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August 16, 2023
Profitable Sustainability as the Driving Force of Global Change
In the face of the social and environmental crisis of the planet, sustainability has come to stay. It is a growing trend worldwide, especially in the Americas, thanks to cutting-edge technological solutions. How do companies implement sustainable policies while maintaining or even increasing their profitability?
Only recently, organizations could afford not to have sustainable policies. However, that is no longer possible today. The deep social, environmental, and economic problems that our planet faces, exacerbated by the devastating effects of the Covid-19 pandemic, have made sustainability a crucial aspect of business strategy for companies worldwide.
Sustainability has become a necessity rather than an option for organizations seeking growth and success. The new paradigm is sustainable profitability. What does it mean? It is about achieving economic growth while caring for the environment, protecting natural resources, and contributing to community development.
Many companies are already doing this, and they are achieving satisfying results. According to a recent survey conducted by Bain & Company and EcoVadis among more than 100,000 companies worldwide, activities related to environmental, social, and corporate governance (ESG) factors have positively impacted the financial performance of these organizations.
The study demonstrated, on the one hand, that sustainable businesses are more profitable. On the other hand, sustainability should not be seen as an expense but as a highly profitable investment with commitment and responsibility.
Another report by Deloitte, based on a survey of over 2,000 business leaders from 24 countries, shows that organizations are starting to understand the importance of incorporating sustainability strategies: 75% of the respondents stated that their organizations increased their investments in sustainability during the year 2022.
The same study also revealed that 61% of the surveyed leaders believe climate change will significantly impact their strategy and operations in the next three years.
The Moment of Truth
In September 2015, United Nations member countries approved the 2030 Agenda for Sustainable Development, which includes 17 Sustainable Development Goals (SDGs) aimed at eradicating poverty, protecting the planet, and ensuring the prosperity of all its inhabitants.
The UN has acknowledged that the planet's difficulties have increased, and the efforts to achieve the goals must be increased. Foretica, one of the leading global organizations working for sustainability, has recently stated that "the moment of truth has come."
Therefore, with only 8 years remaining until 2030, it is increasingly essential for companies to redouble their efforts in climate and environmental matters, incorporate new production methods, embrace renewable energies, and use natural resources efficiently.
The Americas: A Growing Trend
There have been advances in sustainability in Latin America, but there is still much progress. A study by KPMG, conducted among more than 1,000 companies in 10 countries, states that 69% of Latin American companies regularly produce sustainability reports. However, only 41% include this information in their annual financial statements, which is low compared to the rates in Asian (73%) or European (63%) companies.
On the other hand, sustainable policies are much more advanced in North America, as evidenced by the latest Global 100 ranking of the world's most sustainable companies, compiled by Corporate Knights. In this survey, 20% of the companies are of American origin, while 11% have headquarters in Canada.
The Era of "Green Consumers"
Another aspect contributing to the consolidation of sustainability in companies is the behavior of consumers, who prioritize sustainable products when making purchasing decisions. While in the past, the primary motivations for spending were price and quality, a significant percentage of consumers now want to know the product's origin and production stages.
According to a study by NielsenIQ, 69% of global consumers feel that sustainability is more important to them than it was two years ago. This increased awareness among consumers about the products they consume makes them cling to and support brands that demonstrate a strong commitment to the environment and society. Simultaneously, they quickly discard brands that do not meet their expectations.
These "green consumers" have a direct impact on both the economy and the reputation of organizations. They force companies to pay more attention to the type of energy they use, the carbon footprint they generate, and the production processes they employ. In short, companies need to be prepared to provide better responses in an increasingly sustainable world.
Sustainability and Technology
Technology plays a key role in enabling organizations to develop their sustainability strategies. Tools are available to control carbon emissions, monitor energy efficiency with artificial intelligence, optimize polluting transportation means, manage waste, audit different supply chain stages, and improve inclusion and diversity policies, among many other sustainable initiatives.
SAP, a global leader in enterprise software, is one of the companies offering a wide range of tools. Through SAP Cloud for Sustainable Enterprises, it provides cloud-based solutions for its customers to become socially responsible companies quickly. For example, SAP Sustainability Footprint Management helps organizations decarbonize their value chains by calculating their carbon footprint. On the other hand, SAP Responsible Design and Production supports companies in designing their products sustainably and implementing a circular economy. SAP Digital Supply Chain Management has also focused on making the entire supply chain sustainable from start to finish.
To incorporate this type of technology securely and reliably, SAP's business partners play an essential role. Among them, SEIDOR stands out, with over 40 years of global experience, and is a member of United VARs—the alliance of SAP Platinum partners for global projects. SEIDOR offers support and guidance to organizations that wish to implement sustainability solutions.
An Indispensable Path
Companies are increasingly placing stronger bets on sustainability strategies in a world burdened by permanent crises, wars, and pandemics. They do this to contribute their part in protecting the planet and also because they benefit from it.
Sustainable policies such as recycling, water reuse, energy efficiency, and responsible use of raw materials, among others, reduce production costs and allow for savings. They also generate prestige and recognition in society, foster greater customer loyalty, and increase the value of companies. This is because the global trend is for investors to favor socially and environmentally sustainable companies increasingly. Ultimately, sustainable practices enable companies to increase their profits.
In the current times, sustainability can also be profitable. It is the unavoidable path that companies are obligated to follow.
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