Profitable Purpose: The Future of Business Sustainability
By SAP Insights | 5 min read
Sustainability involves rethinking success by including the effects enterprises have on the planet in calculations about the costs of doing business and applying those insights to strategic decision-making.
There are four overarching factors driving the future of sustainability:
- Climate change: Concerns about the warming planet are causing organizations to rethink traditional practices. This starts with the use of natural resources, continues to the processes used to reshape them into products, and applies to the transportation, warehousing, and distribution choices companies make.
- Resource scarcity: Natural resources are becoming harder to find and prices are less stable. Companies are compensating by finding ways to use less production materials and switching to alternatives.
- Government regulations: New rules are appearing in Europe and elsewhere to encourage – and in some cases require – large companies to document their environmental impact and report their findings as part of their financial statements.
- Advanced technologies: Making sustainability profitable means betting on new technologies. The Internet of Things, AI, autonomous vehicles, and data analytics will make processes cleaner and less costly.
You can learn more about how businesses around the world are working to meet this potent stew of challenges in the SAP Insights articles linked below.
The Circular Economy Goes Mainstream
Read our guide for how to take sustainability to its ultimate goal: zero waste.
Start with stakeholders. While sustainable business practices may begin with reducing carbon emissions, the concept of sustainability has expanded to include fair labor practices and social inequities as consumers and workers press corporations to address their impact on the world. Leaders adopting a sustainability strategy are focusing on constant communication with shareholders, the media, customers, and other stakeholders about the efforts and what they mean to each group.
Learn more in “Sustainability as Strategy: When Profits Follow Purpose.”
Profitable thinking. Most leaders calculating profits tend not to analyze their environmental and social costs. A significant minority, however, see that their fortunes are inevitably linked to those of the planet – and they are finding ways to make that link pay off, according to recent SAP Insights research.
Read more about the survey findings in “The Balance Sheet Blind Spot: How Sustainability Affects Competitiveness.” Go deeper into the data to understand how regulatory compliance drives companies to invest in sustainability programs in “Sustainability’s Role in Business Performance.” Learn about the views of leaders at midsize enterprises in “Approaching Environmental Sustainability: A View from Midsize Companies.”
Tech tools you can use. Sustainable business practices require changing the way we traditionally measure economic growth. Emerging technologies such as the Internet of Things, cloud, AI, autonomous vehicles, and data analytics are ready to support a shift in strategic thinking and action through such advances as inexpensive, iterative digital design processes; greater resource and supply chain transparency; and lower-cost logistics and recycling processes.
Sustainability case study in action. The global software company EPI-USE demonstrates how a business model can combine profits with purpose – in this case saving dwindling African elephant and rhinoceros populations. The company understood that customers are increasingly aware of the environmental and human costs of traditional ways of doing business, and employees are showing a powerful desire to work for companies that make a difference in the world. At the same time, the latest technologies create efficient – and profitable – methods of conserving resources and introducing more sustainable business models.
Learn how they did it in “Profit from Purpose: Elephants on the Balance Sheet.”
Creating new business standards. To create sustainability metrics that mesh with traditional financial reporting standards, companies are doing two things. First, they are repairing the damage they inflict on the planet. And second, they are measuring their success on both those efforts as compared to their own histories and standards demanded by regulators, investors, and society at large. The goal: a more integrated approach to reporting that gets companies to take their environmental and social impacts into account with every business decision.
Learn about the ongoing efforts in “The Quest to Redefine Business Success Through Sustainability.”
Finding value in sustainability data. Data that ties a company’s financial performance to environmental sustainability is challenging to find. But executives who recognize that environmental sustainability has become material to their business explain that such data doesn’t have to be perfect to make a meaningful difference. According to an SAP Insights survey, these executives’ companies are using this data to find business value – and report higher revenues than other companies do.
Read more in “Sustainability Data Isn’t Perfect, but Its Benefits Will Be.”
Showing customers how they do it. Today, some of the world’s biggest brands – from retail clothing chain H&M to coffee behemoth Starbucks – are embracing some of the highest sustainability standards. They’re also relying on a variety of approaches to back up their claims: from increasing visibility into supply chains, to receiving certification from well-known regulatory bodies, to savvy product design. These initiatives let companies do good and stand apart in crowded markets.
Check out their stories in “Seeing Is Believing: Building Customer Trust with Transparency.”
Greener transport and logistics. With a call to run all businesses more sustainably, delivery and logistics are obvious paths to implement green measures. A variety of technologies used in combination – solar panels on refrigerated trucks, warehouses that run on renewable energy and use mobile devices (instead of paper) to manage bills of lading, real-time data and routing software to minimize fuel consumption on delivery routes – can make this part of the supply chain less carbon-intensive.
Go along for the ride in “Sustainable Logistics on the Move.”
Putting theory into practice. Some companies are starting to view customer product returns as an opportunity to create great customer experiences, differentiate themselves from market rivals, and protect the planet. This new mindset, and the best practices needed to support it, include preventing returns (by helping customers know the precise specifications of the goods they are buying, to avoid misfits or surprises), and generating ROI from the goods that do come back (such as by selling “open box” items). These and other moves reduce wasted resources while improving business results.
Read more in “The Business of Returning Things.”
Further reading
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