How regional corporates are increasingly embracing sustainability targets

Coronavirus has increased the world’s awareness of the value of sustainable and environmentally friendly practices and businesses are no exceptions.

Asim Khan [Digital Strategy & Enterprise Transformation Specialist] SAP Go-To-Market leader at IBM Consulting sheds light on the state of corporate sustainability in the region.

What is the current state of sustainability in the region from your perspective and how fast is that maturing?

I believe it has become a lot more encouraging of late particularly because of the demographic evolution in the region. Now, millennials and generation Z together constitute a large portion of the regional population mix with higher literacy rate, better income, and very decent “Inclusive Internet Index” which has made them a driving force behind this newly found Environmental Consumerism across the Middle East region. This has inspired regulatory authorities, policy makers, enterprises across the region to adjust their priorities to attract and retain this population segment in the form of their consumers, employees, and investors.

Hence, we shouldn’t be surprised by the fact that sustainability was selected as one of the key themes at Expo 2020. Also, Saudi Arabia has just pledged to hit net-zero emissions target by 2060 and UAE has asked to host UN Climate Change Conference (Cop28) in 2023.

Can you share some of the key issues that are shaping sustainability agendas?

There can be many compelling reasons for enterprises to embed sustainable practices at the core of their digital transformations. As businesses are under increasing pressure from regulators, consumers, and investors to address climate change and showcase how they are transforming their operations, while prevailing inefficiencies in Supply Chain and Manufacturing are negatively impacting brand perception as well as business financials.

We are seeing that more and more companies are increasingly aligning their sustainability efforts with global standards like the UN’s seventeen Sustainable Development Goals (SDGs) because regulation is becoming imminent which means soon disclosure-demands will increase.

Are you seeing the rise of more ethical consumers, given the increasing global conversation on the rise of purpose-driven customers? And what is the opportunity and the challenge that they represent for organisations?

The Covid-19 pandemic has elevated consumers’ focus on sustainability and willingness to pay out of their own pockets, or even take a pay cut, for a sustainable future, according to a recent IBM Institute for Business Value (IBV) survey of over 14,000 consumers in nine countries. Nine in 10 consumers surveyed reported the Covid-19 pandemic affected their views on environmental sustainability, and Covid-19 was the top factor cited in influencing their view – more than others presented such as widespread wildfires/brushfires, disasters due to weather events and news coverage on the topic.

Similarly, according to “Meet the 2020 consumers driving change” published by IBV, today’s always-on consumers come highly informed with specific demands pertaining to price, ingredients, delivery options, production methods, and much more. Consumers are motivated by a search for value that goes beyond price comparisons. Over 70 percent of respondents say they are looking for specific attributes that are important to them when choosing a brand. It’s now important to offer items based on specific qualities tailored to meet consumers’ demands, such as products that are certified as organic, fresh, environmentally friendly, parabens-free, and the like.

This all implies that ethical consumers are on a rise! So, enterprises should start aiming beyond the typical horizons of sustainability which are “accountability” enforced by regulators, “profitability” dictated by the business and try to improve their “desirability” for consumers from sustainability perspective.

Enterprises have a great opportunity to position themselves as more desirable for ethical consumers if they look for opportunities like sourcing recycled materials in the manufacturing of products which is only possible by building out their own viable ecosystem of suppliers who share similar values. Enterprises should rethink packaging with an emphasis on minimizing the amount and type of waste and the ease with which it can be recycled. Enterprises should try to introduce new revenue models by explore leasing or “product-as-a-service” models etcetera.

However, the biggest challenge for enterprises to achieve this might be their inability to track and report sustainability KPIs from their enterprise applications and accurately trace them back to their ERP financial data. Another key constraint is the current lack of collaboration in ecosystems because good ecosystems can genuinely accelerate the speed and scale of change, overcoming barriers via collaboration and risk-sharing.

Businesses are under increasing pressure from regulators, consumers, and investors to address climate change and showcase how they are transforming their operations.

If an organisation recognises it has to evolve then how does it take the first steps: How do they open the door on becoming SDG-aligned, ESG-relevant, and sustainability strategies?

Across the world, countries are implementing post-pandemic recovery plans, and climate/green investments are an essential component for countries and enterprises to achieve and accelerate their sustainability and ESG goals. It all starts by defining the purpose of how an enterprise can become part of the circular economy. And then measuring, disclosing, and acting on that purpose-driven strategy revolving around People, Profit, and Planet.

And the pandemic has proven beyond any doubt that enterprises who were already geared to pivot their business models not just survived but also thrived in this new normal, same will be applicable for the upcoming sustainability era.

Align Sustainability into your SAP-based Business Transformation engagement

• Start with Defining the Problem / Opportunity with IBM Sustainability Garage using IBM’s Green Compass Framework to focus on 1-2 Goals that can be quickly turned into MVP.
• Connect how you Report with your SAP-enabled Transactional Transformation Program.
• Embed Sustainability by Design into your core SAP processes e.g., the way you buy, make, ship, sell with IBM Rapid Discovery.
• Accelerate the transformation by embedding pre-defined solutions from IBM and SAP.
• Align the Impact to GRI and SDG Reporting to continuously measure the beneficial impact in People, Profit and Planet outcome

Climate/green investments are an essential component for countries and enterprises to achieve and accelerate their sustainability and ESG goals.

Almost all companies in all sectors are now ‘tech’ companies in some fashion. But what is the role of technology in building sustainable enterprises?

To answer this question, let me first mention one of IBM’s latest announcements as we have recently launched a suite of environmental intelligence software that leverages AI to help organisations prepare for and respond to weather and climate risks that may disrupt business, more easily assess their own impact on the planet, and reduce the complexity of regulatory compliance and reporting. The suite aims to help companies streamline and automate the management of environmental risks and operationalize underlying processes, including carbon accounting and reduction, to meet environmental goals.

We want technology to turn our clients’ ambition into action by aligning sustainability within their digital transformation agenda. Since, there is an urgency for adopting sustainability into the business vision and business architecture. Through our IBM-SAP Evolution partnership we are developing solutions for SAP that align with industry, process, and sustainability imperatives. Augmented with IBM capability we enhance “out of the box” capabilities from SAP to drive sustainable solutions with an emphasis on sustainable supply chains. IBM has successfully developed and deployed Sustainability solutions as “Client Zero”, and partnered with industry leaders like Shell, Wells Fargo, Unilever and Yara to help establish and further their ESG goals.

Asim Khan [Digital Strategy & Enterprise Transformation Specialist] SAP Go-To-Market leader at IBM Consulting.