Despite a slow start, Australian businesses are turning the tide on sustainability. But tackling financial, resource and attitudinal barriers will be key.
When it comes to sustainability, Australia is slow off the mark, with Australia ranked 50th out of 67 countries for its sustainability efforts.
For Australia to reach its target of net zero greenhouse gas emissions by 2050 and compete in a global marketplace that prioritises decarbonisation, a dramatic shift is required.
And according to new research by ABB, the wheels are in motion. The Sustainability in Business report – surveying respondents from various industries including construction, energy and utilities, manufacturing, design and consulting services, mining, and oil and gas – found Australian businesses are increasingly willing to invest in sustainability initiatives.
Most (83 per cent) plan to increase their investment in sustainability over the next three years, superseding global willingness which sits at 67 per cent.
As encouraging as this may be, there are certain roadblocks that still need to be overcome. But the time to act is now, emphasised Kelvin Wong, Commercial Leader, Electrification of ABB Australia.
What are the roadblocks to sustainability?
While over half (51 per cent) of those in the C-suite, or who are business owners or directors, ranked sustainability of the utmost importance, it’s not valued as highly across other workforce segments.
Other challenges include resource shortages, with labour topping the list of pressures for over half (57 per cent) of organisations. Scarcity of raw materials (35 per cent), electrical components (33 per cent) and energy (33 per cent) are also causes of concern.
Then there are financial challenges to grapple with. By investing in sustainability initiatives, the top outcome most businesses want to achieve is cost savings through operational efficiencies.
While upfront investment is essential to achieving these productivity gains, it’s also a deterrent for many (60 per cent) – who believe this is the biggest hurdle to sustainability.
But according to Wong, sustainability goals and initiatives should not be viewed as a cost.
Why is an individual approach important?
Impediments to sustainability vary across sectors. Take waste, for example. While a third of Australian companies say that energy and raw materials are their biggest waste concerns, this figure jumps up to two thirds for companies in the energy and utilities sectors.
While packaging is the biggest waste concern for the commercial and residential buildings sector, only a third of construction businesses consider it their top concern.
This contrast demonstrates the need for a tailored approach to sustainability that takes sectors and their supply chains into account.
To really make progress on sustainability, any organisation must consider its own unique business pain points.
“In an economic environment marked by high costs and labour shortages, Australian businesses need sustainability solutions that can create competitive advantage by addressing these business challenges,” Wong said.
Who are “sustainability leaders”?
While most businesses view sustainability favourably, a subgroup – “sustainability leaders” – was unearthed during the research.
Typically in upper management roles, they are part of organisations with an established approach to sustainability, and make a concerted effort to improve sustainability internally as well as externally.
Sustainability leaders have strategic and clearly defined plans in place, with multiple metrics designed to measure both their organisations’ and suppliers’ sustainability efforts.
Underpinning these measures is the adoption of technology, with 80 per cent of sustainability leaders using devices and smart systems to optimise energy consumption to drive both short- and long-term change.
More than half (52 per cent) of companies are implementing devices to measure and control energy consumption, with 39 per cent adopting smart building systems for optimised energy usage. A third use automation to reduce energy consumption, while 31 per cent use data analytics to manage energy-intensive processes.
By understanding the cost savings that can be achieved off the back of sustainability investment, sustainability leaders are far more likely to obtain an efficiency-based edge, with ABB’s research demonstrating that leading companies are already benefitting from the commercial potential of sustainability.
“They are investing in technology to monitor, automate and optimise their energy consumption,” said Wong. “They are expecting to reduce their emissions, but they also expect to reduce operating costs and total cost of ownership.”
How can the sustainability gap be bridged?
Less than a quarter of engineers and operators share leaders’ enthusiasm for sustainability.
But overcoming this disconnect and obtaining buy-in across the organisation is vital for ensuring an organisation’s sustainability goals are transformed into tangible results.
The upper echelons of organisations are in charge of strategy and budgets, allowing them to address sustainability head on. But it is their responsibility to ensure all employees are on the same wavelength in terms of progressing sustainability.
This includes being clear and consistent in communications about sustainability down to a micro level, so employees can see how their day-to-day activities contribute to sustainability objectives.
A key way to bring employees on board is to recognise all behaviours that contribute to sustainability, no matter how small they might seem. Those who go out of their way to embed sustainability into organisational culture should be rewarded.
Education is also crucial for securing engagement and quelling scepticism. Engaging a partner such as ABB is helpful on this front, providing education on the benefits of technology for achieving sustainability goals and outlining solutions that apply to all levels of the organisation.
A sustainability partner can also provide best-practice advice and help to implement solutions that have worked for similar businesses locally and internationally.
What does sustainability success look like?
ABB channel partner IPD, a distributor of electrical and automation products across Australia, raised concerns about the volume of packaging materials going to waste – including cartons and plastic air pouches – in the deliveries the company was receiving from ABB.
Inefficient unpacking and loading processes also negatively affected productivity.
Through collaboration, ABB and IPD came up with a solution. Taking inspiration from the reusable plastic crates supermarkets use for home deliveries, IPD trialled using 200 crates for deliveries from ABB.
Reusing these crates removed the need for packaging and reduced handling time and improved sustainability and efficiency.
Plans are in the works for further sustainability initiatives, with ABB and IPD looking into replacing plastic pouches used as void fill with recyclable paper and implementing reusable pallets.
Collaboration across supply chains is key to ensuring leaders gain transparency beyond their own direct emissions.
To learn more about how Australian businesses are approaching sustainability, read the Progressing Sustainability in Australian Business report.