Agile business processes that are also environmentally friendly and sustainable have become an imperative as the key to surviving in the competitive business landscape.
This is more so in an era of economic uncertainty and increasingly greater regulatory oversight to ensure environmentally sustainable business practices.
Running a sustainable organisation makes eminent business sense as it can help in risk management, cost savings, competitive advantage and most importantly help in future-proofing companies by ensuring the availability of the right talent, resources and funding.
What is the best way forward for organisations?
This was the subject of a roundtable discussion organised by iTnews Asia in collaboration with Hitachi Vantara and SAP, titled: Building a Resilient Enterprise; How sustainability can improve agility and efficiency.
At the event, business leaders representing a wide variety of industries with different needs discussed both the challenges as well as opportunities that sustainable business practices offer.
One of the key themes discussed was how cloud-based ERP solutions provide organisations a ready-to-work industry-standard processes that incorporate the latest technologies.
This ensures that users have access to best practices and built-in capabilities around business processes, health and safety, and supply chain, along with integration with other systems such as the IoT and artificial intelligence (AI).
This helps companies run efficient businesses by providing full visibility that can also help organisations track energy consumption, of the entire production process and help build more resilient supply chains.
One of the broad conclusions reached during the deliberations was that having sustainability as the central mantra helps businesses operate in a way that not only meets the needs of profit and growth but also ensures that this is done without compromising on the needs of the wider community, and environment.
Hitachi Vantara’s Director of Digital Enterprise Delivery, Amit Gandhi, noted that environmental, social and governance (ESG) norms, which are driving the discussions on the need to build a sustainable business, were not something recent.
“Investors were evaluating companies based on their ESG profile as far back as 2004-2006 timeframe,” Gandhi noted.
He added that ESG has come to the forefront "based on comprehension and understanding" of its importance to protect the environment and also due to "external pressures".
Climate reporting
He added: “In Singapore, for example, climate reporting is already mandated for certain industries, at this point.
“We've already heard the recommendation that all listed companies, effective 2025, will have to start reporting climate data as well… and the same would apply to even the non-listed large companies two years down the line,” Gandhi told the audience.
He added that there are new guidelines on the carbon footprints and what can and cannot be used to offset carbon emissions.
Sustainable business practices are moving towards government-mandated regulations, he added.
“So that is why most companies need to have sustainability transformation as part of their roadmap. However, a recent study showed that 37 percent of companies lack a comprehensive sustainability strategy or an implementation roadmap.
“A reason for this is that they do not have access to the right data (and) I think data is a big part of the sustainability journey,” he said.
Gandhi added that the last part of the puzzle is the lack of qualified personnel who have access to critical resources and the skills that are needed to make this happen (achieving sustainability goals).
He noted that there are now more than 500 standards, voluntary or regulatory, that are now operational in sustainability targets, with more than 5000 KPIs (key performance indicators) that are being recorded as part of this.
“The key to this is having the right data, storing the right data, being able to analyse it, report it and make use of that kind of data.”
This is where Hitachi Vantara in partnership with SAP can help, he added.
“SAP showed the three zeros that SAP has in terms of the strategic directions… There are concrete solutions from SAP, which deal with the zeros of zero-emission, zero waste, and zero inequality.
“And combine it with holistic steering and reporting. So, there are solutions like the sustainability cockpit from SAP, which sits on top of all this data,” Gandhi said.
He added that with about 87 percent of the world's commerce being done by customers using SAP, “You can imagine the potential of what kind of data is available.
“And with all these tools, available data can be stored and analysed as part of your (organisation’s) processes, instead of you start collecting data from here and there later on after the fact. So, that is where the benefits of being able to leverage the data come into play,” Gandhi said.
Energy guzzler
He noted that studies have shown that the ICT industry consumes between 5-9 percent of the world’s total electricity consumption and emits around 2 percent of the total greenhouse gas
“So, this is one of the areas where we are playing a very comprehensive and intensive role in decarbonising the IT assets and operations.
“Another area which comes naturally to Hitachi is manufacturing and operations, the heritage companies of Hitachi; we have the know-how of manufacturing, operation technologies, skills that we are using and focusing on in terms of managing the sustainability and the green aspects of manufacturing.
“Here we are talking about energy consumption and carbon emissions, among others. We have strategies, tools and experiences of managing that as well,” Gandhi said.
He added the other areas where Hitachi Vantara is very actively working are facilities.
“Here again, it's about more like something close to IoT, incorporating sensors, and analytics on top of that, to come up with strategies to manage sustainability, manage emissions and manage power.
“And last but not least, I think data is, I would say, the most important thing and being able to analyse that data in real-time and make the right decisions.
