Data essential to addressing sustainability
First the good news: businesses fully recognise the need to address the issues of sustainability if they are to enjoy long-term profitability. But the bad news: they are being held back by difficulties in securing the relevant data to help them achieve their objectives.
At the recent launch of SAP’s global annual sustainability report it was revealed rather positively that as many as 90% of UK business leaders understand there is a link between long-term profits and environmental sustainability. On top of this a sizeable 65% of executives believe there will be positive business outcomes over the next five years if they address the environmental issues.
Moving on from greenwashing
Tim Embley, group research & innovation director at Costain Group, suggests: “Since COP26 businesses have woken up after a period of greenwashing. Sustainability has crept up on industry. Putting sustainability at the centre of what [products and services] companies provide gives them better outcomes. Our clients recognise sustainability is inherent in better economic outcomes.”
This positive intent to act comes despite suggestions that the current tough economic backdrop might have pushed sustainability down the agenda, according to Gemma Baker, sustainability managing director at Accenture, who says: “I don’t agree it is affecting companies’ sustainability efforts. The C-suite understands that the only growth is sustainable growth. We’ve not seen them cutting their [environmental] budgets. Business leaders have woken up to the fact that there is only one path and we’re starting many [sustainable] projects with large clients.”
Fashion is making changes
She cites the fashion industry as continuing to push ahead with environmental initiatives. “Retail is in a very different place to where it was five years ago. Look at Primark, one of the biggest fast fashion companies, which has gone 180 degrees with its business strategy,” says Baker.
Stephen Jamieson, global head of circular economy solutions at SAP, agrees sustainability is very much the “hot topic for fashion” encompassing both the back-end [transportation and logistics] and the front-end, involving creating appealing designs. “There is a focus on waste and durable garments for a second-life and production from re-generated resources. Sustainability is driving a lot of their actions at the moment,” he says.
Customers need to change
One of the balancing acts the fashion industry has to deal with is between product availability and waste, which Michiel Verhoeven, managing director for UKI at SAP, says invariably go “hand-in-hand”. Consumers are likely to have to change their behaviours and expectations in some ways in order to help balance these two factors, but although Verhoeven says the level of awareness of sustainability is high among consumers this has not necessarily translated into meaningful changes in their shopping behaviours.
Despite this the SAP research shows that almost half (49%) of leaders surveyed cite customer demand as the biggest driver of environmental action. This has certainly resulted in the food and retail sectors having been more proactive with their sustainability actions versus some other sectors such as mining/resources and financial services who Baker says are now looking to catch up.
Data holding companies back
What is arguably holding up companies across all sectors is their inability to use data to measure and substantiate their eco-credentials. The survey found 40% of UK businesses solely rely on assumptions and estimates to screen their supply chains, while 33% do so when working to address climate change. Relying on questionable metrics is worrying at a time when many companies are being accused of greenwashing. The UK seems to be in a more damaging position than other countries because only 8% of companies state they are satisfied with the quality of their data compared with a global average of 23%.
But change is afoot because Embley believes UK businesses are at the start of a drive to secure the relevant data sets and cites the major water companies who are now sharing data on water flows as an example of proactivity and collaboration in seeking to address the issue. “This [combined] data can help drive better outcomes for the end consumer,” he says.
The difficulties with data involve it being sat in silos, often being very disparately located, and it is often not comparable, according to Baker, but she can see change happening as there is a growing trend for businesses to appoint a ‘Head of ESG Data’. This will undoubtedly help the problem Jamieson has encountered, which involves the challenge of getting data and insights into the hands of the right person within organisations.
He is certainly aware of the major challenges ahead when considering the “sheer scale of data flowing through global organisations”. “What should be measured, where, when and why?” he asks. But he remains hopeful because fundamentally “businesses want to do the right thing”.
