Welcome back on PlayBlog,
Today we want to talke about Sustainability: can it be a strategy?
Thanks to an article of Harvard Business Review, we will talk about this topic and how companies are using this approch in a strategical way.
In recent years, a growing number of companies around the world have voluntarily adopted and implemented a broad range of sustainability practices.
Why are companies choosing this strategy? For brand or financial performance?
Two answers are the most common ones, for one branch sustainability is spreading as a “common practice” and as such, it may be a necessary condition for survival, but it cannot be a sufficient condition for building a competitive advantage while the other one there are those who argue that sustainability can be a strategy that generates a competitive advantage and therefore, results in above-average performance (i.e. “doing well by doing good”).
From university background on Porter’s seminal 1996 about Value Proposition, he argues that strategy “is about being different” and that “the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match.”
For each industry, Harvard Business Review has identify the set of sustainability practices upon which companies converge over time — which we term “common practices” — and those for which they do not — which we term “strategic.” Their exploratory results confirm that the adoption of strategic sustainability practices is significantly and positively associated with both return on capital and market valuation multiples, even after accounting for the focal firm’s past financial performance. In contrast, the adoption of common sustainability practices is not associated with return on capital, but it is positively associated with market valuation multiples.
Their results suggest that sustainability can be both a necessity and a differentiator. Some sustainability activities are simply becoming “best practice” and so are a necessity. But the data suggests that some companies are creating real strategic advantage by adopting sustainability measures their competitors can’t easily match.
Would you like to know more about how to create a marketing sustainability strategy for your company?
