From consumer-goods to renewable energy and from multinational global corporations to local start-ups, sustainability is on everyone’s lips and minds.
It is a brave new world indeed and, in a series of webinars moderated by Arabian Business’s editor-in-chief Scott Armstrong, IBM and SAP delve into it, describing the current corporate sustainability landscape and its challenges before exploring the solutions that they have been jointly working on through their offerings and capabilities.
A new generation of consumers is insisting their money goes to companies that are environmentally conscious and ethical while regulators and investors alike are nudging businesses into paying more than lip-service to their ESG goals by backing them with tangibles, explained Allan Coulter, IBM-Global CTO for SAP services.
“It’s definitely the topic of today, in all regions, we’ve seen a massive uptake in the desire to be sustainable. There’s a regulatory aspect to this for sure…but there’s also a huge business differentiation and opportunity,” said Coulter.
“Within the consumer industry, we’ve seen lots of action regarding brand awareness and strategy to drive differentiation. Even in the energy industry, we’ve seen the orientation move from the traditional energy types to renewable energy,” he continued.
In alignment with Coulter, Carlos Diaz, chief sustainability officer, SAP EMEA South, said: “Things are changing very fast, whether it’s to get green money or to ignite green businesses. There’s a huge new body of regulations [concerning sustainability] and that affects you whether you are working in the European Union or outside of it.”
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For his part, Diaz outlined three components to sustainability in a business, starting with accountability, usually the domain of the legal officer, dealing with regulations and maintaining a licence to operate. Then comes the financial side, under the CFO, which looks at profitability and how much the company is saving from being sustainable. The last element, desirability, is critical in the consumers’ eyes, said Diaz but is often paid attention to the least.
“Customers care about elements they can see and that are tangible. They don’t want to hear about SDG goals or when companies will be carbon neutral, they want other kinds of things and so the desirability aspect is critical. It is not just the CFO or the legal staff, it is also the marketing people and all the company understanding what to do in terms of sustainability that makes it successful,” explained Diaz.
In attempting to identify and meet their sustainability targets, corporates can hit a few road blocks which Coulter outlined as follows: “There is the regulatory aspect but also, if you look at Europe, things like human rights in the supply chain are becoming more of an issue and we will see this expanding into other markets,” said Coulter.
“When you get to things like carbon accounting, how do you effectively measure that? Because at the end of the day, not every company’s got the investment capital to capture every single emission that is happening within their organisation. There is a big investment that needs to be made for companies to truly start to measure their scope,” he continued.
“You’ve got to be seen as driving the sustainability goal to capture the green dollar to then drive the investment you need to make,” he added.
Diaz said consumers have become more aware of what sustainability entails and are questioning having to pay a green premium when it costs companies less if products are locally sourced.
“We need to be granular to really understand where people want to put their money and the green premium is disappearing. Last year, people were willing to pay much more for green but now they are telling us that if this product has travelled less, used less land and water why is it more expensive?” explained Diaz.
Driving this increased awareness around corporate sustainability are the millennials and Generation Z but also the regulators and investors.
“Today’s young generation is a far more ethical and activist generation then we were so it just feels that there is swell of attitude both from the political will, backed by the consumer will, to make this a sustainable motion in the market place. Because of that, you are seeing businesses react in a far more engaging way than they did in their history,” said Coulter.
“At IBM, we can set sustainability in the context of the company’s ambitions using our modelling capabilities. We have seen this kind of sustainability garage where we can help companies define where they want to get and move it to actionable behaviours. Every company can become sustainable, it is more about how and where to start and where the best place is to place their money,” he continued.
Diaz said: “Any company can be sustainable tomorrow but they can go bankrupt unless they put together sustainability information with financial information and really understand how one effects the other.”
It is here that the second webinar comes in to highlight the solutions that IBM and SAP are providing their corporate customers to support them in translating their goals and commitments into action.
“I don’t think companies have a choice, they cannot delay any longer. There is increased pressure from their shareholders and their clients who are expecting action and at the practical level, we are starting to see companies looking at initiatives within the supply chain areas and emissions management. But it is really important that these are aligned to ESG and SDG disclosure reporting within that business because unless we can align these programs more holistically, we will not see the progress we need,” said Catherine McCourt, senior partner FSCT service line leader IBM Consulting, EMEA.
As such, IBM and SAP’s systems help businesses understand the impacts of their sustainability commitments, enabling to make more-informed decisions.
“We at SAP have to make sure that the systems we bring to life for our customers not only allow them to close the books and know the financial results, but also to be capable of understanding the impacts of ESG and be able to account for them in a seamless embedded way. This is so decision-making can be done more effectively, independent of whether you are at the beginning of this journey or you are using sustainability as a sort of innovation for the future,” said Claudio Muruzabal, president SAP EMEA South.
Muruzabal called the partnership between IBM and SAP, “an incredible marriage”. “Our role is to make it easy for businesses around the world to account for the important components of sustainably in the same way they account for financial results, regardless of their size,” he said.
“We are working together across a number of clients – this is a global problem and we are going to need everybody to come together to solve this,” said McCourt.
“SAP runs 80 percent of the world’s biggest businesses and if you look at the sustainability solutions around today, there are lots of things to do. It’s about pulling this all together and actually helping our clients move the needle forward. We use a mix of IBM and SAP technologies to drive these outcomes,” she continued.
The webinar concluded with Mihir Gor, IBM UKI CTO for SAP Services walking listeners through the unique offerings and capabilities that IBM and SAP have developed to drive and support corporate sustainability.
This article was originally published on our sister publication Arabian Business.
