68% of Australian businesses see relationship between sustainability and competitiveness and profitability, leading to 11 point increase in businesses increasing their investments

Sydney – 20 May 2024 – Australian organisations say their overall business performance is intrinsically linked to treating sustainability as a strategic priority – and are boosting their investments as a result.

A recent study by SAP found 68% of Australian businesses see a moderate to strong relationship between sustainability and both their organisation’s competitiveness and its profitability, slightly below global results (72% competitiveness, 68% profitability).

That impact on business outcomes is driving investment. In Australia, almost half of businesses (49%) intend to increase their investments in sustainability over the next three years, up 11% points since last year (38%)[1].

Sustainable Australian businesses drive growth in the top line, bottom line, and green line

The study, which surveyed 250 business leaders in Australia[2], found more than two-thirds (67%) of Australian businesses saw sustainability strategies contributing to outcomes like revenue or profit growth to a moderate or strong degree. Similarly, 69% of Australian respondents saw a moderate or strong increase in the efficiency of business processes from sustainability activities.

Six in ten (60%) of Australian businesses expect to demonstrate a positive financial return on their sustainability investments within the next five years, compared to 61% of global respondents.

“Sustainability can no longer be considered separately to the wider financial performance of the business because it is increasingly clear that more sustainable organisations are more successful organisations,” said Gina McNamara, Regional Chief Financial Officer, SAP Asia Pacific & Japan.

“Already, more than one in ten (11%) Australian businesses say sustainability is material to their business results, and another 36% say it will be within five years. Now is the time to combine financial and environmental decision-making in every business process, so we treat carbon data the same way we treat financial data.”

Yet, challenges remain. Difficulty proving return on investment is the top barrier to taking environmental action with 40% of Australian businesses finding it a challenge, above the global average of 33%. Other notable issues include lack of funding (33%), lack of an environmental impact strategy (32%), and lack of expertise (32%).

Australian businesses looking to unlock the value of sustainability data

Extracting value from sustainability data will be key to enabling Australian businesses to prove return on investment.

Just 15% of Australian businesses are completely satisfied with the quality of the sustainability data they gather, down from 17% last year and below the global mark of 23%.

This may be because there remains work to do to measure sustainability data directly, rather than rely on assumptions and estimates. Australian businesses trail the rest of the world when it comes to directly measuring energy consumption and emissions (72% in Australia vs. 83% globally), resource availability (73% vs. 79%), and materials use (70% vs. 76%).

“If our sustainability data is not complete then the decisions we make to improve the health of our planet and our businesses are cast into doubt,” continued McNamara. “The key is to record and report accurate, granular, and auditable sustainability data and integrate it with financial data to make the right business decisions.”

Australian businesses are utilising sustainability data across their ecosystem

That becomes particularly important considering Australian businesses are using sustainability data to make decisions today. Three quarters (75%) of Australian businesses use sustainability data to inform strategic and operational decision-making to a moderate or strong degree. Just four per cent do not use sustainability data in decision-making at all.

Yet, there are encouraging signs of progress. Over seven in ten (73%) of Australian businesses report moderate or strong tracking of Scope 1 emissions, while that number is 64% for Scope 2 emissions, and 52% for Scope 3 emissions.

Similarly, Australian businesses are making sustainability demands across their ecosystem. Almost two-thirds (64%) of respondents said they require sustainability data from their suppliers to a moderate or strong degree, and 63% demand environmental impact data from partners like logistics and fulfilment.

“The benefits of integrating sustainability data and outcomes into the core business are clear,” concluded McNamara. “But there’s still so much more to do. Working with a technology partner like SAP will help more businesses measure actual sustainability data, act on it strategically, and drive competitiveness, profit, and revenue themselves.”

About this research

SAP Insights collected data from 4750 respondents across 21 nations and 29 industries. Respondents had the highest knowledge of their organisation’s sustainability objectives and processes​. The study was conducted in February-March 2023 via an online survey.

[1] https://news.sap.com/australia/2022/11/29/sustainability-is-driving-profitability-and-competitiveness-in-australia-though-access-to-data-is-stifling-progress/

[2] Business leaders refers those with the following job titles: Vice President, Director, Unit Manager, Operations Manager, Facilities Manager, all C-Suite titles (CSO, COO, CFO, CPO, CEO, CRO) Environment or Sustainability Manager, Procurement Manager, Environmental Health & Safety Manager, Risk Manager, Public Affairs Manager.