1、How to Ace the Sustainability Learning CurveTop heavy is not good.Not for vehicles(they have a nasty tendency to tip over at speed).Not for wedding cakes(unless you catch the spill on video).And not for businesses.In business,top heavy means lots of high-salaried people making decisions without much

2、 visibility into what is happening with customers,or employees,day by day.When it comes to sustainability,boards and CEOs are invaluable to figuring out strategy and championing change.Big,enterprise efforts like thiswould go nowhere without their vigor.But when the confetti settles and the sustaina

3、bility ship has been launched,everyone needs to help steer.Those carbon targets and pledges to investors wont achieve themselves.In fact,the longer a company has been measuring sustainability,the more likely its sustainability strategy is set by the chief sustainability officer rather than the board

4、 or the CEO,according to a survey by SAP Insights.But the person in charge isnt the only characteristic that distinguishes companies that are progressing from the beginners.Respondents show other signs that form a pattern,including whether theyre using sustainability data in their business strategy

5、and operational decisions,whether theyre holding more leaders accountable for results,and whether sustainability is material to their financial results.Heres what we know about what the learning curve for sustainability looks like and how any company can accelerate its efforts.ProgressingEarly Stage

6、Decision-MakingFinancial MaterialitySustainability Progress Model The board or the CEO sets strategy for sustainability The sustainability strategy is focused at the business level rather than globally Leaders are more concerned that government regulations will negatively affect their business The b

7、usiness invests less in sustainability issues The chief sustainability officer sets strategy for sustainability The sustainability strategy is more integrated with the overall business strategy and has more external motivators,such as strengthening societal approval of the business and commitment to

8、 the UN Sustainable Development Goals Leaders are more likely to say that government regulations have a positive impact on the business The business invests more in sustainability issues Accountability for sustainability is more concentrated at the top of the company,mostly at the C-level Sustainabi

9、lity specialists,such as the chief sustainability officer and the sustainability manager,have less accountability Accountability is less likely to be assigned in areas important for sustainability progress,such as energy risk,facilities,processes,procurement,and individual business units Accountabil

10、ity for sustainability is focused at lower levels inside the business The chief sustainability officer and sustainability manager have a high degree of accountability Accountability is spread more broadly to business leaders Sustainability data is used less often in business strategic and operationa

11、l decision-making Sustainability has been measured for a shorter period (1-5 years)Fewer areas of sustainability are measured Satisfaction with sustainability data quality is lower Sustainability data is more integrated into strategic and operational decision-making Sustainability has been measured

12、for a longer period (5+years)More areas of sustainability are measured Satisfaction with sustainability data is higher Fewer businesses say that sustainability is material to financial results today Respondents are more likely to say that sustainability will not be financially material to their busi

13、ness results until more than 20 years fromtoday More businesses say that sustainability is material to financial results today Respondents are more likely to say that sustainability will be financially material to their business results in 1-3 yearsLeadershipAccountabilityBoards and CEOs lead at fir

14、st.Beginners are more likely to have their boards and CEOs directly overseeing sustainability strategy,especially if they have only been collecting sustainability data for one or two years.Companies that have been collecting data for oneto two years are 47%more likely to have the board in charge of

15、setting sustainability strategy and 14%more likely to have the CEO in charge.Board of directors35%27%19%19%Chief executive officer(CEO)Chief sustainability officer(CSO)OtherHaving the CEO or the board in charge makes sense when starting out.Sustainability isnt a project,its a transformation.You need

16、 the leaders at the top to champion sustainability and to tell employees why and how they need to change until it becomes part of how they doeverything.Further,CEOs have the credibility to pitch early-stage change as a growth strategy.When CEOs are leading the sustainability strategy,businesses are

17、more likely to be motivated by revenue and profit opportunities by a wide margin.Businesses where the CEO sets strategic direction for sustainability are 16%more likely to have revenue and profit growth opportunities as a motivator for action.16%More likelySustainability isnt a project,its a transfo

