Seeking green: How focusing on sustainability can build financial resilience
Managing Director, Customer Value and Transformation Advisory, Google Cloud
When planning for uncertainty, whether it’s financial or environmental, technology can help tackle both. Doing so in tandem can amplify those efforts
As a decision-maker, investing in the cloud to build financial resilience may already be among your top priorities. Another big prerogative is sustainability, judging by current polls and trends.
But have you considered how combining the two can benefit both initiatives, and the organization as a whole? Like peanut butter and pickles, sustainability and financial resilience might seem an unlikely pair at first glance, but they actually make a perfect pairing.
Sustainability efforts typically drive good financial impacts across many dimensions, including operational efficiency, risk management, and innovation. Likewise, best practices for using the cloud to build financial resilience can help create a strong foundation that drives more sustainable business practices.
Despite these connections, companies tend to view financial resilience and sustainability as unrelated, and thus rarely correlate the two. However, sustainability is increasingly taking on a broader context that goes beyond its more commonly understood benefits, like energy savings and lower carbon emissions. In the era of ESG, sustainable can mean an organization that’s mindful of impacts encompassing more than the environment — one that wants its operations, community, and the planet to continue to thrive in all circumstances.
With volatility and uncertainty now part of the daily routine, leaders are under pressure to explore every avenue to reduce costs, improve productivity, protect against risks, and safeguard their future business performance. When considered in this light, sustainability is no longer just a question of positive environmental action; sustainability means making decisions that can deliver value today that will endure a changing planet, and market, through tomorrow.
The start of a beautiful friendship: Financial resilience and sustainability
Sustainability within the enterprise has long been treated as more of a compliance reporting or marketing exercise, rather than a valuable investment in the future. Shifting consumer behaviors and renewed awareness created by the global pandemic have raised the stakes, pushing sustainability into the realm of competitive advantage.
For instance, a recent sustainability survey conducted by the Harris Poll and Google Cloud found that overlooking sustainability as a long-term investment is a missed opportunity. The vast majority of executives (85%) said they believe that consumers and clients prefer engaging with sustainable brands.
At the same time, it’s critical to do more than “commit.” The 2023 Brand Finance Sustainability Perceptions Index found that 79% of consumers would reduce their use of a brand if it was found to be acting in an unsustainable way, demonstrating that companies are under immense pressure to take genuine sustainable action or risk losing both reputation and customers.
Even more compelling, becoming more sustainable shares many of the steps to building organizational resilience. It requires executing strategies and adopting technologies that eliminate waste, optimize costs, and enable holistic action to ensure your organization is equipped to deal with unexpected events.
Companies tend to view financial resilience and sustainability as unrelated, and thus rarely correlate the two. The right technology can combine, and amplify, these efforts.
Sustainable organizations are likely to be more resilient in the face of disruption because they’ve done the groundwork to reinvent their business models, practices, and products so they are able to adapt to changes in expectations, market fluctuations, and capture future revenue.
In other words, companies that provide the tools to deliver on sustainability are not only likely to perform better financially, meet customer and employee expectations, avoid compliance violations — they will also have the means to be resilient under any condition.
Given the benefits, pursuing sustainability to support financial resilience seems like the natural business decision. Yet while motivation is far from lacking, it can be hard to know exactly how to tackle both. The Harris Poll survey noted that nearly all organizations (96%) have at least one sustainability program in place, but almost three-quarters of them are unsure of how to advance sustainability efforts despite saying they want to take action.
Like most challenges today, the key to success lies in your organization’s data.
An inconvenient truth — you’ve got data problems
Whether your aim is to drive efficiencies, reduce costs, or make headway on sustainability goals, data plays a significant role in helping organizations determine where to invest their time and resources. Still, research estimates that around 70% of enterprise data is never used for analytics, highlighting a growing gap between having data and generating value.
Data fragmentation, organizational silos, and lack of integration between systems and applications can result in missed efficiency opportunities, higher costs, and limited agility and responsiveness. Both sustainability and financial resilience require understanding and visibility that spans across the entire organization, not just individual business units.
To effectively manage and measure your efforts, you need to have the right data available to make informed decisions. Without the right systems, tools, and processes in place, you’re likely to come up short.
In a fast-changing world, we need renewable business practices, not just renewable energy.
This is particularly true when it comes to measuring the impact of sustainability, which generally suffers from deficiencies on all fronts. Most organizations rarely have specific systems in place to measure sustainability initiatives. The Harris Poll survey found that although executives recognize technology as a key lever for unblocking progress, only 36% say their organization has measurement tools in place to quantify sustainability efforts and only 14% actually use metrics to optimize their efforts.
Sustainability metrics tend to be collected manually from across the organization once or twice a year for annual reporting purposes, making it difficult to establish a baseline for understanding what’s happening and extracting insights that could help with daily operational decision-making. In addition, many enterprises struggle to get accurate, real-world observability into the impact their decisions, operations, and supply chains have on the natural environment.
All problems that call for good decision-making are ultimately data problems. The ability to unify, access, and analyze data is now paramount as organizations attempt to navigate challenging economic headwinds and still move forward towards their goals.
A stable foundation of data that gives a full picture of what’s happening in real time opens up an entirely new world of insights. Where executives and business leaders might have once felt the need to rely on a blend of instinct, experience, and incomplete or imperfect data, they can now track and monitor previously untapped metrics, such as those around sustainability, to guide their strategies.
Building your sustainable foundation for the future
Cloud technologies and infrastructure can play a fundamental role when it comes to empowering both sustainability and resilience through data. More and more organizations are investing in cloud-based components and capabilities that can help them unify fragmented data; access a wide range of data sources, as varied as business applications and geospatial data repositories; and leverage advanced data tools and solutions that make it easy to collaborate, visualize, and deliver insights.
All problems that call for good decision-making are ultimately data problems. The ability to unify, access, and analyze data is now paramount to navigate challenging economic and environmental headwinds.
One example of how building the right cloud data foundation can become a vehicle to drive sustainable change and long-term resilience is Lufthansa Group. With its announcement to achieve net-zero emissions by 2050, the airline needed to ensure its ability to access more sustainable fuel, implement carbon-friendly technologies, and develop and optimize more efficient operations both in the air and on the ground.
With the help of Google Cloud, Lufthansa Group launched a cloud-based operational planning tool that integrates data from all of its core systems that run aircraft rotation, passenger management, crew management, and technical fleet management.
Leveraging data and AI solutions for analytics and modeling, the airline is able to model specific scenarios so its operations control center team can make optimal decisions at any given time. In addition, Lufthansa Group has several pilot projects in the works, such as using AI-enabled scenario-planning to optimize flight rotations and determine the ideal aircraft for a particular route.
The efficiencies gained through deploying Google Cloud technologies have led to measurable CO2 reductions, increased operational efficiency, and lower costs while also improving passenger experiences. By improving its data and AI capabilities, Lufthansa Group has more visibility into weather patterns, routing options, fuel efficiency, aircraft usage — all of which helps it achieve efficiencies across multiple functions that lead to less cost, a reduced environmental footprint, and happier passengers.
More than ever, it’s increasingly critical to utilize technology investments like cloud services and infrastructure to combat these challenges. Harnessing emerging tools and capabilities to unify disparate systems, establish visibility, and enable predictive intelligence can provide the information needed to make data-driven decisions — whatever the situation or aspiration.
We may not have linked financial and environmental sustainability in the past because of prioritization and capabilities, but today it’s becoming much easier to combine the two through technology and amplify their benefits.
Soon, it shouldn't be a question of why you aren't doing this — it will be what's stopping you?