According to a recent study by SAP, domestic companies are increasing their investments as a result of treating sustainability as a strategic priority, and their overall business performance is essentially linked to this.

SAP recently conducted a survey of approximately 250 people in Korea regarding the increasing trend of domestic investment in sustainability solutions and announced the research results.

According to this study, approximately three-quarters (73%) of domestic companies reported that sustainability strategies contribute to performance, such as sales or profit growth, at a moderate or high level. Additionally, 73% of domestic respondents stated that business process efficiency increased at a moderate or high level due to sustainability activities.

On average, 56% of domestic companies responded that there is an average or high level of relationship between sustainability and organizational competitiveness and profitability. However, this figure is somewhat lower than the results for the Asia-Pacific and Japan regions (competitiveness 71%, profitability 68%).

These impacts on business performance are driving investment. In Korea, 56% of companies responded that they plan to increase investment in sustainability over the next three years, an increase of 24 percentage points from last year (32%), suggesting a close relationship between sustainability and business priorities.

Four out of ten domestic companies (44%) expected to generate positive financial returns on sustainability investments within the next five years. This is higher than the global average of 61%.

Gina McNamara, Chief Financial Officer (CFO) of SAP Asia Pacific and Japan, stated, “As it is becoming increasingly clear that organizations that prioritize sustainability are more successful, sustainability can no longer be discussed separately from corporate financial performance. Already, 5% of Korean companies responded that sustainability is important to their performance, and 28% said it will become important within five years. Now is the time to combine financial and eco-friendly decision-making across all business processes. Therefore, SAP is processing carbon data in the same way it handles financial data.”

On the other hand, it was found that domestic companies are still facing various challenges. 43% of domestic companies cited a lack of expertise required to implement environmental protection measures as the biggest obstacle, a figure higher than the global average of 30%. Other notable issues include a lack of environmental impact strategies (42%), difficulty in proving return on investment (38%), and doubts regarding the ability to measure environmental impact (38%).

Deriving value from sustainability data is expected to be key for domestic companies in demonstrating a return on investment. Only 7% of domestic companies were fully satisfied with the quality of their collected sustainability data, unchanged from the previous year (7%) and falling short of the global average of 23%. This is interpreted as being due to a lack of effort to directly measure sustainability data rather than relying on assumptions and estimations. Domestic companies lag behind other countries in directly measuring energy consumption and emissions (Korea 67%, global 83%), resource availability (Korea 71%, global 79%), and material usage (Korea 68%, global 76%).

“If sustainability data is incomplete, it can cast doubt on the decisions made to improve the health of the planet and the company,” said CFO McNamara. “The key is to record and report accurate, granular, and auditable sustainability data and integrate it with financial data to make the right business decisions.”

This is particularly important considering that domestic companies are utilizing sustainability data in their decision-making today. It was found that approximately three-quarters (71%) of domestic companies use sustainability data at a moderate or high level in strategic and operational decision-making. Only 4% of companies do not use sustainability data at all in their decision-making.

On the other hand, signs of progress are also appearing. Nearly 8 out of 10 domestic companies (76%) answered that they are tracking Scope 1 emissions at a moderate or high level, while Scope 2 emissions reached 64% and Scope 3 emissions reached 57%.

My companies are also demanding sustainability across the entire ecosystem. About three-quarters (70%) of respondents said they require sustainability data from suppliers, and 66% said they require environmental impact data at a moderate or high level from partners such as logistics and order processing.

“The benefits of integrating sustainability data and results into core business are clear, but there are still many hurdles to overcome,” said CFO McNamara. “By collaborating with technology partners like SAP, more companies can measure real sustainability data, act strategically, and improve their competitiveness, profits, and profitability on their own.”