Why Sustainability as the Strategy?
In times marked by geopolitical instability, regulatory uncertainties, social tensions, and the increasing volatility of environmental factors, it has become urgent to reframe the role of companies in society and the economy. While some companies navigate these times with strong resilience, the vast majority are questioning whether sustainability is (or is not) a good strategy amid the ESG backlash.
The quicker answer is that sustainability is not a trend. The backlash is (and will destroy a lot of value).
While the world faces profound upheaval, and many of our values are at risk, we know that society and business can only succeed if we achieve economic, social, and environmental prosperity together. Otherwise, success is only temporary. While some argue that ESG initiatives detract from a company’s core mission of maximizing profit, the current backlash is also an important moment for companies to reaffirm the strategic value of sustainability. Rather than retreating in the face of criticism, companies have a unique opportunity to showcase how sustainability is not only about doing good but also about driving long-term business success and competitive advantage.
In fact, companies that integrate sustainability into their core strategy position themselves not just as leaders in their industries but as resilient, future-focused organizations. Sustainability goes beyond compliance and cost-cutting measures — it’s a mindset shift toward long-term value creation. As Professor Michael Porter, from Harvard Business School, emphasizes, sustainability can be a powerful source of competitive advantage if embraced as a strategic choice, through which companies address societal challenges while unlocking new business opportunities. But what business opportunities are there for companies?
Business Case for Action: How Can Sustainability Drive Success?
Let’s explore four Business Cases for Action with concrete examples on how sustainability can propel your company forward:
1. Reduce Costs Sustainability is often associated with cost-saving opportunities. Businesses can save significantly by reducing energy consumption or optimizing resources. Example: Unilever implemented energy efficiency measures across its factories and reduced its energy use by 30%. Not only did this lead to millions in savings, but it also
reduced the company’s carbon footprint. Have you considered how energy-efficient technologies or waste reduction practices could drive similar savings for your business?
2. Increase Prices In a world where consumers are more conscious about the impact of their purchases, sustainable products and services often command premium prices. Consumers are willing to pay more for products that align with their values, whether that’s organic, fair trade, or carbon-neutral. Example: Patagonia has positioned itself as a leader in sustainable fashion. They are known for their environmentally friendly products, and their customers are willing to pay a premium for items that align with their values. This has not only helped them build brand loyalty but has also allowed them to charge higher prices for their sustainable offerings. Could sustainability be your differentiator in a competitive market?
3. Increase Market Share Sustainability drives loyalty. Companies that embrace sustainable practices often build a loyal customer base that values environmental and social responsibility, and many times they can conquer new clients from their competitors, just because they differentiate themselves through sustainability values. Example: Tesla has grown its market share by capitalizing on the shift toward electric vehicles and renewable energy. The company’s commitment to sustainability and reducing carbon emissions has attracted environmentally conscious consumers, allowing Tesla to expand rapidly in a growing market. Are you leveraging sustainability to reach new customers or capture a larger share of your target market?
4. Change the Business Model Sustainability can promote business model transformation. Companies that rethink their value proposition around sustainability often create new revenue streams and innovative solutions. Example: Ørsted has successfully transitioned from a traditional oil and gas company to a leader in renewable energy, particularly in offshore wind. By embracing a new approach, Ørsted is working to integrate sustainability into its core business model. They focus on expanding the use of renewable energy and reducing carbon emissions across all aspects of their operations. This transformation has not only improved their environmental impact but also opened new business opportunities in green energy. Is it time for your company to rethink its business model and embrace sustainable innovation?
Reflect and Diagnose: Is Sustainability Part of Your Strategy and a Driver for Innovation?
We invite you to reflect on where your company stands in integrating sustainability into its strategy. Take the following quiz honestly to assess your current position:
1. Does sustainability play a central role in your company's business strategy?
Have your board and collaborators understood why sustainability can be a source of business transformation and competitiveness?
Have you embedded sustainability into your decision-making processes, from product innovation/design to post-sales services?
Do your sustainability initiatives align with your long-term business goals?
2. Is sustainability creating measurable value for your company?
Have you seen improvements in operational efficiency, cost reduction, or market share through sustainable practices?
Is sustainability helping you differentiate your brand and build stronger customer relationships?
Are you exploring new business models, products, or services that are aligned with sustainability trends, drawing inspiration from industry benchmarks?
3. Are you ready to take the next step toward sustainability-driven growth?
Do you have the internal capabilities and resources to drive a sustainability transformation?
Have you communicated your sustainability vision to all stakeholders, ensuring buy-in and alignment from employees, customers, and investors?
Do you have clear metrics to track the impact of your sustainability efforts? Do you have SMART goals for sustainability-related topics, and do you monitor and report them?
If you answered yes to more than five of the above questions, you’re on the right path! But if you’re still unsure or facing challenges in leveraging sustainability as a strategic advantage, it might be time to explore new opportunities and strategies.
Sustainability is not a trend; it’s the future of business (and society). Those who start today will be ahead tomorrow. Next week, we will explain in more detail why, for this to happen, you need Responsible Leadership, especially in times of crisis.
If you’d like to discuss how to integrate sustainability more deeply into your business strategy or get support in transforming your approach, we are here to help!
Have a great and impactful summer!
Filipa Pires de Almeida, Executive Director