What Does Sustainability Mean for Corporations? An SAP Concur Podcast Conversation Series with TCG (Part 1)

As we look for ways to increase corporate sustainability, it can be difficult to know where to start. Understanding key terms as well as what to measure empowers organizations to set science-based targets, and then to monitor and adjust.

We asked Ryan Hamilton, Senior Value Consultant for the Value Experience Group at the SAP Concur organization and Sally Crotty, Senior Consultant and Sustainability SME for our partner, TCG, to share their expert perspective on what sustainability means for corporations. In the next episode, we’ll move into how to use this understanding to transform your organization’s sustainability measures and impact.

You can listen to this episode on Apple | Amazon | Spotify | Listen Notes | Acast or your favorite place to find podcasts.

 

Transcript:

Ryan Hamilton:

Hi, everyone. Welcome to the first in our two-part series on sustainability. My name is Ryan Hamilton. I'm a Senior Value Consultant with SAP Concur [solutions], and I'm joined by my colleague, Sally Crotty, with TCG Consulting. Sally, would you like to introduce yourself?

Sally Crotty:

Thank you, Ryan. Hi, everybody. I'm Sally Crotty. I'm a Senior Consultant with TCG Consulting. I've been working in the business travel industry for over 30 years in a variety of senior roles, predominantly within travel management. However, I've also worked in the hotel industry, and I've also some experience with travel technology, online booking tools, and GDS systems. Earlier this year, I became the SME for sustainability for TCG Consulting, where we look at the impact on organizations from a number of sectors and the total cost of managing sustainability within a business.

Ryan Hamilton:

Great. Thank you for the introduction, Sally. Like I mentioned, this is the first in a two-part series. Today, we're going to be talking about the high-level view of what sustainability is, what it means to corporations, and how we can view it from a plan moving forward as a business. So Sally, really excited to have you with us here to talk about the topic of sustainability today, which you have all sorts of expertise and that I'm excited to dive into. To start with, Sally, I would love... I guess if there's one thing that I think myself and a lot of folks are guilty of, it's thinking in too narrow of terms about sustainability. So to start with, why don't you talk about your perspective on the different types of sustainability?

Sally Crotty:

Yeah, sure. Okay. And thank you for inviting me to talk about this today. We have been talking about sustainability in business, in general, and within the travel industry for quite a long time now. However, sustainability, even though it's been on the agenda for many organizations, there's not been much of a focus, particularly in relation to business travel. So we're increasingly seeing sustainability goals included in company strategic imperatives today, in company values, and there's certainly more focus in this area since the start of the pandemic. So we're seeing much more activity, in relation to environmental, social, and governance goals, so your "ESG" goals. And sometimes, you may hear them refer to as "people, planet, and profit," and they seem to be keywords that we also hear on a regular basis. So it's not just an environmental focus on sustainability, but also, increased focus on social and economic sustainability.

Ryan Hamilton:

So we're probably going to spend most of the time today talking about environmental sustainability, but we'll touch back on economic and social sustainability throughout the conversation. So to frame that a little bit, can you talk about what "social sustainability" means to an organization?

Sally Crotty:

So social sustainability? Yeah, of course. So quite a keyword, a buzzword at the moment. So, social sustainability is sometimes referred to, like I say, as people or sometimes human sustainability. And it really is a critical part of a company's values or strategic imperatives, and it could relate to many different areas. So it's things like fair pay for employees, promoting a healthy work-life balance, promoting diversity and inclusion in the workplace. Maybe flexible working hours, and flexible working locations, for example, health and safety. It may be that it's allowing employees to be involved in volunteering schemes, things of that nature. But also, social sustainability is developing employee skills, so training their employees for the future. And also, in some cases, training, it could be the local area attracting new employees, so it may be that they work with college leavers or the school leavers in order to train them up to help create a workforce for the future. It all depends on the organization and the size, the company, of course. So also, it's about supporting the companies in which we live and work, really.

Ryan Hamilton:

So really, what it sounds like is... The word sustainability, obviously, is a perfect fit. So people's sustainability is about not just utilizing the people resources that you have at hand, but ensuring a continuity in your community, in your workforce, in the environment you're in that people will continue to be available and continue to grow as the company grows over time. Is that a fair summary?

