Businesses are struggling to make returns on investments when it comes to their sustainability strategies despite investment being on the up, new research has claimed.
A study by SAP of 4,700 business leaders globally notes the shift that sustainability has seen, going from being a moral and ethical obligation to one that could reap long-term financial benefits.
More than one-third (37%) now say that revenue and profit opportunities are a leading motivator for sustainability action.
Sustainability: investments growing more than returns?
SAP found that only 7% of Europe’s businesses and 5% of Britain’s businesses have assigned responsibility for setting the strategic direction on sustainability action to their CFO, with CEOs and the Board of Directors both accounting for 24% each across Europe, which is proving to have an impact on the economic value of sustainability.
It was also uncovered how many businesses are failing to sufficiently measure their progress, and the distinct lack of standardized reporting frameworks and calculation methodologies, adding to the ambiguity of their sustainability action.
Fewer than two in five (37%) can track scope 1 emissions (produced directly by the business) to a “strong degree,” and alarmingly, one in 10 (11%) can’t even track scope 3 emissions (produced indirectly across the supply chain).
SAP’s Global Head of Circular Economy Solutions, Stephen Jamieson, explained the severity of this: “In a climate where stricter regulations are now requiring businesses to disclose environmental impact, leaders who cannot accurately report this data risk allegations of greenwashing, and fines and reputational damage.”
With 85% of European leaders planning to increase their investment in sustainability action by 2026, SAP’s report highlights the need for CFOs to take control of many sustainability decisions in order to deliver the financial results that many businesses desire.
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