableness of the assumptions underlying the forward-looking statementsset out in The Report;

· An evaluation of whether the information presented in the report is in line with our overallknowledge of, and experience with, sustainability at SAP AG;

· With regard to evaluating alignment with the AA1000APS (2008) principles of 'inclusivity',‘materiality’ and ‘responsiveness’: conducting interviews with staff representing Customer

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Communities, Government Relations, Analyst Relations, Investor Relations and theSupervisory Board as well as reviewing relevant internal and external documents.

In addition for reasonable assurance we conducted the following procedures:· An evaluation of the design, existence, and testing of the operation of the systems and

methods used to collect and process the 2011 data reported for the Greenhouse gas footprint,Total energy consumed, Renewable energy, Employee retention, Women in management,Business Health Culture Index and Employee engagement including the aggregation of thedata into the information as presented in The Report;

· Auditing the data for the indicators in scope of reasonable assurance using internal andexternal documentation, to determine in detail whether the data for these indicators aspresented in The Report correspond to the information in the relevant underlying sources andwhether all the relevant information contained in such underlying sources has been included inThe Report;

· Conducting site visits to Walldorf, St. Leon Rot, Newtown Square and Bangalore to assess thequality of information management systems and the reliability of the data as reported tocorporate level.

ConclusionBased on our work described in this report, we conclude that:1. In relation to the AA1000APS principles of 'inclusivity’, ‘materiality’ and ‘responsiveness’:Based on the procedures performed nothing came to our attention to indicate that SAP AG has notapplied, in all materials respects, the AA1000APS (2008) principles as set out in sections GRI 4.14 to4.17. As SAP AG has disclosed, the following aspects require further alignment with the criteria in theAA1000APS principles:In relation to the principle of ‘inclusivity’:

· continue to implement more formal approaches for comprehensively evaluating andprocessing internal and external feedback received from various engagements; and

· investigate technology-based solutions enabling effective engagement with stakeholdersin large scale networks.

In relation to the principle of ‘materiality’:· further integrate the materiality assessment with governance, strategy and operations as

well as with means of external communications; and· implement internal processes to consolidate insights gained from engagements with

different stakeholder groups to inform the materiality assessment.In relation to the principle of ‘responsiveness’:

· establish outcome-orientated performance indicators to improve the monitoring ofprogress in and effectiveness of engagements on various material aspects; and

· increase transparency on dilemmas in relationships with different stakeholders and onconflicting interests between relevant stakeholders.

2. On The Report:· Based on the procedures performed, as described above, we conclude that: Nothing

came to our attention to indicate that the information in The Report is not, in all materialrespects, fairly stated in accordance with the reporting criteria.

· The 2011 data on the Greenhouse Gas Footprint, total energy consumed, renewableenergy, employee retention, women in management, Business Health Culture Index andemployee engagement in The Report are, in all material respects, presented inaccordance with the reporting criteria.

· The financial figures on operating margin and revenue in The Report are properly derivedfrom the audited financial statements in the Annual Report 2011.

Commentary

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Without affecting the conclusions presented above, we would like to draw the readers’ attention to thefollowing:In 2011, SAP AG has broadened the scope for reasonable assurance on indicators in The Report,which demonstrates the importance of these topics to SAP AG. During the assurance process itappeared that the application of corporate guidelines is not fully harmonised for specific indicators andthat the level of implementation of internal controls varies at local level. This increases the risk thatprogress towards ambitions cannot be monitored and managed in an effective way. We recommendSAP AG to step up its efforts to improve harmonised implementation for the key indicators in order tomanage performance at different levels in the organisation effectively.

Amstelveen, 23 March 2012KPMG Sustainability,part of KPMG Advisory N.V.W.J. Bartels RA