Why sustainability and economic viability go hand in hand

Defined by the World Economic Forum as any structured financial activity created to ensure a better environmental outcome, green finance – also known as sustainable finance or climate finance – is firmly in the spotlight as countries across the globe attempt to play their part in the fight against global warming.  

Clearly, conversation was amplified by the Paris Agreement of 2015, which reaffirms that developed nations should take the lead in providing financial assistance to those “less endowed and more vulnerable”.

From a business perspective, the pressure is on companies big and small to align financial activities with responsible practice and prioritise investments in environmentally-friendly initiatives. 

As Global Head of Sustainability at Celonis, a specialist in the field of process mining, Janina Bauer is well placed to assess the impact that everyday activities at big-name organisations are having on their surroundings. 

Her firm belief is that, these days, there is little separation between green finance and the rest of the business world.

“In today’s landscape, high-performing organisations and systems are ones that are both economically viable and sustainable, which means not harming the environment they are operating in,” explains Bauer. 

“To future-proof your company, you need both aspects. That’s why Celonis helps companies boost their sustainability with scalable and data-driven solutions. 

“When you improve processes and their interdependencies, you can be compliant with regulations, balance your sustainability and business goals, tune your sustainability programme and free up resources to invest in the transition we all need.”

Neglecting sustainability a costly mistake

There can be little doubt that sustainability is becoming top of mind for an increasing proportion of companies. 

More and more are recognising the importance of not just acknowledging sustainability, or even having a dedicated department, but embedding it into all of their core practices and processes.

The stats do a lot of the talking on this front. According to recent research from IBM, more than 80% of CEOs believe their sustainability investments will produce improved business results over the next five years. What’s more, almost half are confident sustainability initiatives will accelerate business growth.

However, Bauer’s take is that not enough leaders have access to the information required to truly operationalise their sustainability strategy and turn investments into discernible performance. 

Too often, she says, sustainability remains an afterthought or is perceived as being overly complex. 

“Sustainable operations require things that we quite naturally want in a profitable business: streamlining, reduction of inefficiencies and a focus on value drivers,” Bauer continues.

“Over the long term, sustainability goes hand-in-hand with cost reduction. That’s why everybody has a part to play in driving the sustainability agenda, regardless of whether it’s in their job title or not.”

Embedding sustainability across the business

Countless discussions have been had during this ongoing era of digital transformation about the need to relinquish the shackles of siloed working and embrace a more collaborative approach in order to achieve business objectives. 

The same goes for sustainability, asserts Bauer. Leaders must look beyond the 2D view of top and bottom lines when it comes to defining business execution, and should add a third dimension in the form of a ‘green line’. 

“It’s crucial to have a clear picture of the operations of the whole business,” Bauer goes on. “The average process runs across ten systems, and many organisations have more than 200 IT systems and applications.

“Hidden inefficiencies in such siloed systems destroy business performance, and also hurt corporate sustainability efforts. Rooting out these inefficiencies maximises business execution as well as boosting sustainability. 

“When businesses get that end-to-end picture of all their processes, they can see what inefficiencies can be eliminated, what needs to change and what can stay the same. This empowers them to be not only sustainable, but also profitable.”

The perks of process mining 

Process mining arguably lies at the intersection of technology, financial efficiency and sustainability.

Bauer describes it as an X-ray for an organisation’s data, allowing leaders to understand the full journey of the goods they sell – often for the first time – and spot inefficiencies along the way.

“Extracting this data and combining it with sustainability data is the first step to making effective emissions reductions across your organisation,” she says. 

“When it comes to transporting goods, for example, the data from process mining means lead times can be compressed and bottlenecks can be voided, causing the number of hours spent and emissions to drop.”

Even more powerful is object-centric process-mining (OCPM), a new, three-dimensional approach offering an overview of different systems to drive sustainability. 

Where traditional process mining focuses on individual processes, OCPM helps leaders create a complete ‘digital twin’, capturing everything from when a customer places an order to when shipments are dispatched – covering all interlocking systems. It also captures interactions between order management, procurement, supply chain and production. 

“By implementing such tools,” Bauer adds, “business leaders can fully understand the real-life objects and events that make up their organisation, identify where their carbon footprint lies, and take steps to boost sustainability across the entire supply chain.” 

L&D key to addressing shortcomings ​​​​​​​

In truth, achieving alignment across the business from a sustainability perspective is far straightforward, especially when it is often seen as something for people to specialise in. 

What’s more, relevant data tends to be scattered, and bringing it together to drive sustainability insights is a tricky, time-consuming job. 

“ESG reporting is usually manual and vague, and all too often fails to deliver the insights people need to really make changes,” claims Celonis’ sustainability lead. “Reports are frequently retrospective and too high-level to really have an impact on real business processes.

“Sustainability has to become the standard, and business leaders must adopt a mindset where the sustainable approach is the default at every step. What holds businesses back is often fear and the perceived cost of change among employees.”

Bauer is unequivocal in her declaration that learning and development, in the form of both training and knowledge transfer, is key to addressing these shortcomings. 

“Business leaders need to communicate that sustainability goes hand in hand with profitability, and that inaction on climate change carries its own costs,” she concludes.

“Your own employees are an important stakeholder on this issue, so opening up feedback channels and listening to them will help fuel engagement on sustainability.”