Sally Crotty:

Absolutely, yes. And I think it is really important. I mean, maybe not in all cities or locations, but maybe in more rural locations where you find some organizations may be the key employer in that area, so then it would become very much very important, indeed.

Ryan Hamilton:

And then, when you start to talk about where people or social sustainability intersects with environmental sustainability, I can think of probably two examples. The first would be folks probably aren't wanting to work for a company that is at the very bottom end of the spectrum, in terms of environmental sustainability. So the less attention you pay to one, the more detrimental the effect on the other. The other example I can think of would be ensuring, over time, that people are continuing to drive improvement. You can't have people sustainability if all of a sudden the environment has gone to waste. And people have less energy to focus on work if they're, for example, trying to find something like water.

Sally Crotty:

Certainly. And it's really becoming increasingly important to have these really strong sustainability goals, and not only to attract new talent to an organization for somebody that may be really interested in protecting their future and the generations of the future, then of course, this is really important. Also, in retaining employees as well. If you think the company have great values and are really protecting the future, then you want to stay with them. And actually, when we think about it, our people are such a valuable asset to any organization, if they feel valued, then they're going to enjoy working for that company as well. And I think you talked or touched on water, as well, just a moment ago, and I think you're absolutely right. It was interesting for me to hear that in touching on environmental sustainability, that the amount of water that we actually have for use on the planet, or on the earth today, only 1.2% of all the water on earth today is actually available for human use.

And so this is expected to reduce over the coming years. So as we hear more and more of this information based on the science, then we need to act now and really make a difference.

Ryan Hamilton:

Absolutely. And I suppose that a third area of intersection that you and I will talk about a little bit, especially as it relates to travel and expense, meetings and payments, as well, is the other side of the coin, which is that if we focus too much on environmental sustainability at the cost of making day-to-day processes tedious, or making it hard to complete work, that also could have a detrimental effect on your people sustainability, right?

Sally Crotty:

Absolutely.

Ryan Hamilton:

You have to do this in a collaborative fashion. Okay. So we'll dive into some of those topics in a little bit more detail, but before we get there, I was hoping you could give us a quick overview of economic sustainability and what that means to an organization.

Sally Crotty:

Yeah, of course. So "economic sustainability," sometimes referred to as governance or profit, it's ensuring that the business can grow in a sustainable way and to maintain company profitability over time. So it's also understanding what the company emissions are today, what information is available to measure the reduction in emissions, and what's needed in order to achieve their sustainable goals as the business grows. So it could be things like they may be building a new factory or distribution center. And if that building could have a roof completely covered in solar panels, for example, which would empower that building without needing any other source of power, then of course, that's a sustainable future for that company and for that particular location. So it's things like that. It's enabling the company to grow, but in a sustainable way.

Ryan Hamilton:

I understand. So let's dive into the big topic at-hand here, which is environmental sustainability, and eventually, how that relates specifically to TMPE or travel, meetings, payments, and expenses. So to start with, Sally, what are we really talking about through a business lens? We've touched on things like water. We've touched on things like power generation. You've mentioned emissions a couple of times. Does it all boil down to emissions when you think about this through a business lens?

Sally Crotty:

Well, if we focus on environmental sustainability, to simplify it, effectively means that we need to reduce the impact of greenhouse gases on the environment, which are generated by a business, therefore, becoming a more sustainable organization. So greenhouse gas emissions are categorized generally into three groups or scopes by the greenhouse gas protocol or sometimes :"GHG protocol." They provide the most widely-used international accounting and reporting standards today. Now, the different scopes that they have in place are... Let's look at Scope 1. They're direct emissions from owned or controlled sources for business, such as fuel combustion, company vehicles. And something I was really interested to learn about was fugitive emissions because it sounded quite interesting when I first heard about it and that fugitive emissions are things such as leaks from air conditioning or refrigeration units and things of that nature. And then, you've got Scope 2.

Scope 2 are indirect emissions. So they are generated by the purchase of energy, such as electricity to operate a business, or maybe the cost of heating or cooling a factory or an office, so that's indirect, Scope 2. And then, moving onto Scope 3, they also indirect, so anything really not included in Scope 2 already. And they will be emissions that occur within an organization's value chain. So they are things like purchased goods and services, waste generated from operating the company, operating their business, and things like employee commuting, that would also be considered Scope 3, and also business travel. So it's quite astounding to actually know that business travel can account for more than half of a non-manufacturing company's carbon footprint. Not only does it have a negative impact on the environment, but also, it can impact on the organization's reputation and bottom line if their emissions are so high from traveling for business.