18、rmationCompanies that have been collecting data for more than two years are 73%more likely to have the chief sustainability officer in charge of setting sustainability strategy.Eventually,the chief sustainability officer takes charge.Having sustainability leadership glued to the top of the organizat

19、ion isnt,uh,sustainable.Its going to be one of a hundred things the board and CEO need to worry about.Thats why,as companies progress,they eventually delegate leadership to a chief sustainability officer.73%After rallying the business around a sustainability transformation,the CEO and the board dont

20、 need to be the face of it anymore.But they dont withdraw completely.Among the top motivators for chief sustainability officers who set sustainability strategy are board and CEO commitment and company purpose,which shows that chief sustainability officers arent running around like stray cats.Busines

21、ses where chief sustainability officers set strategic direction for sustainability are 12%more likely to have board and CEO commitment as their top motivator.12%More likelySustainability is part of strategic and operational decision-making.More experienced companies use the data they have collected

22、about sustainability when they make decisions.Respondents who are happiest with their sustainability data are more likely to have been collecting it for at least five years.And the longer they have been collecting it,the more likely they are to be using it to make operational decisions the kind that

23、 reduce a carbon footprint or prioritize reuse of materials.When you have a lot of reliable data,you gain a better understanding about what needs to be measured and how to improve mega-metrics like carbon footprint.Which is to say,knowing why youre measuring something is as important as measuring it

24、.Businesses that use sustainability data to a strong degree in decision-making have a much higher degree of complete satisfaction with the quality of their data(45%)than everyone else(less than 10%).45%Strong degree of data use10%Everyone elseAccountability spreads everywhere.In organizations where

25、the chief sustainability officer setssustainability strategy,accountability spreads to other leaders in the organization,particularly sustainability managers,energy managers,and risk managers.The spread of accountability is crucial to sustainability success.Only if accountability is given to(andacce

26、pted by)the respective line-of-business leaders will a business have the fuel to make big changes.When accountability rests with more than one area,you start building a cross-business function that can spread sustainability to processes everywhere.Think of it like IT,where specialists in HR processe

27、s and software are in HR rather than in the technology department.In businesses where the chief sustainability officer sets the strategic direction for sustainability,82%more energy managers have accountability for sustainability,along with 56%more risk managers,and 104%(or roughly two times)more en

28、vironmental managers.82%56%Risk managersEnergy managers104%Environmental managersSustainability becomes material to financial results.Okay,you may be thinking that installing solar panels on a few rooftops isnt exactly going to be newsworthy to investors.But consider businesses that have been measur

29、ing sustainability for 20 years or more.This group is highly represented by industries such as energy,chemicals,and automotive that have been regulated for a long time and thus forced to do it.Among such businesses,44%say that environmental issues are already material to their business results,while

30、 another 11%say they will be within three years.44%of businesses that have been collecting sustainability data for 20+years say that sustainability is already financially material to their business vs.17%for everyone else.44%17%But financial materiality isnt linked only to how long a company has bee

31、n tracking sustainability.Businesses that have delegated leadership,are using sustainability data to make operational decisions,and have widely distributed accountability appear to be more successful financially.Businesses where sustainability data has a strong effect on operational and strategic de

32、cision-making are more likely to give responsibility for setting strategic direction for sustainability to the chief sustainability officer rather than the board or the CEO.Board of directors32%26%22%20%Chief executive officer(CEO)Chief sustainability officer(CSO)OtherCompanies that use environmenta

33、l metrics to a strong degree are 4%more likely to predict growth in 2023.Now that you know what a sustainability-savvy company looks like,how can you become one?Here are three ways to get more experience fast.Use improvements in data collection to catch up.The area of data quality is not respondents

34、 happy place.Among companies that have been measuring sustainability data for one to two years,just 13%say they are completely satisfied.No surprise.We all know collecting good data is hard.Yet even among those whove been collecting for 20 years or more,just 38%express complete joy.Data collection f

