New research from Oxford Economics and SAP has revealed that Malaysian companies have yet to gain from their sustainability plans.
SAP: Malaysian Companies Yet To Gain From Sustainability Plans
Sustainability goals are a key part of any company’s Environmental, Social and Governance (ESG) efforts, but many companies still find it difficult to derive significant value from their sustainability strategies.
Verena Siow, President and Managing Director of SAP South East Asia, share key findings from new research from Oxford Economics and SAP that showed that Malaysian companies have yet to gain from their sustainability plans.
While 60% of businesses don’t think it’s difficult to be sustainable and profitable at the same time, just 4% say that they actually benefited significantly from their sustainability strategies.
That may be due to a disconnect between the organisations’ plans and its actions. While 63% of Malaysian businesses have a clearly communicated sustainability plan, only 23% have incentivised leaders to achieve those goals, and only 33% say that their employees are active participants in their efforts.
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It is an encouraging sign that businesses across South East Asia are increasingly mindful of sustainability practices along their entire supply chain, including those of their suppliers.
There is no time to waste to move beyond strategy and to achieve real, tangible results. In three years, almost a third of businesses expect significant value from their sustainability strategy – and we believe that with the right focus, this number can be even higher.
Public, private and plural partnerships are quintessential to affect the required change for a green economy in ASEAN. Business leaders in South East Asia should not perceive sustainability action as a risk mitigation measure only. It is an opportunity to realize new sustainable revenue streams, find new efficiencies, and build new business models based on low-emission, circular, and ultimately regenerative concepts to benefit both the organization and for our society at large.
Regulatory Compliance : Sustainability Driver + Challenge In Malaysia
Sustainability strategies are largely driven by regulatory compliance in Malaysia, with survey respondents noted that these are the primary drivers in their businesses:
- the threat of regulatory mandates : 52%,
- operational efficiencies : 54%, and
- market reputation (48%).
That focus aligns with regulatory compliance being the second biggest benefit derived from sustainability so far (39%), behind only reduced carbon emissions.
It’s clear that organisations may need to refocus their strategies to achieve greater value from sustainability. Too much focus on compliance was cited as the third highest challenge to sustainability success by Malaysian respondents, trailing only the lack of reinvention of business strategy and ineffective data.
Data Is Key To Improving Sustainability Outcomes
According to the survey, the key to improving sustainability outcomes will be the effective use of organisational data to make more informed decisions.
Accurate data was ranked as among the most significant activities to help reach carbon reduction goals, only trailing sustainable sourcing and monitoring energy among respondents.
Unfortunately, ineffective data for decision-making is considered a moderate challenge for 75% of Malaysian businesses. The research also found that:
- less than a quarter (23%) businesses have calculated their total organisational carbon output,
- although a majority (77%) have begun the process in some areas.
Of the businesses who have made begun measuring their carbon, only 33% actually made changes to their processes based on the data. More obviously needs to be done.
Just over a third (35%) of Malaysian respondents said they had invested in data analysis to measure sustainability in their business, while half (50%) said they were training staff how to capture sustainability data.
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Malaysian Companies Need Sustainability Leadership
Action on sustainability is needed urgently in Malaysia, and has to be driven from the top down.
Beyond the impact on the environment, just 21% of Malaysian businesses say that their workforces are not even aware that missing sustainability targets will drive customers to their competitors.
Businesses that have obtained value from their efforts have these qualities :
- they set clear expectations at the strategic level,
- they apply the transformative power of technology and data management, and
- they engage with important audiences such as employees, supply chain partners and policymakers.
“Sustainability leaders go beyond vision to ensure that sustainability initiatives are acted upon,” said Edward Cone, editorial director, Oxford Economics. “They communicate with key constituencies both inside and outside the company, and they use integrated technologies to measure and track performance in a way that drives accountability.”
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