The size of Joe Biden’s motorcade, the arrival of Leonardo di Caprio, and a maskless, dozing Boris Johnson sat next to 95-year old 'National Treasure' Sir David Attenborough have been just some of the highlights of COP26 so far. But away from the showbiz attendees and hypocrisy of world leaders, there were also many pledges made to tackle climate change.
One of the new initiatives unveiled at the Glasgow event by the UK Government was plans to force businesses to publish details of how they intend to go green.
Under Chancellor of the Exchequer Rishi Sunak’s proposed rules, UK banks and listed companies will need to develop net-zero transition plans by 2023, including targets to reduce greenhouse gas emissions and actionable steps to hit those targets.
The aim of Sunak’s proposal is to prevent firms from greenwashing, and increase transparency and accountability over their eco commitments.
However, recent research from SAP highlights how meeting this requirement could prove tricky for businesses, as they struggle to gather accurate data about their environmental impact.
The Sustainability’s Role in Business Performance study revealed that many firms already understand the importance of going green. Of the 7,000-plus global business leaders interviewed, 17% said environmental issues are already material to business results, while a further 22% said they would become material to company performance within five years. The majority of respondents also perceived environmental sustainability to be linked to the long-term profitability and competitiveness of their business.
The problem facing firms is getting systems in place to help them introduce and measure green targets.
When asked what were the main barriers for their company taking action to improve the planet’s environment, the top response was not understanding how to embed sustainability into business processes and IT systems. This was cited almost twice as often as reasons like organizational resistance, it not being a business priority and customer indifference.
Data collection is proving another obstacle for firms in their sustainability efforts. While 32% of companies are collecting environment data through sensor meters, giving them accurate information, 37% are basing data on assumptions and estimates.
Where companies are collecting data on particular environmental issues, there is not huge enthusiasm for the information gathered. Only 21% are completely satisfied with the quality of their data, 60% are somewhat satisfied, while 19% are unsatisfied.
The biggest bugbears cited were a lack of confidence that data is complete (27%), data not collected often enough (27%) and data not accessible soon enough (25%).
This lack of trust in data is especially concerning as three-quarters of businesses are using this environmental sustainability information as a key piece of their strategic and operational decisions.
The study also identifies a worrying trend around a lack of standardisation in eco reporting. The most popular method, used by almost a quarter of businesses, for monitoring and reporting environmental sustainability are metrics developed in-house. But there are also 10 different standards being used by firms to report their environmental impacts, including the International Organization for Standardization (17%), Sustainability Accounting Standards Board (16%) and World Business Council for Sustainable Development (16%).
At a roundtable event to support the launch of the research, SAP and sustainability experts shared their insights into the value of high-quality environmental impact data, and how technology is being enhanced to improve its collection.
Michael Groves, CEO of ‘wastetech’ business Topolytics, said that from a carbon emissions and waste perspective, aspects like how far material is being moved before it gets processed need to be taken into account. But for a lot of companies working with waste contractors, once the material goes into that system, they don't have insight into the carbon impact of that journey:
Literally just the movement of that material is generating its own emissions through the transport and some of those distances are quite significant. So for some of that detail, measurement is one thing, but it's understanding the quality of the data that you're generating which is crucial.
What collectively we're all doing here is actually building up a much higher level of confidence in that data so that we can then start to make better decisions. On the carbon footprint, it's about understanding where the data comes from, how it's measured and how accurate it is as well.
Professor Peter Hopkinson, Circular Economy specialist at the University of Exeter, outlined some work the university is currently doing on the NHS and net zero, and the role data plays if the organization is to become part of the circular economy:
[The NHS] is a big supply chain and a big source of emissions for the UK. If you look at the data, you see that 3% of NHS carbon emissions are coming from inhalers, which is a staggering figure. When you look at that, then you start to think, if we apply a circular economy solution to that, what does that look like and is that the priority? Or is it somewhere else where there may be lower emissions, but you might have a greater traction and feasibility - should you target that? That's how we think about it, we look for the loss of value, the leakage of ignitions and other materials.
Stephen Jamieson, Global Head of Circular Economy Solutions at SAP, explained how the vendor is developing technology to help companies gain better visibility of their environmental impact. SAP recently launched Product Footprint Management, a cloud application running on SAP Business Technology Platform, which enables the calculation of product footprints periodically and at scale across the entire product lifecycle. Jamieson said:
This is really looking at how can we take the processes that are in SAP systems and better describe the CO2 journey in those processes, whether it's a packet of cookies or a consignment of garments for a fashion retailer. How do we embed those things so that organizations can say, if I'm using a particular material, if I'm making a particular design decision, I can see the impact of that in terms of regulations.
If you know that one material encourages a certain plastic tax, whereas another material doesn't, then there's a natural next question, which is what's the CO2 impact. This is really where our story's developing now, it’s utilizing technologies like Product Footprint Management at that point to say, we can look at scenario A versus scenario B.
SAP is also aware of the need for integration with technology from external suppliers, to make it easier for companies to capture relevant data, he added:
There's a huge opportunity, collectively and collaboratively, in the partner system. We are building APIs to our product and solutions so that we can create that connectivity and foster that collaboration. We see it as critically needed. And then over time, it's more about unlocking the opportunity that exists innately within the three and a half million businesses that are already part of our business network. Bringing those two approaches together we see as a great opportunity for a partner ecosystem.
The amount of scrutiny into and regulation around sustainability of businesses is only going to increase in the future. It’s encouraging that so many firms are already aware of the need for going green to ensure long-term profitability and competitiveness. Hopefully the data required to meet targets in this area, like those unveiled by Sunak at COP26, will become easier to gather with tools like Product Footprint Management, especially if they offer integration with other relevant systems.