Amid the pressing reality of climate change, and with customers of businesses in all industries increasingly demanding more sustainable practices, ASUG is set to unveil its first research report dedicated to sustainability in the SAP ecosystem.
As part of its efforts to meet this demand across the enterprise technology landscape, SAP has developed a suite of solutions—including SAP Sustainability Control Tower, SAP Sustainability Footprint Management, and SAP S/4HANA Cloud for EHS Environment Management—aimed at enabling customers to track data necessary to driving sustainability initiatives and goals.
“By adopting the SAP strategy of leveraging embedded environmental, social, and governance (ESG)/sustainability capabilities across the core SAP ERP and line-of-business (LoB) process solution areas, organizations can not only streamline and automate much of the processes and underlying data in question, but also gain valuable insights into said processes to identify opportunities for improvement and unlock greater or new business opportunities as a result,” John W. Martin, National Sustainability Practice Lead at SAP told ASUG.
ASUG surveyed 85 of its members—with high levels of involvement in their enterprises’ sustainability initiatives—about their organizations’ approaches to sustainability and the challenges they face in adopting sustainability solutions. The respondents represented enterprises across a variety of industries, including but not limited to consumer products, chemicals, utilities, and healthcare. Here are our top takeaways from the research, set to be released in full later this year.
The Priority of Sustainability
While sustainable practices are steadily becoming more of a priority for enterprises, adoption of these practices requires time and resources. Especially amid the challenges of the last few years, shaped by the aftereffects of the pandemic and economic inflation, committing the necessary resources to initiate effective and wide-reaching ESG efforts can be a hurdle for enterprises to overcome.
However, ASUG found that an overwhelming majority of respondents (91%) said their companies are turning their focus to sustainability initiatives. Specifically, 56% of respondents indicated their companies are “very focused” on sustainability, and 35% reported their organizations are “somewhat focused.”
ASUG also examined the factors encouraging its members to adopt sustainable practices, including meeting customer demands (47%) and regulatory compliance (45%). However, external demands are far from the only influential factors. The next three most reported are:
- Efforts to improve an organization’s reputation (45%)
- Sustainability’s importance for a company’s specific industry (44%)
- Sustainability has always been an organizational focus (42%)
How Sustainability Efforts are Led and Measured
ASUG examined how respondents evaluated sustainability metrics at their organizations. There is no single “correct” approach to tracking progress of sustainability initiatives, and strategies can differ based on a variety of factors, including companies’ sustainability objectives, products, and industries. Understanding how our members quantify sustainability is vital, as this data is often used in regulatory and compliance reporting.
Over two-thirds (65%) of respondents said their organizations track sustainability KPIs (key performance indicators) and metrics. Meanwhile, 27% of respondents indicated their companies are in the process of defining which KPIs and metrics to track. A far smaller share of respondents (7%) said they address and comply with sustainability-related regulations and standards differently—such as through custom regulations and working with third-party organizations to determine metrics.
Diving deeper into those KPIs and metrics, the research examined the specific data points organizations are tracking as part of their sustainability efforts. ASUG asked respondents to select all the options that apply to their efforts. The top three selections are:
- Energy consumption – 67%
- Greenhouse gas emissions/carbon footprint – 52%
- Water use – 44%
In terms of driving sustainability efforts, ASUG found that management styles can vary from company to company. Nearly half of respondents (44%) said C-level executives lead and develop sustainability initiatives at their companies (compared to 25% who indicated LoB staff should take point on such initiatives, and 23% who said the initiatives should be led by cross-departmental project teams).
“I think what has changed in the last 12 months, at least in North America, is a realization of the impact of compelling events,” Japen Hollist, Head of Sustainability Go-to-Market at SAP, said. “Voluntary sustainability reporting is being enhanced—if not replaced—by mandatory sustainability regulations, including Corporate Sustainability Reporting Directive (CSRD), European Union Deforestation Regulation (EUDR), Carbon Border Adjustment Mechanism (CBAM) from the EU, California laws SB253 and SB261, and the long-awaited SEC rules.”
Barriers to Sustainability Progress
Despite the importance of these efforts, some organizations face barriers to building successful sustainability initiatives. The most frequently cited challenge by our members was “financial concerns,” including return on investment, high costs, and maintaining profit levels.
“We struggle with balancing cost over value,” one respondent told ASUG. “We want to be sustainable as a company, but there needs to be a business driver (e.g. regulatory necessity, efficiency gains, and/or improved company image).”
Organizational engagement and buy-in were the next most frequently cited challenges. Many organizations cited competing business demands as a barrier.
Additionally, enterprises must ensure their workforces are equipped with the knowledge and skills necessary to lead and maintain successful sustainability initiatives. While 44% of respondents said no knowledge or skillsets are missing in their organizations in this area, another 40% said they are “not sure” if such gaps exist within their enterprises. Only 16% of respondents said their companies lack the skills and knowledge to achieve sustainability progress.
In closing these skill gaps, there are many methods to spur sustainability education available to modern enterprises. Over half (58%) of respondents said they are open to learning via webcasts and webinars, while 48% said they preferred to gain insights from customer stories that provide insights into the challenges and successes of others via customer stories.
ASUG will publish the full results of its ASUG Sustainability Research survey later in 2024 and continue to monitor this topic throughout the year. In the meantime, stay tuned to ASUG First Five for more insights, and join us for an upcoming ASUG Community Alliance discussion about the state of sustainability in North America.