71% of Asia Pacific and Japan businesses see relationship between sustainability and competitiveness, leading to 12 point increase in businesses increasing their investments
Singapore – 5 December 2023 – Asia Pacific and Japan (APJ) organisations say their overall business performance is intrinsically linked to treating sustainability as a strategic priority – and are boosting their investments as a result.
A recent study by SAP (NYSE: SAP) found APJ businesses see a moderate to strong relationship between sustainability and their organisation’s competitiveness (71%) and its profitability (68%), similar to global results (72% competitiveness, 68% profitability).
That impact on business outcomes is driving investment. In APJ, over half of businesses (51%) intend to increase their investments in sustainability over the next three years, up 12 points since last year (39%).
Sustainable APJ businesses drive growth in the top line, bottom line, and green line
The study, which surveyed 1300 people in five APJ markets, found almost three quarters (74%) of APJ businesses saw sustainability strategies contributing to outcomes like revenue or profit growth to a moderate or strong degree. Similarly, 77% of APJ respondents saw a moderate or strong increase in the efficiency of business processes from sustainability activities.
Half (50%) of APJ businesses expect to demonstrate a positive financial return on their sustainability investments within the next five years, compared to 61% of global respondents.
“Sustainability can no longer be considered separately to the wider financial performance of the business because it is increasingly clear that more sustainable organisations are more successful organisations,” said Gina McNamara, Regional Chief Financial Officer, SAP Asia Pacific & Japan.
“Already, almost one in ten (9%) APJ businesses say sustainability is material to their business results, and another 32% say it will be within five years. Now is the time to combine financial and environmental decision-making in every business process, so we treat carbon data the same way we treat financial data.”
Yet, challenges remain. Difficulty proving return on investment is one of the top barriers to taking environmental action with 36% of APJ businesses finding it a challenge, above the global average of 33%. Other notable issues include lack of an environmental impact strategy (36%), COVID-19 uncertainty (34%), and lack of expertise (33%).
APJ businesses looking to unlock the value of sustainability data
Extracting value from sustainability data will be key to enabling APJ businesses to prove return on investment.
Just 23% of APJ businesses are completely satisfied with the quality of the sustainability data they gather, down from 27% last year and equalling the global mark of 23%.
This may be because there remains work to do to measure sustainability data directly, rather than rely on assumptions and estimates. APJ businesses trail the rest of the world when it comes to directly measuring energy consumption and emissions (79% in APJ vs. 83% globally), resource availability (76% vs. 79%), and materials use (71% vs. 76%).
“If our sustainability data is not complete then the decisions we make to improve the health of our planet and our businesses are cast into doubt,” continued McNamara. “The key is to record and report accurate, granular, and auditable sustainability data and integrate it with financial data to make the right business decisions.”
APJ businesses are utilising sustainability data across their ecosystem
That becomes particularly important considering APJ businesses are using sustainability data to make decisions today. Three quarters (75%) of APJ businesses use sustainability data to inform strategic and operational decision-making to a moderate or strong degree. Just two per cent do not use sustainability data in decision-making at all.
Yet, there are encouraging signs of progress. Over three quarters (76%) of APJ businesses report moderate or strong tracking of Scope 1 emissions, while that number is 70% for Scope 2 emissions, and 61% for Scope 3 emissions.
Similarly, APJ businesses are making sustainability demands across their ecosystem. To a moderate or strong degree, over seven in ten (72%) respondents said they require sustainability data from their suppliers and 69% demand environmental impact data from partners like logistics and fulfilment.
“The benefits of integrating sustainability data and outcomes into the core business are clear,” concluded McNamara. “But there’s still so much more to do. Working with a technology partner like SAP will help more businesses measure actual sustainability data, act on it strategically, and drive competitiveness, profit, and revenue themselves.”
About this research
SAP Insights collected data from 4750 respondents across 21 nations and 29 industries. Respondents had the highest knowledge of their organisation’s sustainability objectives and processes. The study was conducted in February-March 2023 via an online survey.
About SAP
SAP’s strategy is to help every business run as an intelligent, sustainable enterprise. As a market leader in enterprise application software, we help companies of all sizes and in all industries run at their best: SAP customers generate 87% of total global commerce. Our machine learning, Internet of Things (IoT), and advanced analytics technologies help turn customers’ businesses into intelligent enterprises. SAP helps give people and organizations deep business insight and fosters collaboration that helps them stay ahead of their competition. We simplify technology for companies so they can consume our software the way they want – without disruption. Our end-to-end suite of applications and services enables business and public customers across 25 industries globally to operate profitably, adapt continuously, and make a difference. With a global network of customers, partners, employees, and thought leaders, SAP helps the world run better and improve people’s lives. For more information, visit www.sap.com.