New research shows focus on compliance possibly hindering sustainability outcomes
Jakarta — 7 November, 2022 — Recent research by Oxford Economics and SAP (NYSE: SAP) has revealed work remains to be done to drive value from sustainability for businesses across Indonesia. While 69% of businesses don’t think it’s difficult to be sustainable and profitable at the same time, just 13% say they receive significant value from their sustainability strategies today.
This may be because there remains a disconnect between sustainability plans and actions for many organisations. Under half (46%) of Indonesian businesses have clearly communicated sustainability plans, leading to only 13% incentivising leaders based on sustainability success and less than four in ten (38%) whose employees are active participants in their sustainability efforts.
“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.”
Regulatory compliance is both key sustainability driver and challenge
Sustainability strategies are largely being driven by regulatory drivers in Indonesia today. Survey respondents noted the primary driver of sustainability in their business is the threat of regulatory mandates (60%), significantly ahead of customer demands (54%) and market reputation (54%). That focus aligns with regulatory compliance being the main benefit derived from sustainability so far (56%), ahead of reduced carbon emissions and increased productivity.
It’s clear that organisations may need to refocus their strategies to achieve greater value from sustainability. Too much focus on compliance was cited as the third highest challenge to sustainability success by Indonesian respondents, trailing the lack of reinvention of business strategy and ineffective data.
Investment in data key to improving sustainability outcomes
Key to improving sustainability outcomes will be the effective use of organisational data to make more informed decisions. Accurate data was ranked as among the most significant activities to help reach carbon reduction goals, only trailing sustainable sourcing among Indonesian businesses.
Yet, ineffective data for decision-making is considered a moderate challenge for 81% of Indonesian businesses. The research also found that less than a quarter (23%) businesses have calculated their total organisational carbon output, and only slightly more (31%) have begun the process in some areas. Of the businesses who have begun measuring their carbon, 46% have made changes to their processes based on the calculations.
More needs to be done. Less than a third (31%) of Indonesian respondents said they had invested in data analysis to measure sustainability in their business, and a 40% said they were training staff how to capture sustainability data.
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.
Businesses who 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, 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.
You can read the full study here.