Sustainable innovation: forget about compliance – harness sustainability as a strategic tool

Businesses in Europe are currently questioning the new Corporate Sustainability Reporting Directive (CSRD). Questions are arising around the directive’s validity, ease of use, and reliability. Some aspects of the EU Green Deal are being similarly examined. This criticism comes at a time when the United States, by far the world's leading oil producer, has clearly backtracked on its environmental commitments. In fact, the US is heavily investing in the continued use of fossil fuels and supporting energy-intensive and resource-demanding AI with a $500 billion investment plan announced in 2025.

As the debate continues in western countries around developing frameworks for sustainable development, China, the world's leading producer of solar panels, wind turbines and batteries for electric vehicles, has just launched its own corporate sustainability reporting standards. This launch marks a clear and strong statement from China, who are focused on their own sustainability metrics.

This conflicting political and regulatory landscape clearly shows the current difficulty in moving European economic system towards sustainable growth that is mindful of the planet and ensures long-term success for business across the globe.

Successful sustainable innovation as an inspiration for future business growth

However, there are still compelling reasons for business leaders and company directors to draw inspiration from sustainable development. And these reasons demonstrate one crucial point: Sustainable innovation is not achieved merely by adhering to regulations; rather, sustainability must be recognised as a strategic tool to enable more efficient, cost-effective, and environmentally responsible business practices. 

With the benefit of several years’ hindsight, we can now evaluate the results and performance of pioneering companies across various sectors that have proactively embedded sustainability and inclusivity within their business strategies. Their performance clearly shows that sustainable innovations and investments yield significantly higher returns for businesses.

In addition to the first wave of integrated sustainability reports published by companies in Switzerland and Europe, the recent book ‘The New Nature of Business: The Path to Prosperity and Sustainability’ by André Hoffmann and Peter Vanham is full of examples of companies that have successfully adapted their business model to make it more sustainable, or even partially circular:

• Schneider Electrics (France): more than 12.7% organic growth in 2023 and on track to meet its target of 800 Mt of CO₂ emissions for its customers in 2025. To put the positive impact a single company can have into context, this is equivalent to the annual emissions of global aviation in 2022.
• Holcim (Switzerland): more than 6.1% organic growth in 2023 while reducing CO2 per net sales by 20% compared to 2022. These changes make decarbonisation a profitable growth driver and fuel rapid growth in circular construction, with a 24% increase in recycled construction demolition materials in 2023. This is significant progress for a company that alone generated 0.5% of the world's annual CO2 emissions in 2018.
• INSEAD (France/Singapore): In 2023, INSEAD passed the €300m mark in annual revenue for the first time, representing 100% growth in ten years. INSEAD has adapted its teaching and course content by integrating sustainable development into all core courses of a new MBA programme designed to give future and current business leaders the tools and knowledge to understand today's challenges as opportunities. The INSEAD MBA has been ranked in the world's top 3 business programs by the Financial Times since 2021.

These organisations have a common thread: they have elevated sustainability as a strategic instrument to drive innovation and adapt their business models, involving all their key stakeholders in the transformation journey.

Adopting a mindset focused on sustainable innovation combined with a pragmatic, hands-on approach is all that business leaders need to gradually make business models more resilient, sustainable and efficient.  This approach is proving to be highly beneficial; in fact, mitigating adverse impacts such as waste and pollution not only supports environmental responsibility but also leads to significant cost reductions. 

Data: the driving force behind sustainable innovation

Data will continue to play a pivotal role in the success of sustainable innovation. Regulations such as the CSRD have, for the first time, placed sustainability data at the forefront of corporate agendas—and that is exactly where it should stay. After all, what you can measure, you can manage.

While reporting is essential for transparency, its true value lies in leveraging data-driven insights to drive more sustainable product development and business models. And this principle of effectively using data doesn’t apply only to sustainability – it is equally relevant for emerging technologies like AI: You simply cannot use AI effectively without meaningful, structured data. Data alone is not the solution, it is the foundation.

Before harnessing (sustainability) data – whether through AI or other means – the data must first be consolidated, structured, and made accessible, ideally through seamless integration into your ERP system. This data processing is a crucial step, and it often remains a significant challenge for many organisations.

But here’s the real game-changer: When sustainability is embraced as a driver for innovation, resource efficiency, and resilience, it transforms into an unrivalled business advantage. This advantage is precisely what the global economy and businesses need today.

Sustainability is a competitive edge, not an administrative burden

Organisations that embed sustainability at the core of their business strategy will position themselves well for long-term success. This is because sustainability is not red tape hindering progress, but a driver of innovation.  Having a strong sustainability presence is not just about environmental impact, it also contributes to tangible business benefits and future-proofing businesses through minimizing risks and maximising efficiency.

Sustainability is an investment with proven returns, which include:

• Increased resource and energy efficiency.
• Incentive for innovation with clear and business-pragmatic benefits.
• Greater resilience to global disruptions.
• New business models and client segments based on circularity and services.

Become a pioneer. Don’t treat sustainability as a compliance exercise, use it as a strategic tool. In a world that is increasingly characterised by uncertainty, resilience is your strongest asset, and sustainability is the way to bolster it.