35、or 20+yearsData collection for 1 to 2 yearsJust 13%of businesses that have been collecting sustainability data for one to two years are completely satisfied with its quality.Among businesses that have been collecting data for more than 20 years,only 38%say they are completely satisfied with its qual

36、ity.How to catch up38%Completely satisfied13%Completely satisfiedThats going to change.Think of the handicaps that plagued companies trying to gather sustainability data back in the old days:Clientservers!80 gig hard drives!3G networks!(Oh wait,those werent even available yet.)You get the idea.Now w

37、e have virtually unlimited cloud storage and databases that compute in near real time,not to mention the(admittedly gradual)progress of Internet of Things and AI to gather data from far-flung equipment and analyze exponentially more of it exponentially faster.Not to sound like that high school kid b

38、ehind the counter at Best Buy,but you can do so much with technology today!It lets you claw back lost time fast.Broaden your horizons to make progress.Businesses that have advanced enough to put the chief sustainability officer in charge of sustainability arent just focused on their own fortunes but

39、 also on those of the planet.That will be essential to make real progress on climate change.If that sounds unbearably squishy and tree-huggy,consider this:Businesses that are motivated by the UN Sustainable Development Goals still prioritize traditional red-blooded business goals,such as opportuniti

40、es to develop new or improved offerings or revenue and profit growth opportunities.The UN commitments are simply part of a full list of sustainability priorities.Businesses where CSOs set strategic direction for sustainability are motivated 42%more by commitment to the UN Sustainable Development Goa

41、ls,but they are not ignoring more traditional goals.42%Find a connection to financial results the sooner the better.The mandates that heavily regulated industries like energy,chemicals,and autos have been working with for decades are coming soon to a balance sheet near you.So even if the dirtiest th

42、ing your business produces is a bunch of used coffee cups at the end of the workday,youre not out of the woods.Rather,youre just about to enter them.Regulators in the United States and the European Union are working on rules to incorporate emissions from a companys dirtiest suppliers(like fuel and l

43、ogistics)into its totals,according to consultancy PwC.Soon,your suppliers emissions may matter as much to your financial results as your own.Its time to start thinking of them that way.Everyone makes sustainability pledges:Carbon neutral by 2035!Use 25%more renewable materials!Reuse and recycle prod

44、ucts!But companies that are progressing in their ability to run sustainably are taking specific steps.Theyre giving leadership for sustainability to the expert,the chief sustainability officer,and theyre spreading accountability across the organization.Theyve decided that growing the business and pr

45、otecting the planet are compatible goals.They realize that if they dont reduce the damaging effects of their businesses on the environment theyll lose the ability to grow.You cant sell to a depleted market.The most important step theyre taking in the short term is to use the sustainability data they

46、 collect for operational decision-making.This is the toughest part.Collecting quality data is difficult and using that data to make business decisions is a big shift.But its how you make all those sustainability pledges real.Its how you get everyone in the business to incorporate sustainability into

47、 their thinking and actions.And its how you keep the ship heading in the right direction when the water is heaving(and rising)all around you.Not just barking orders from the bridgeEmily Acton is an Analyst and Editor at SAP Insights research center.Eric Anderson is a Research Data Scientist at SAP I

48、nsights research center.Thomas Birnmeyer is Senior Director Sustainability at SAP.Sarah Dziuk is Senior Director and Research Integration Leader at SAP Insights research center.Jenny Hill is Senior Marketing Specialist at SAP Insights research center.David Jonker is Vice President and Chief Analyst

49、at SAP Insights research center.Christopher Koch is the Senior Editorial Director at SAP Insights research center.Michael Rander is a Senior Director and Head of Operations at SAP Insights research center.Dan Wellers is Futures and Foresight Lead.About This ResearchThe SAP Insights research center c

50、ollected data from 6,669 respondents across 40 nations and 29 industries.Respondents had highest knowledge of their organizations sustainability objectives and processes.The surveys were conducted in April 2022 via a 10-minute online survey.2022 SAP SE or an SAP affiliate company.All rights reserved

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