Leaders are obstructing their own environmental progress
Despite leaders across Europe demonstrating their intent when it comes to making sustainability progress, companies continue to be obstructed by barriers of their own making.
That’s according to SAP’s annual Sustainability Report, which reveals more than eight in 10 (85%) bosses will maintain or increase their investments in sustainability action by 2026.
But, while 27% of European businesses say environmental action is already having a strong impact on revenue and profit opportunities, just 13% have assigned accountability for this work to the CFO.
What’s more, almost one-in-three (31%) have difficulty proving ROI, making long-term progress harder to prove and sustain.
In carrying out its research, SAP surveyed 4,700 business leaders, including more than 1,700 within Europe. The study explores the key motivations and challenges facing organisations looking to reduce their environmental impact at scale.
Shifting incentives for sustainability action
Measures to safeguard the planet may, in the past, have been seen as a moral or ethical obligation, but today’s business mindset is rapidly evolving.
European businesses are increasingly seeing the long-term financial benefits, with almost two in five (37%) reporting that revenue and profit opportunities are a leading motivator for sustainability action.
And, against a backdrop of inflation, supply chain issues and the rising cost of living, European leaders are increasingly steadfast in their environmental commitments as they view sustainability action as a means to offset economic uncertainty.
Almost three in five (59%) of European leaders expect to see a positive financial return on their sustainability investments within the next five years.
“Our study shows it’s time for finance leaders to realise that having a solid sustainability action plan makes business sense,” comments Renaud Heyd, CFO at SAP in the UK and Ireland.
“It’s imperative to attract funding from investors who need to make their portfolio greener, and to get a competitive advantage as customers demand sustainable products throughout the supply chain.
“As taking steps to improve the planet becomes more than just an ethical question and leaders see long-term material gains, CFOs have the authority and expertise to champion the environmental roadmap.”
Assigning sustainability responsibilities to the CFO
In spite of the link between environmental action and long-term revenue generation, SAP’s research shows businesses are not involving finance leaders in taking sustainability action, which is holding back progress.
Currently, just 7% of European businesses have assigned responsibility for setting the strategic direction on sustainability action to their organisation’s CFO.
Instead, this is falling to a variety of other leaders, including the Board of Directors (24%), CEOs (24%), COOs (10%) and Chief Risk Officers (9%).
Moreover, the study suggests this approach isn’t effectively translating the economic value of sustainability progress across the business.
As many as 30% of businesses cite funding issues as one of the top five barriers to taking sustainability action, while a further 19% cannot obtain the support of senior stakeholders to take action.
Read the full report: SAP Sustainability Report 2023
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