Green Costing: Using AI in SAP for Sustainable Product Costing Models

With rising environmental issues and regulatory pressures, it is becoming increasingly incumbent on manufacturers to include their environmental effects, such as carbon emissions, into the financial system. In the traditional sense, product costing methods in SAP Controlling-Product Costing (CO-PC) mostly offer only partial integration of environmental factors and would rarely meet the challenges in providing genuine accounting for sustainability. This paper discusses green costing as a new approach that espouses charging product prices and cost structures with environmental and carbon-related costs. By integrating AI into SAP environments, especially through SAP S/4HANA and SAP Analytics Cloud, sustainability accounting is made dynamic and data driven. AI models include forecasting and allocating various environmental costs including carbon emissions, energy consumption, and waste disposal by collecting real-time data from IoT-enabled devices, supply chain, and production systems. Integrating AI into SAP CO-PC will shift the paradigm from traditional, static costing to smart, green decision-making. This paper addresses key methodologies, case studies, and operational benefits of installing green costing machinery in SAP through AI, thereby rendering a programmatic path for those firms that want to have sustainability objectives as a complementary metric with profitability.