“That’s where I would say tools from SAP, which allow us to capture the data, and the capability of being able to analyse that data, which is where Hitachi would come in, and together (Hitachi and SAP), we can offer organisations the right directions and support in meeting their sustainability strategy,” Gandhi added.
SAP’s Market Unit Lead, Addy Lim, said SAP's cloud-native ERP platform enables every organisation to be an intelligent, sustainable enterprise.
He added that it provides businesses with the agility to evolve new business models, achieve new efficiencies, steer the business with instant insights, and enable seamless re-organizations and expansion.
It also provides ecosystem resilience and understanding of working capital flows and streamlines procure-to-pay and order-to-cash processes for visibility, speed and efficiency.
Both of these help the company’s sustainability outcomes by recording, reporting, and acting with an automated, auditable, and compliant solution that embeds sustainability into a company’s business processes, he said.
Lim noted that when companies plan for their sustainability goals, they need to ask how they would get there. “How do you put your company on a path to transform in the right way and at the right speed,” he said.
He said SAP’s Cloud ERP offers a new architecture that helps address the transformation drivers faced by companies and brings together what is required to transform the business into a more sustainable one.
SAP’s Industry Cluster Lead – Energy & Natural Resources, SAP SEA at SAP, David Coldrey, noted that the ESG expectations of companies are continually growing.
For ESG transparency along the value chain companies need to record data spanning multiple sources, formats and organisations without the granular level of details and precision.
There are also new and increasing ESG reporting requirements spanning multiple frameworks and standards to report against and fulfil the respective requirements.
SAP ERP combines, connects and links financial and non-financial views metrics into one holistic reporting pane, he added.
It embeds and validates real-time data to effectively understand, analyse, and guide compliance, reporting and opportunities, he added.
Three zeros
Coldrey noted that SAP's strategy for sustainability includes zero emissions with climate action by managing the environmental footprint including compliance, regulations and journey to carbon accounting.
It also helps with zero waste by introducing a circular economy that helps to redefine design, production demand and supply of products through their use cycles for reusability, waste reduction and new value creation.
SAP Cloud ERP also helps in fostering zero inequality with social responsibility, Coldrey said. He added that it does so by safeguarding social responsibility across the workforce, sourcing, and procurement to enable equality and social equity.
SAP’s Specialist Sales - Digital Supply Chain, Kabir Radhakrishnani, noted that according to a survey, supply chains are the biggest contributors to sustainability and the greenhouse gas norms and the carbon footprint for organisations and it ranges from 30 to 90 percent depending on industry verticals with 90 percent more towards the retail and consumer goods industry.
He added that SAP’s solutions for the supply chain come embedded with solutions that track, record and report carbon emissions and this provides companies with visibility that can then help to devise strategies to control the emissions.
Extreme infancy stage
To a point made by one of the guests that Singapore companies are “at an extreme infancy stage with regards to ESG norms”, Coldrey noted that taxing of carbon is going to "come soon and that is going to drive a lot of behaviour (towards ESG norms)".
“I think carbon tax could be, say S$5 a day that means you got to start tracking how much carbon you produce once that price starts to go up. But if the tax is a sort of elective tax, then you can find ways to reduce what you need to pay and that means you're incentivised to reduce your carbon creation.
“But to get there you have to start collecting this data, and then you can start saying, ‘I didn't I didn't use this much more. Why are we using so much here? There's a big bucket here this, we need to find a way to reduce that,” he said.
He added that SAP believes that carbon accounting will become a reality soon.
“You have financial accounting and we think there will be a parallel ledger, that is carbon accounting. You're going to have a debit and credit for a product, which is prepared at a common level,” he said.
Coldrey noted that in Australia, the government has mandated that the top 20-25 emitters have to reduce their carbon emissions by 4.5 percent per year until 2030.
“So, you better understand how you can capture the data; you better be able to start identifying, what are the business processes (that are leading to carbon emissions)? And then you have to start looking for ways to reduce it.
“It comes back to, I think, the knowledge, what is the business process? How do I get this information, and just like how businesses work with someone saying this is our (financial) target for the year at the start of the year, the same way businesses will say, this is the (carbon reduction) target for the year,” he said.
He added that capturing the data and understanding is the key to sustainable growth.
Gandhi noted that while companies may be forced to capture carbon emission data due to government and ESG regulations, at the end of the day it would be a combination of regulations and an understanding that it also makes a lot of business sense to do so.
“It is like a self-developing force and it will become a part of our lives and companies will automatically work towards it,” he added.
Participants added many other points about their practical difficulties as well as success in their sustainability agenda.
One participant noted that while sustainability goals were worth pursuing for environmental reasons, for many companies, particularly small and medium-sized enterprises (SMEs) bottom line and profitability considerations often took precedence over sustainability goals.
