SAP SE (NYSE: SAP) today unveils the results of its new Sustainability Report revealing that nine-in-ten UK businesses connect long-term profitability with environmental sustainability. But an inability to use data to measure and substantiate their eco-credentials emerges as a key barrier.
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The global study of 6600+ business leaders, including over 300 from the UK, is the second edition of SAP’s annual Sustainability Study which explores the motivations and challenges facing organisations as they look to improve the environment on a global scale. It finds that as profitability and sustainability become inextricably linked, poor data practices are setting in – providing a stumbling block to future growth.
In fact, as many as 40% of UK businesses rely solely upon assumptions and estimates, not facts, to screen their supply chains, while one-in-three (33%) do so when working to address climate change. At a time when UK businesses need to avoid being seen as green-washing, measurement is the foundation of accurate and legitimate action to support the environment.
Marrying sustainability and long-term profitability
With almost three-quarters of UK consumers assessing a company’s green credentials before making a purchasing decision, leaders are responding in kind to increase their short-term investment in environmental issues, such as: climate change (50%), air pollution (32%) and solid waste (31%). It follows that when asked about motivators to improve the planet, UK leaders ranked customer demand (49%) and the potential for revenue generation (38%) among the highest, just as they did in 2021.
Commenting on the research, Michiel Verhoeven, Managing Director, SAP UKI, said: “In a macro-economic environment filled with uncertainty, taking action to improve the environment can restore balance and fundamentally improve the bottom line. Whether that’s transitioning to renewable energy and reducing our reliance on fossil fuels, or streamlining supply chains to address product shortages.”
Taking action to improve the environment and reduce an organisation’s footprint has always been a moral and ethical necessity, but the survey reveals it has evolved to become a key driver of revenue. So much so that almost two-thirds (65%) of UK businesses now believe that addressing environmental issues will be material to business results within the next five years.
At the same time, fewer businesses are now predicting that environmental action will come at a cost to their bottom line. In fact, when compared to 2021 results, 57% fewer leaders believe environmental action will adversely impact their financial results in more than five years’ time – suggesting confidence in sustainability action to improve their financial performance in the near future.
Environmental strategy grounded in best data practice
But capitalising upon heighted customer demand and the potential for long-term profitability requires a dedicated sustainability strategy powered by data analysis. And this is where UK businesses are running into trouble.
Almost a quarter (23%) of UK businesses are doubtful about their ability to accurately measure their impact on the environment. While just 8% are completely satisfied with the quality of their data, there has been a drop on both last year’s survey results and the global average (23%), this year.
Professor Peter Hopkinson, Professor in Circular Economy and Co-Director Exeter Centre for the Circular Economy, adds: “Data is a crucial requirement for evidencing the proof of circular economy value creation, the benefits of net zero, and strategies to drive up resource productivity. The work by SAP provides clear evidence that access to robust and reliable data is becoming a critical capability requirement for business reporting, future value creation, supply chain resilience management.”
With 69% of UK businesses feeling the impact of the rising cost of resources, because of climate change, leaders cannot afford to deploy poor data etiquette if they wish to offset market uncertainty, strengthen their eco-credentials and connect long-term profitability with sustainability action.
Verhoeven adds: “It should be an imperative for every organisation to substantiate their environmental credentials. Customers need to be sure businesses are not green-washing and are committed to action. By working with a technology partner, like SAP, leaders can holistically assess their impact on the planet and ensure they are taking accurate steps to reduce their footprint. That’s how they will protect their reputation, reach net-zero faster and drive revenue opportunities in the years to come.”
For more information about SAP’s 2022 Sustainability Report 2022, click here.