Some Businesses Totally Miss The Future Of Sustainability

This post is sponsored by SAP.

"Sustainability" has become a business buzzword lately, but many people don't know exactly what it means. 

Organizations trying to become sustainable need to do more than separate their recyclables from their garbage. Dr. Peter Graf, who became SAP's first chief sustainability officer in 2009, tells us the true leaders in the field are those who look at the financial, environmental, and social implications of business processes all at the same time.

Graf recently spoke with us about the challenges of becoming sustainable, as well as the path he took to embracing sustainability in both his professional and personal life.

Interview conducted by Business Insider's Patricia Chui. This conversation has been lightly edited for clarity and length.

Business Insider: What does sustainability mean to you?

Peter Graf: Sustainability is an end goal in which you could theoretically run your organization, its supply chain, and its products indefinitely. It's a big vision about how can we set up our organizations, our supply chains, and our interaction with customers in a way that optimizes the economic equation [and] the environmental and societal outcomes at the same moment.

BI: Why should businesses become sustainable?

Peter Graf

PG: First and foremost, sustainability has proven to be a source of innovation, so it can help you increase your revenues. Second, by being more clever and effective about the use of your resources, you can save a lot of money. The third point is that you can reduce your risk. The public doesn't condone environmental damage or societal unfairness. If you operate an oil rig and you produce a lot of pollution, people avoid your gas stations.

Revenue, cost, and risk are the drivers for sustainability. The big challenge is to help the company understand that transformation is required, and there's a strong business case behind the transformation — in fact, a stronger business case than many other things the company could do.

The leaders in this transformation see sustainability not as a necessary evil but as an opportunity to compete. And they develop an integrated thinking. The decision to create a warehouse somewhere has implications that are financial, environmental, and social. The trick is, you need to look at all of them at the same time.

BI: When companies try to become sustainable, what is the hardest part of the process for them?

PG: Many companies are not approaching sustainability from the core of how they create value. Sometimes people go after the lower hanging fruit, but transformation in the core of the company is not happening. For example, if you're in the food industry, or in the consumer goods industry, it's all in the supply chain. If you don't start figuring out how to make your supply chain more sustainable, and if you don't really care where you put your buying power, then everything else you can do is not going to be as relevant.

Every industry is being redefined right now, as people start to grasp how sustainability creates value for them. That's difficult, because that means change at a level that is really at the core of the organization.

Read more: http://www.businessinsider.com/peter-graf-interview-sustainability-sap-2013-3#ixzz2OF0ipVuZ