Businesses are increasingly seeing the commercial benefits of sustainability but struggling to take action because of a lack of expertise and data, according to Schneider Electric's Sustainability Index.
The Sustainability Index: transforming intention to outcomes report found that most companies see climate change as a major operational risk and support Australia’s transition to net zero, however, while businesses are embracing sustainability, they are struggling to act.
The report polled more than 500 decision-makers across corporate Australia, and findings revealed that three-quarters (76 per cent) of respondents believe sustainable transformation offers a competitive edge, which is up 13 per cent on similar research conducted in 2021.
Asked what the drivers were towards adopting sustainability, 86 per cent nominated profitability benefits including increased revenues, brand equity and efficiency. Additionally, most businesses (75 per cent) feel benefits outweigh the costs when it comes to adopting sustainable technology, up from 68 per cent last year.
Participants also stated there was increasing pressure from customers and shareholders to reduce their climate change impact, with one stating they will be forced to change, otherwise their company will be left behind by competitors.
According to Gareth O’Reilly, Schneider Electric’s Pacific zone president, Australia is at a tipping point for corporate sustainability.
“Most companies support reaching net zero, and they know energy efficiency will make sustainability profitable, they need the data, technology and expertise,” O’Reilly said.
“Now is the time to act on reducing emissions to not only reduce impact on climate change, but also to help manage operational risk and meet stakeholder expectations.”
Companies are investing in the energy transformation, with most (79 per cent) respondents agreeing that digital is playing a key role in achieving sustainability goals, and more than half (57 per cent) stating they had increased their spending on digital technology over the past three years, with 42 per cent investing in automation.
A majority also planned to invest in monitoring and reporting (79 per cent), energy and resource efficiency (75 per cent), and data automation (74 per cent) in the next two years.
This increased investment in digital technology to augment energy management is contributing to what Schneider Electric describes as ‘Electricity 4.0’, a new energy revolution driven by the convergence of digital and electric at scale.
However, despite recognising the commercial benefits and the public and stakeholder pressure for action on sustainability, one in 10 (11 per cent) have no intention of reducing their carbon footprint, and many (45 per cent) don’t expect to do so until 2030 or later, citing several reasons.
Leading barriers to net zero reported by companies that want to decarbonise included a lack of expertise (28 per cent) or data (21 per cent) to do so. Most companies don’t have detailed data or resources to identify and measure their own emissions and those across their supply chains.
With climate change seen as the number one risk to the supply of energy and resources, around a third (37%) of those who participated in the survey are acting to reduce their own emissions. Additionally, 45 per cent have, or are developing, business plans to address the climate risk.
“Most businesses want to act on climate issues, but many are constrained by a lack of skills, expertise, technology, and the data to take the steps needed to cut emissions, however, the technology is available for businesses to make substantial emissions reductions,” explained O’Reilly.
“Setting a net zero target is a critical step, but it is the planning and operational changes a business makes to achieve these goals that really matters.
“Digital monitoring enables us to see how we use our energy, thereby, driving efficiency and eliminating waste. Adding smart devices and software enables us to deploy energy more efficiently.”
The survey also revealed that nearly half (46 per cent) of respondents had, or were well underway with, a strategy to quantify their own emissions, or those across their supply chains.
Of those companies committed to decarbonisation, between 14 and 30 per cent said they had “limited understanding” of their own emissions across the various Scope 1 and 2 elements, and between 16 and 35 per cent for Scope 3 elements.
Roughly 30 per cent said they had estimated their emissions based solely on their energy spending, and less than five per cent said they had achieved material emissions reductions across their use of gas and fuel – although nearly 10 per cent said they had achieved reductions in their emissions from electricity use.
“The data shows us that all the pieces for net zero are falling into place, and if businesses listen to the market, the public and their stakeholders to embrace the future of energy, we can create a greener future for Australia,” O’Reilly concluded.