A new study by SAP reveals that 68 per cent of Australian businesses see a moderate to strong relationship between sustainability and of their organisation’s competitiveness and profitability.
In detail, 67 per cent of Australian businesses say that sustainability strategies led to moderate to strong revenue growth. Similarly, 69 per cent saw a moderate to higher levels of business process efficiencies from sustainability activities. And 60 per cent expect a positive financial return on their sustainability investments within the next five years.
“Sustainability can no longer be considered separately to the wider financial performance of the business because it is increasingly clear that more sustainable organisations are more successful organisations,” Gina McNamara, Regional Chief Financial Officer for SAP Asia Pacific & Japan, said.
“Already, more than one in ten (11 per cent) Australian businesses say sustainability is material to their business results, and another 36 per cent say it will be within five years,” McNamara added. “Now is the time to combine financial and environmental decision-making in every business process, so we treat carbon data the same way we treat financial data.”
Despite the positive take outs from the research, 40 per cent of respondents saying that they find it difficult to attain a return on investment from their sustainability initiatives. There are also challenges pertaining to lack of funding (33 per cent), lack of an environmental impact strategy (32 per cent), and lack of expertise (32 per cent).
Ultimately, SAP says that extracting value from sustainability data will be key to enabling Australian businesses to prove return on investment, a challenge considering that only 15 per cent of Australian businesses are completely satisfied with the quality of the sustainability data they gather, down from 17 per cent last year. This has been attributed to the currently lacking means to measure sustainability data directly.
“If our sustainability data is not complete then the decisions we make to improve the health of our planet and our businesses are cast into doubt,” McNamara said. “The key is to record and report accurate, granular, and auditable sustainability data and integrate it with financial data to make the right business decisions.”
SAP noted that 75 per cent are using sustainability data to inform strategic and operational decision-making to a moderate or strong degree. Just four per cent do not use sustainability data in decision-making at all. However, the study also found that 73 per cent have reported moderate or strong tracking of Scope 1 emissions, while that number is 64 per cent for Scope 2 emissions, and 52 per cent for Scope 3 emissions.
Similarly, Australian businesses are making sustainability demands across their ecosystems, with 64 per cent saying they require sustainability data from their suppliers to a moderate or strong degree, and 63 per cent demanding environmental impact data from partners like logistics and fulfilment.
“The benefits of integrating sustainability data and outcomes into the core business are clear,” McNamara said. “But there’s still so much more to do. Working with a technology partner will help more businesses measure actual sustainability data, act on it strategically, and drive competitiveness, profit, and revenue themselves.”