Ryan Hamilton:

That seems like a pretty meaningful statistic. I think some people would underestimate how much business travel is contributing to greenhouse gas emissions for an organization. Just to, I guess, say that again, that's as much as half of a non-manufacturing organization's emissions can be attributed to the Scope 3 business travel?

Sally Crotty:

Absolutely. Travel represents 5% of global emissions. Corporate travel makes up 30% of that. So 1.5% of global emissions is actually related to corporate travel. It doesn't seem a lot, but in the grand scheme of things, for that to be just attributed to corporate travel is actually quite a substantial amount. And, of course, it does vary by different companies and what their processes are. So if we look at maybe a professional services company, would likely travel far more than say a manufacturing organization who generally have most of their workers in fixed locations, I guess. And maybe only a handful of those travelers would actually travel on a regular basis. However, for professional services, particularly global organizations, they could be traveling very frequently. And so much so that they may be traveling in business class, they may be staying in really high-end hotels, maybe luxury properties that we also have to consider maybe higher in emissions maybe than actually a more budget-type accommodation. So it can vary a lot by organization and by policy, I guess, as well.

Ryan Hamilton:

Okay. So a couple more questions just to establish some background before we really get into the practical aspects of managing this in T&E and how our two organizations can help. You mentioned the difference in emissions between, say a high-end hotel and maybe a budget or more ecologically-focused hotel. Are we really just measuring this in the unit measure of this greenhouse gas, call it tons or square feet or something like that? Is that how we measure sustainability, or rather, impact?

Sally Crotty:

Sure. Well, if we think about how we measure sustainability, there are a number of ways we can look at it, but let's take company that's already maybe taking some action. They're already committed to working towards specific targets and guidelines, and there are organizations that will help with this. So one organization is the Carbon Disclosure Project, so CDP. And they help companies and cities disclose their environmental impact, and they report on the companies that are leading the way in reducing their emissions. So those companies that are protecting water supplies and protecting forests and reducing emissions where they can.

Sally Crotty:

So you also may have heard of science-based targets. That's really key as well, at the moment, and over a thousand companies around the world are already committed to science-based targets. And these targets provide companies with a clearly defined path of how to reduce their emissions in line with the Paris Agreement goals, which is aimed at reducing emissions to limit global warming to 1.5 degrees Celsius. So there are many different ways of measuring these targets that are set. They can be achieved by reducing the Scope 1 and 2 emissions in company operations, and Scope 3 emissions in particular, where we're focusing today, which include travel.

Ryan Hamilton:

Gotcha. So these science-based targets are essentially organizations agreeing to get a good handle on what they're actually emitting, and then quantifiably reduce or eliminate that, based on either a percentage or an objective amount. Okay. Go ahead.

Sally Crotty:

Sorry. I was going to say, committing to those goals really, they, therefore, have to produce reports so they will understand where they are today, in terms of emissions. They will have some reporting in place, but if we say that over a thousand companies are working science-based targets, there are so many more out there that are not yet committed to those, and maybe don't know how to measure or how to start seeing an improvement. So there's a lot of work out there, I would say, to do in order to start measuring and achieving and reducing.

Ryan Hamilton:

Great. Well, Sally, I really appreciate the conversation today. Like I mentioned, this is the first in our two-part series. Today, we talked about the high-level view of what sustainability is, what it means to corporations, and what a roadmap for improving sustainability might look like. In our second episode, Sally will join me again to talk about some practical applications and how to really dive into the details and start to make forward progress. Thank you all for joining us. And we hope you can join us the next episode.

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Ryan supports the net-new business, premier, and strategic markets as part of the Enterprise Value Consulting practice at SAP Concur, which is focused on using performance benchmarking and process improvement principles to help clients maximize the value of their employee-initiated spend programs. Ryan works with organizations developing the cutting-edge of modern policy as well as the largest multinational clients to help realize savings through tax risk mitigation and spend policy implementation. When he’s not working on projects, recording podcasts, contributing to whitepapers, or developing new data tools, Ryan is an avid mountain climber and skier.

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