Recent research by Oxford Economics and SAP has revealed work remains to be done to drive value from sustainability for businesses across Malaysia. While 60 per cent of businesses do not think that it is difficult to be sustainable and profitable at the same time, just four per cent say they receive significant value from their sustainability strategies today.
This may be because there remains a disconnect between sustainability plans and actions for many organisations. While six in ten (63%) of Malaysian businesses has a clearly communicated sustainability plan, only 23 per cent have incentivised leaders based on its success and only a third (33 per cent) say their employees are active participants in their sustainability efforts.
“It is an encouraging sign that businesses across Southeast Asia are increasingly mindful of sustainability practices along their entire supply chain, including those of their suppliers,” said Verena Siow, President and Managing Director, SAP Southeast Asia.
“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 effect the required change for a green economy in ASEAN. Business leaders in Southeast Asia should not perceive sustainability action as a risk mitigation measure only. It is an opportunity to realise 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 organisation and for our society at large,” added Siow.
Regulatory compliance is both key sustainability driver and challenge
Sustainability strategies are largely being driven by regulatory drivers in Malaysia today. Survey respondents noted one of the primary drivers of sustainability in their business is the threat of regulatory mandates (52%), only behind operational efficiencies (54%) and ahead of 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.
Investment in data key to improving sustainability outcomes
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.
Yet, 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, though a majority (77%) have begun the process in some areas. Of the businesses who have made begun measuring their carbon, only 33 per cent have made changes to their processes based on the calculations.
More 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.
Sustainability leadership is needed
Action on sustainability is needed urgently. Beyond the impact on the environment, just 21 per cent of Malaysian businesses say their workforces aren’t aware that missing sustainability targets will drive customers to their competition.
Businesses who are achieving value from sustainability are defined by traits such as setting clear expectations at the strategic level, applying the transformative power of technology and data management, and engaging 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.”
You can read the full study here. Meanwhile, snapshot of Malaysian findings within the infographic below.
