Published an hour ago
Proposed by SAP
Coming on the heels of a global pandemic that changed the way we live and work, the war in Ukraine has added to the uncertainty and instability we face. If there’s one good to be had from these disruptions, it’s that organizations have had the opportunity to reinvent themselves for the better. They can reimagine the way they innovate, operate and create value for all stakeholders by leaving behind the practices of the past and embracing the vision of sustainability for the future.
Decisions based on sustainability principles are crucial for navigating today’s complexities, dealing with near-term stresses, and adapting to a changing global system, while laying the foundations for growth in the years to come. coming.
There are three concepts leaders need to prioritize when charting their path to a sustainable business:
1) Accelerate the use of renewable energies
Europe is dependent on fossil fuels. Before the war in Ukraine, Europe imported around 40% of its gas and more than a quarter of its oil from Russia. While the EU has turned its back on Russian coal, it is struggling to agree on how and to what extent to boycott Russian oil and gas. Many countries are looking for alternative sources, with the United States, Saudi Arabia, Venezuela and other producers filling the void.
The industrial sector uses about 54% of the total energy delivered worldwide, more than any other sector. More … than 80% of this energy is still produced by fossil fuels. It’s clear that energy and climate policies will be impacted short term. The war will likely expand the use of fossil fuels, jeopardizing the timetable for achieving net zero emissions. If we want to avoid slowing down or reversing our progress towards our net zero goals, the private sector must accelerate its transition to the use of renewable energies.
Renewable energy costs have fallen significantly over the past 20 years and their use has increased accordingly. However, to achieve a secure, sustainable, and economically feasible energy system, government and business leaders must work together to create policy and financial environments that encourage rapid adoption. Clean energy technologiescombined with energy efficiency solutions, are essential to reduce emissions.
Companies must formalize its energy strategy and supporting the deployment of renewable energy sources, which are largely domestic, safer, more secure and less expensive on a large scale. To do this, they can favor self-produced energy or commit to using 100% renewable electricity. They can form partnerships to develop renewable energy infrastructure projects and join coalitions like the RE100.
2) Participate in collaborative networks
Russia’s invasion of Ukraine has increased instabilities in global supply chains and intensified the scarcity of important resources. Developing stable, reliable and sustainable supply chains requires rich data, connected business networks. These networks will provide the transparency needed to better manage resource availabilitydeliver essential products and services, combat unethical behavior and reduce environmental impacts.
For example, more than 30% of food produced globally is lost or wasted due to inaccurate demand calculations or transportation issues. Ukraine has large deposits of lithium oxide. Since batteries are the most expensive part of electric vehicles, rising nickel and lithium prices may slow market adoption.
Conflict can also give rise to unethical labor practices, making monitoring of human rights and working conditions in supply chains crucial. With sustainability-focused planning and technologies, governments, businesses and NGOs are better prepared to manage crisis response; for example, in the event of natural disasters or social emergencies.
Industry data networks like Catena-X and the World Business Council for Sustainable Development Carbon Transparency Pathfinder enable companies to manage sustainability performance across supply chains. This includes material sourcing, carbon emissions accumulated in products, and reuse at the end of a product’s cycle.
3) Leverage sustainable finance
Business leaders often assume that being more sustainable means being less profitable. This is not the case. Transform to a low-carbon, low-waste and low-inequality economy and leverage sustainable finance represents a huge opportunity.
Capital markets are greening. Sustainable bonds are booming and the majority are now corporate issuers. Sustainable lending grew 300% last year. Companies with enduring credentials are increasingly becoming targets for M&A deals. Despite fluctuations in stock markets, the value of sustainable companies’ shares increased by an average of 46% in 2021.
Financing the transition to sustainable businesses and economies means business leaders must move away prioritize solely shareholder returns for a wide range of stakeholders, including employees, communities, customers, partners, regulators and, above all, nature. Sustainable finance can accelerate business investments in nature-based solutions, such as protecting forests and other carbon sinks to regenerate ecosystems and support biodiversity.
Rising environmental, social and governance (ESG) reporting standards require companies to accurately collect, organize and report their impacts across multiple standards. Investors want greater disclosure because they not only see regulation, but consumer and employee demand trends as well. They want more sustainable products, services, policies and business performance; they want to work for responsible companies and they are more engaged. This creates economic opportunities and stabilize employment.
Business leaders must play a role in a “just transition”, helping emerging markets as they face the greatest risks from climate change and ESG challenges. The pandemic and the war in Ukraine have put combined pressure on emerging markets, with a disparate impact. Aid and support funding from Western governments, which was already under-deliveredis reoriented towards military and humanitarian support in Europe.
There is a growing desire for this investment support. ESG investments now account for nearly 18% of foreign financing for emerging markets outside China, four times the average of recent years. Sustainable finance can deliver strong returns while directly tackling climate, biodiversity and social inequality challenges.
As a key driver of sustainability impacts, the private sector has an important role to play in influencing policy action, improving the sustainability performance of operations, products and supply chains, providing sustainable financing and large-scale innovative solutions. Together, we can generate positive outcomes for the planet and our communities, and secure long-term security, stability and equitable economic progress for all.
SAP’s strategy is to help every business operate as a smart, sustainable business. As the market leader in enterprise application software, we help businesses of all sizes and in all industries run at their best: SAP customers generate 87% of total global business. Our machine learning, Internet of Things (IoT) and advanced analytics technologies help transform our clients’ businesses into intelligent enterprises. SAP helps empower people and organizations with deep business insights and fosters collaboration that helps them stay ahead of their competition. We simplify technology for businesses so they can consume our software the way they want, without disruption. Our suite of end-to-end applications and services enable businesses and public customers in 25 industries around the world to operate profitably, continuously adapt, and make a difference. With a global network of customers, partners, employees and thought leaders, SAP helps the world run better and improve people’s lives.
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