SAP Reveals Asia Businesses Yet to See Value from Sustainability Strategies

Recent research by Oxford Economics and SAP has revealed work remains to be done to drive value from sustainability for businesses in Asia. While 66% of businesses do not think it’s difficult to be sustainable and profitable at the same time, just 8% say they receive significant value from their sustainability strategies today.

Click to expand: Infographics on Oxford Economics and SAP study

This may be because many organizations remain disconnected from sustainability plans and actions. On average, 60% of businesses have a clearly communicated sustainability plan, with Japan leading at 68% whilst Indonesia scoring lowest at 46%. Only 20% in the region have incentivized leaders based on its success and less than half (44%) say their employees are active participants in their sustainability efforts, with the highest in India at 52%, followed by Singapore at 51% and the lowest in Malaysia at 33%.

Regulatory compliance is both a key sustainability driver and a challenge in South East Asia

From the research, data has shown regulatory mandates are one of the key drivers of sustainability strategies, with Singapore leading at 74%, 60% for Indonesia and 52% for Malaysia.

Organizations may need to refocus on their strategies to achieve greater value and benefit from sustainability. Compliance is the main benefit companies derive from sustainability (46%), ahead of reduced carbon emissions, with Indonesia scoring the highest at 56%, Singapore at 43% and the lowest for Malaysia at 39%. Too much focus on compliance is the second biggest sustainability challenge for businesses (26%), only behind reinventing business strategy, with the highest score attained by Singapore 32%, Indonesia 27% and the lowest being Malaysia at 23%.

“It is an encouraging sign that businesses across South East Asia are increasingly mindful of sustainability practices along their entire supply chain, including those of their suppliers,” said Verena Siow, President and Managing Director, SAP South East Asia. “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.”

Data is Key to Improving Sustainability Outcomes

Key to improving sustainability outcomes will be the effective use of organizational data to make more informed decisions. According to the survey, accurate data was ranked as among the most significant activities to reach carbon reduction goals amongst businesses in South East Asia.

Yet, ineffective data for decision-making is considered a moderate challenge in the region. The research also found that less than one in six (13%) businesses in Singapore, and less than a quarter (23%) in Malaysia and Indonesia, have calculated their total organizational carbon output. A majority (60% in Singapore, 77% in Malaysia) have begun the process in some areas versus only 31% in Indonesia. Of the businesses that have made begun measuring their carbon, 62% across the region have made changes to their processes based on the calculations.

More needs to be done. Investments in data analysis to measure sustainability in business remain the minority with 47% in Singapore, 35% in Malaysia and 31% in Indonesia citing their commitment to the investment. Similarly, training of staff on capturing sustainability data saw only 36% of Singapore businesses currently doing so, versus 40% in Indonesia and 50% in Malaysia.

Sustainability leadership is needed

Action on sustainability is needed urgently. Beyond the impact on the environment, just 33% of Indonesian businesses say their workforces aren’t aware that missing sustainability targets will drive customers to their competition, followed by 21% of Malaysian businesses, and only 15% of Singapore businesses.

Businesses that are achieving value from sustainability are defined by traits such as setting clear expectations at the strategic level, applying the transformative power of technology and data management, and engaging with important audiences such as employees, supply chain partners and policymakers.

“Sustainability leaders go beyond vision to ensure that sustainability initiatives are acted upon,” said Edward Cone, editorial director, of Oxford Economics. “They communicate with key constituencies both inside and outside the company, and they use integrated technologies to measure and track performance in a way that drives accountability.”

In this year’s COP27, SAP has pledged to support more policy transformation globally and help innovate sustainable businesses by reenergizing emerging economies to achieve a trillion-dollar greener impact and job generation.

“Public, private and plural partnerships are quintessential to effect the required change for a green economy in ASEAN. Business leaders in South East Asia should not perceive sustainability action as a risk mitigation measure only. It is an opportunity to realize 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 organization and for our society at large,” added Siow.

SAP has most recently updated its SAP Sustainability Control Tower solution to offer what companies are looking for today to run more sustainably.