Too many businesses still treat environmental management and intelligence as a tick-box ‘compliance exercise’ (51 per cent) and the ‘cost of doing business’ (43 per cent), rather than a transformational opportunity. 

That’s a key finding from a new report by Frost & Sullivan, which partnered with Australian technology company Envirosuite to produce  Environmental Intelligence: driving business growth in a changing climate.

The authors of the report write that it reveals how some organisations plan to unlock business value from environmental intelligence, while others are left lagging behind — even as sustainability becomes a key business driver.

According to Peter White, CEO of Envirosuite, in response to the formidable environmental challenges impacting growth outcomes for organisations across the globe, the transformative concept of Environmental Intelligence (EI) is emerging and gaining momentum. 

“What we’ve discovered is that Environmental Intelligence is something that isn’t just good for communities and the environment. It’s a growth driver, contributing to increasing sustainability and profitability. It’s now shifted from compliance to business-critical and offers a competitive edge.”

EI is an evolution of environmental management — a technology-driven process harnessing the power of big data, machine learning and analytics tools to produce real-time visualisations, predictive modelling, digital simulations and actionable insights.

White told Which-50, “Less than half of companies see environmental management as important for their corporate reputation. However, the highest adoption was in companies with annual revenues above $1 billion. This indicates the need for large organisations to leverage their environmental best practices for enhanced corporate branding.”

Indeed, a 2019 survey of 6000 companies in 26 markets across Asia-Pacific, Europe, and North America found a strong increase in sustainability reporting once the company size crossed $1 billion in revenues.

“As environmental management evolves and the awareness of EI grows, so does the need to implement these solutions. Almost 90 per cent of global companies have acknowledged they are planning to increase or maintain their spending on environmental management next year, largely due to value of digital data. Those who extract value from their data will drive competition, optimise their operations and asset life, and achieve better business outcomes,” he said.

Cost pressures remain the main challenge to environmental management in organisations. 

“The majority of organisations see consistent levels of expenditure on environmental management in 2020 as in 2019, despite the negative impacts of COVID-19. However, 27 per cent say they anticipate increasing expenditure on environmental management in 2020 compared to 2019.”

He also said that, while the vast majority of companies take their environmental compliance obligations seriously, many are not aware of the power of EI and so have not yet moved to use it to their advantage to reduce costs, gain competitive advantage and enhance their social licence to operate.

The study found that environmental management is perceived by just over a third (35 per cent)  of organisations as ‘good for the planet’ and ‘the right thing to do’, while slightly less (31 per cent)  say it’s critical to enabling business growth, and 18 per cent say it provides a competitive edge. 

About a quarter of companies surveyed told the researchers they will spend more on environmental management this year than last. However, the majority (62 per cent) say spending this year flatlined. 

And ten per cent of respondents consider the issue to be neither important nor relevant.

The study also suggested that a big gap is opening up between leaders and laggards. On the one hand, many organisations are dragging their feet, or are simply unaware of the issues, while at the same time the country also has one of the highest adoption rates of advanced digital tools in the space.

Business benefits

The top benefit of leveraging EI is cited as reduced operating costs (48 per cent), with 32 per cent also citing enhanced brand and positioning. Among the other benefits of leveraging EI cited in the report were reduced health, safety & environment breaches (43 per cent), reduced community complaints and improved engagement (40 per cent), and reduced unplanned shutdowns due to regulatory intervention (35 per cent).

Although most businesses still hold traditional views on the importance of environmental management — essentially that it is an issue of compliance — there is a growing cohort of early adopters, with 44 per cent of organisations suggesting they are planning to implement EI solutions over the next two years.

The report highlights a range of barriers for businesses when approaching environmental management. Cost pressures (52 per cent) are the main challenge to environmental management in organisations, particularly in manufacturing, mining and construction, followed by inadequate or inconsistent environmental data collection (33 per cent). 

With impact investing on the rise, the financial sector, in particular, is highly engaged. 

According to Macquarie Capital Executive Chairman, David Roseman, in a statement issued to coincide with the report’s launch: “We’re only scraping the surface in terms of the impact that Environmental Intelligence (EI) will have for our global business community. It’s increasingly about a social licence to operate as much as a regulatory or compliance obligation, and more and more organisations are switching onto this.”

He said the combination of data, science, and technology provides efficient and effective solutions to address growing business and community challenges.

“We’re on the cusp of a significant shift in how businesses manage their environmental impact and it’s hugely exciting. We see huge growth opportunity in the EI space, with Australia and EVS leading the way in developing innovative technological solutions that can be applied to businesses world-wide.”

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