By Avanti Kumar
KUALA LUMPUR: Just before the start of the 2022 United Nations Climate Change Conference, more commonly referred to as Conference of the Parties of the UNFCCC or ‘COP27’, international enterprise solutions provider SAP hosted a regional media conference earlier this week to dive deep into sustainability issues for Asian businesses spotlighted in a recent study conducted with Oxford Economics.
According to the global survey of almost 2,000 executives, sustainability is at a tipping point, noted SAP president and managing director (Southeast Asia) Verena Siow (pic), who was speaking alongside the company’s highly talented head of communications (South East Asia) Darryn Lim.
Verena said that the research confirmed that sustainability is widely recognised as a successful business driver, reflected in the finding that 63% of respondents believed their company has a formal sustainability plan in place.
In addition to enhancing brand reputation, operational efficiencies, meeting modern consumer and employee expectations, sustainability strategies result in better profitability, she explained.
However, despite the heightened prioritisation of sustainability by business in the region, there is a distinct gap in how organisations are approaching technology implementation.
While the research suggested 60% of businesses accept that the link between sustainability and profitability is a crucial one, only 4% said they realised any significant value from their sustainability strategies.
On the ground, there appears to be a gap – a disconnect – between sustainability plans and actions for many organisations, said Verena.
The study further reported that six in ten (63%) of Malaysian businesses reported a ‘clearly communicated sustainability plan’, but just 23% have “incentivised leaders based on its success and only a third (33 percent) say their employees are active participants in their sustainability efforts”.
“Time is running out for businesses to unlock the real value from sustainability strategies,” she said.
“There is no time to waste to move beyond strategy and to achieve real, tangible results. In three years, almost a third of businesses expect significant value from their sustainability strategy – and we believe that with the right focus, this number can be even higher.”
Changing the ESG perspective
Turning to Malaysian businesses, Verena said there was a disconnect on the ground, which has presented something of a hurdle when trying to unlock significant value from sustainability.
On the positive side, she cites some success stories in the making, pointing out that sustainability “is a relatively new journey for all of us; however, we have many customers here in Malaysia who have already embarked on their journeys and are using SAP tools to monitor their ESG [environmental, social and governance] performance”.
SAP has partnered with companies of different sizes and across diverse sectors, such as Johor Corporation (JCorp), which is leveraging SAP Analytics Cloud and RISE with SAP to potentise its ESG agenda, and to become a sustainable digital business as an economic enabler for the Malaysian state of Johor.
Verena also pointed to “another good example is the oil and gas services company Dialog Group, which is using SAP’s procurement platform SAP Ariba and SAP Concur to help further sustainability aims and advance its aims of being a data-driven organisation”.
Under the 12th Malaysia Plan, the objective is to achieve carbon-neutral status by 2050. Governments play their part through regulatory mandates, and indeed, compliance constitutes one of the main drivers for sustainability, she said.
Aspiring to sustainability
Speaking on another factor for success, Verena later commented: “Public, private and plural partnerships are quintessential to effect the required change for a green economy in ASEAN.”
“Business leaders in Southeast Asia should not perceive sustainability action as a risk mitigation measure only. It is an opportunity to realise new sustainable revenue streams, find new efficiencies, and build new business models based on low-emission, circular, and ultimately regenerative concepts to benefit both the organisation and our society at large,” she added.
All the solutions are built by leveraging the SAP platform and applications portfolio to, for example, rule out hiring bias, and ensuring ‘green suppliers and supply chains. “We believe in the power of our ecosystem to realise opportunities and to thrive in a new world of changing dynamics.”
“It is important to start today. Businesses cannot afford to wait before they take action. We must start to ensure we are sustainable and can make small steps along the sustainability journey.”
Unlocking the power of data
“In the post-Covid world, we are now living in a different normal and we need to ask ourselves how we should adopt to the new circumstances and uncertainties,” Verena said.
The research and SAP’s experience point to the importance of a holistic, integrated approach, and embedding sustainability within the DNA of the organisation.
She spotlighted four key behaviours for successful leadership: setting clear expectations of sustainability performance levels across all groups in the organisation; using good data management and relevant technologies throughout the organisation; engaging with core audiences and stakeholders right across their ecosystem with the organisation’s sustainability plans; and finally, to create a coherent system of records and accountability – to ‘walk the talk’.
“Businesses will then be able to optimise their costs, find new efficiencies and uncover new opportunities,” she said, adding that sustainability leaders do enjoy a stronger bottom line and a healthy profit margin generally exceeding 10%.
The actual link between profitability and sustainability is managed by taking into consideration the time frame; predefining what success should look like; and measuring progress
Sustainability is a strategic pillar for growth, she said, pointing to her rise to a new role – that of chief sustainability officer – to help deliver sustainability goals.
Other analyst findings reflect Verena’s commentary.
For example, three years ago, the Emissions Gap Report 2019 by the UN Environment Programme highlighted that if every company and country reduced their emissions by 7.6% every year between 2020 and 2030, global warming could be held to 1.5°C. Unfortunately, reported emissions from G7 and BRICS countries increased by 256 million tonnes instead.
“Cutting carbon emission in your supply chains and processes lies at the heart of enhancing efficiency, cutting costs, and positioning for sustainable growth,” she affirmed. “Additionally, we will be winning the hearts of our stakeholders, and improving the bottom line.”
“Investing in sustainability through technology is an investment in real growth,” concluded Verena, adding that, “Businesses can create positive economic and social impact together”.
“Furthermore, we are in the decade of action to ensure a brighter future for the generations to come.”