The conversation surrounding sustainability in the corporate world has reached a critical juncture, spurred in part by actions like the recent fine imposed on Eni, an Italian oil company. In early 2020, Eni faced a hefty €5 million penalty from Italy’s Competition and Market Authority for misleading advertising about its Eni Diesel+ fuel. The claims that the product was “green” and offered substantial environmental benefits were revealed as unsubstantiated, prompting Eni to halt its campaign and abandon the use of “green” descriptors for automotive fuels. This incident highlights a troubling trend: greenwashing, where companies prioritise marketing over genuine environmental responsibility, has become pervasive across various industries.

In today’s climate, such deceptions are becoming increasingly costly as consumers, investors, and regulators demand more transparent and accountable corporate behaviours. Companies are now under pressure to embed sustainability deeply into their core strategies rather than simply checking the “sustainability box” in annual reports. Notably, research indicates a significant shift in corporate attitudes towards environmental, social, and governance (ESG) issues—reporting on sustainability surged from just 20% in the year 2000 to 80% by 2021. However, improved reporting does not equate to real action towards sustainable practices, and many organisations are still grappling with how to transition from superficial commitments to actionable strategies.

Progressive companies like Neste, based in Finland, offer a viable blueprint for transformation. Transitioning from a traditional oil refiner to a leader in renewable and circular solutions, Neste has set ambitious targets, including a commitment to cut its customers’ climate emissions by 20 million tons annually by 2030. This level of transformation requires not just a shift in focus but also a thorough re-evaluation of business activities and product offerings. Despite the inherent complexities, embracing sustainability can yield competitive advantages and foster long-term profitability. Neste’s corporate purpose—to create a healthier planet for future generations—illustrates a broader understanding that success relies on integrating societal value into business strategies, rather than merely pursuing short-term profit maximisation.

Some companies are systematically embedding sustainability into their decision-making processes to manage risks and foster innovation. Solvay, a major player in the chemicals sector, employs Sustainable Product Portfolio Management to evaluate its products against sustainability criteria and customer benefits. This method categorises products into three groups: those that provide superior sustainability performance, those that are neutral in impact, and those that face declining market viability due to their negative environmental footprint. This approach not only aligns Solvay’s business strategy with sustainability goals but also positions the company to respond to changing market dynamics more effectively.

Furthermore, companies such as Kering and Evonik are also making strides in this area, demonstrating that a commitment to sustainability can provide avenues for innovation and operational efficiencies. By utilising sustainable hurdles for product development and implementing Environmental Profit and Loss metrics to enhance supply chain decisions, these organisations are transcending traditional business models.

The urgency for companies to act responsibly is further underscored by the rise in consumer awareness and demand for transparency regarding environmental and social issues. As companies pivot towards sustainability, they are likely to find that addressing these concerns does not merely serve societal interests but also bolsters their market positions. The landscape is changing rapidly, and those organisations that can authentically adopt sustainable practices are poised to thrive.

Ultimately, the challenge lies in transforming sustainability from a compliance obligation into a genuinely integrated component of business strategy and operations. As Jan-Ivaar Semlitsch, CEO of Orkla, has stated, the strong commitment of employees towards sustainability can be a source of pride and competitive advantage. The shift from traditional, profit-centric business practices to models that prioritise sustainable choices reflects an evolving understanding of value creation in the modern era.

The journey towards sustainability is fraught with complexities, yet companies willing to embrace the challenge and genuinely embed sustainable practices into their operations are likely to emerge strengthened in the face of an increasingly eco-conscious marketplace.

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Source: Noah Wire Services