Saturday, December 2, 2023

Lack of funding high barrier to sustainability motion for 38% of UK companies

The annual Sustainability Report produced by enterprise software program agency SAP seems to disclose that 8 in 10 (83%) UK leaders will preserve or enhance their funding in sustainability motion by 2026. But, regardless of these intentions, UK companies proceed to create their very own boundaries to environmental progress, say the report’s authors.

The worldwide examine of over 4700 enterprise leaders, together with over 300 from the UK, is the third version of SAP’s annual Sustainability Examine exploring the important thing motivations and challenges going through organisations seeking to cut back environmental affect at scale.

It appears to search out that whereas 31% of UK companies say environmental motion is already having a robust affect on income and revenue alternatives, simply 12% have assigned accountability for this work to the Chief Monetary Officer (CFO). Whereas nearly one-in-three (28%) have problem proving return on funding, making long-term progress tougher to show and maintain.

Sustainability as a monetary incentive, not burden
Previously, measures to safeguard the planet could have been seen as only a ethical or moral obligation however the enterprise mindset is evolving and right this moment, UK companies are more and more seeing the long-term monetary advantages. In actual fact, nearly two-in-five (37%) report that income and revenue alternatives are a number one motivator for sustainability motion.

In opposition to a backdrop of inflation, provide chain points and a rising cost-of-living, UK leaders are steadfast of their environmental commitments as they view sustainability motion as a way to offset financial uncertainty. Now, over half (57%) of UK leaders count on to see a optimistic monetary return on their sustainability investments inside the subsequent 5 years.

Commenting on the analysis, Renaud Heyd, Chief Monetary Officer, SAP UKI mentioned: “Our examine exhibits that it’s time that finance leaders realise that having a stable sustainability motion plan makes enterprise sense. It’s crucial to draw funding from buyers who must make their portfolio greener, and to get a aggressive benefit as prospects demand sustainable merchandise all through the availability chain. As taking steps to enhance the planet turns into extra than simply an moral query, and UK leaders see long-term materials positive aspects, CFOs have the authority and experience to champion the environmental roadmap.”

Constructing their very own sustainability boundaries
But, regardless of the hyperlink between environmental motion and long-term income era, SAP’s analysis exhibits that UK companies usually are not involving finance leaders in taking sustainability actions and that is holding again progress.

At the moment, simply 5% of companies have assigned accountability for setting the strategic course on sustainability motion to their organisations CFO. As an alternative, it falls to an array of different leaders, together with the Board of Administrators (25%), CEOs (21%), Chief Sustainability Officers (15%) and Chief Working Officers (10%). The examine suggests this method isn’t working to translate the financial worth of sustainability progress throughout the enterprise. As many as 38% of UK companies cite funding points as one of many high 5 boundaries to taking sustainability motion, whereas 20% can’t get the assist from senior stakeholders to take concerted motion.

Falling into the measurement lure
Issues are made worse for UK companies who proceed to search out that measurement is a stumbling block to progress, and in the end financial returns.

Simply 37% can observe scope 1 emissions (greenhouse gasoline emissions produced immediately) to a ‘sturdy diploma’, whereas 10% usually are not capable of observe scope 3 emissions (these produced not directly throughout the availability chain) in any respect – inflicting many leaders to depend on estimates or ‘intestine really feel’ when disclosing environmental affect. UK leaders are additionally struggling to undertake a standardised reporting framework, with over one third having no constant methodology for calculating the environmental affect of their merchandise.

That is being additional exacerbated by way of conflicting measurement strategies for reporting. Whereas leaders are overwhelmingly utilizing direct measurement to trace power emissions (83%), useful resource availability (82%), contemporary water availability (75%), stable waste (74%) and supplies use (73%), they depend on guesswork and estimates for air air pollution (83%), nature loss (78%), provide chain affect (69%) and water air pollution (60%). That is resulting in nearly 9 in 10 (89%) reporting problem with gathering or analysing information for regulatory compliance, at a time when UK leaders are already having to navigate an assortment of adjusting laws, taxes and levies related to carbon footprint.

Stephen Jamieson, World Head of Round Economic system Options, SAP mentioned: “In a local weather the place stricter laws are actually requiring companies to reveal environmental affect, leaders who can’t precisely report this information threat allegations of greenwashing, and fines and reputational harm. Specializing in implementing a standardised reporting framework will guarantee companies are substantiating their inexperienced credentials, getting measurement proper, and setting in movement steps that can immediately result in long-term affect. Organisations can use this information to revamp merchandise, reuse supplies, cut back waste and regenerate pure methods throughout the availability chain – in impact, powering the round economic system.

“Our portfolio means we’re well-equipped to assist companies and guarantee they’re in the absolute best place to navigate these challenges within the years forward. This may enable leaders to unlock additional funding, reap the monetary rewards of taking sustainability motion, adjust to altering regulatory necessities, and attain web zero sooner or later.”

Commenting on the analysis, Edward Manderson, Lecturer in Environmental Economics on the College of Manchester, mentioned: “The connection between sustainability motion and monetary efficiency will play a essential function in shaping environmental progress sooner or later. Over the previous couple of years, educational literature has proven that companies profit financially from sustainability measures, and SAP’s analysis demonstrates that that is certainly a actuality for companies who need to get well quick from the pandemic setting. As this analysis exhibits, enterprise technique and sustainability motion are actually so intertwined that there’s merely no excuse for organisations in the event that they fail to deal with shortcomings of their environmental efficiency and enact significant change.”

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