Having in mind that some natural resources are renewable, but other are not, sustainability goals should

be emphasized and global awareness should be on a higher level. Nowadays, companies should have
developed measures with KPI that would help to adjust accordingly operations towards sustainability
goal.

There is no a standard regulation regarding sustainability that is in the place right now. However some
countries or region have their unique laws in force. For example, The European Union applies the
Sustainable Finance Disclosure (SFDR) 1 regulation from March 2021. This regulation is focused on
financial market. Also, UK’s Competition and Market Authority (CMA) guidelines were introduced in
order to help businesses to maintain sustainable agreements.

Additionally, there are social pressures for companies to maintain their businesses sustainably. It is
shown that 85% of global customers are making their purchase decision based on whether company
applies sustainability standards in business or not. Younger generations seem more involved and more
interested in arising environmental issue. One third of Millennials are willing to pay more in order to
receive products or services2 delivered by sustainable companies.

Sustainability has a very important role when it comes to strategic as well as operational business goals.
Companies that have sustainability as a part of their strategic agenda are showing the better overall
performance compared to companies that do not include sustainability.

There is a study conducted in 2015 which includes over 2000 cases that showed that in 90% cases,
sustainable companies have higher performance. Additionally, firms focused on sustainability have a
tendency to be better in conducting business and have stronger relations with customers compared to
non-sustainable companies.3

What makes Sustainable companies more successful? The main reasons can be summarized although
not limited to the following:

 Lower cost of doing business

 Increased profitability
 Innovative activities
 Better reputation
 New partnerships or strategic alliances with suppliers
 Usage of alternative materials

For illustration, let’s focus on examples from practice. According to Harvard Business Review 4, there is
an evidence that Unilever had 70% of its turnover growth based on sustainable principles. All of
Unilever’s brands should have reduction in their environmental footprint. This would lead company one
step closer to sustainability goals. So far, Unilever has 26 sustainable brands. Back in 2016, company had

1
https://www.spglobal.com/marketintelligence/en/news-insights/blog/what-is-the-impact-of-the-eu-sustainable-
finance-disclosure-regulation-sfdr
2
https://masschallenge.org/article/sustainability-trends
3
https://www.ictsd.org/do-sustainable-companies-perform-better/#:~:text=Accounting%20performance%20and
%20stock%20market,89%20other%20large%20companies%20considerably.
4
https://hbr.org/2019/06/research-actually-consumers-do-buy-sustainable-products#:~:text=Most%20important
%2C%20products%20marketed%20as%20sustainable%20grew%205.6,categories%20had%20the%20largest
%20share%20of%20sustainability-marketed%20products.
18 sustainable brands thus this increase signifies company’s effort towards sustainability (some of this
brands are Dove, Lipton, Roxona, Hellmann’s and so on). Moreover, in the last four years of performing
business in accordance to sustainability standards, Unilever has a significant growth. In the present,
Unilever is on its mission to meet 80% of its commitments which are aimed at reducing environmental
impact along with bettering social impacts. Around One billion people will have a better health
conditions thanks to this.5 This illustration indicate that sustainable companies do perform better from
financial point of view but also from social and environmental one. In addition to all mentioned,
company has earned reputation and that is leading to loyal customers and increased base of customers
that will, as a result, have increase in selling and profitability.

However, the issue of fuel consumption (CO2 emission) and increased interest in sustainability issues, as
a result have specific demands in Europe when it comes to recycling vehicles that have come to an end
of their life (life of use). Also, one other aspect is usage of raw materials in automotive industry.

Automotive industry has achieved significant change and improvement when it comes to sustainability
objectives. For instance, hybrid vehicles (first-generation and second-generation of Toyota Prius).
However, it is important to mention the following implication:

a) The reduction of fuel usage might appear lower in practice than it was initially shown during
testing
b) Hybrid power actually adds weight, cost and complexity to vehicles
c) There are many compensations taken by customers that will decrease intended reduction of fuel
usage
d) Hybrid vehicles are focused on reduction of CO2 emission only, and that is just one aspect of
sustainability that should be taken into consideration
e) There is no fundamental change in Toyota’s business model. Company is just using hybrid
engines as a way to sell more cars and increase market shares. 6

The contemporary business model in automotive industry is the main reason why some innovative
technologies have not been implemented. Although, some practical examples have shown that
imaginative solutions are possible and there is a space from improvement. The next generation of
cars should be focused on sustainability goals.

Taking all above mentioned into account, sustainable companies do perform better compared to
companies that are focused on sustainability. However, this is still challenging field and requires a
lot of time and effort. Finally, results of performing in accordance to sustainability principles are
multiple: social, economic and financial.

5
https://www.unilever.com/news/press-and-media/press-releases/2018/unilevers-sustainable-living-plan-
continues-to-fuel-growth/
6
Tukker A., Charter M., Vezzoli C, Stø E, Andersen M.M. System Innovation for Sustainability 1: Perspectives on
Radical Changes to Sustainable Consumption and Production (1st Edition)