Sustainability is driving profitability and competitiveness in Australia

Damien Bueno, President and Managing Director for SAP ANZ

SAP SE launched report revealing that businesses in Australia are seeing financial benefits from sustainability, but an inability to accurately measure their impact on the environment could hinder progress. The Environmental Sustainability Study of 6500+ business leaders, including 204 from Australia, is the second edition of SAP’s annual report which explores the motivations and barriers firms face as they look to boost sustainability in their companies.

What were the findings of SAP’s research?

Customer demand (39%) and revenue and growth opportunities (36%) and are the top two motivating factors for Australian businesses to take environmental action, followed by governmental regulation (36%) as another leading factor. Yet Australian organisations risk losing out if they are unable to place data at the heart of their sustainability strategy.

Making sustainability profitable and profitability sustainable

Taking action to improve the environment and reduce an organisation’s footprint is not only a moral issue but has quickly become a key driver of revenue. More than eight in ten (86%) Australian leaders now see a positive connection between taking environmental action and profitability. Just fourteen per cent see either a negative or no relationship between the two.

It’s no wonder that over half (56%) of Aussie businesses believe addressing environmental issues will be material to business results in the next five years. Also, 52% said that their stakeholders would be moderately or highly tolerant of reduced profitability in pursuit of their firm’s sustainability goals – indicating leeway to invest in positive sustainability outcomes.

Building a data-led sustainability strategy

Nurturing a connection between profit and purpose requires a dedicated sustainability strategy and an ability to prove return on investment (ROI). However, these factors have been revealed as leading barriers to environmental action. Almost four in ten (38%) of Australian businesses surveyed say difficulty proving a return on investment (ROI) is holding them back, while thirty-four per cent point towards a lack of environmental strategy.

The ability of businesses to gather and analyse quality data has emerged at the heart of the issue. 83% are not completely satisfied with their ability to accurately measure their impact on the environment. Such challenges will hold back progress and delay innovation, and yet some businesses are exacerbating these issues by how they utilise their environmental data.

Three in ten (30%) rely solely upon assumptions and estimates to screen the environmental impact of their supply chain. Similarly, a majority (76%) of businesses say they don’t have complete visibility over the sustainability metrics of their external supply chain.

What do the findings mean for sustainability in Australia?

Commenting on the research findings, Damien Bueno, President and Managing Director for Australia and New Zealand at SAP, said: “If Australia is going to move towards a more sustainable future, organisations across the country need to embrace sustainability as part of what they do every day, and embed these strategies into their operating models.”

“To do this properly, organisations need to consider their entire value chain. Only by coming together, and being more open, trusting and collaborative with their value chain partners, will organisations be able to truly progress sustainability outcomes,” Damien Bueno concluded.