Business competitiveness and sustainability
Institutional Communication Service
28 March 2022
Company competitiveness is closely related to the social context in which a company operates. In other words, integrating social awareness on specific issues dear to the public into its actions and, more generally, taking into account the community's overall well-being translates into a market advantage. Today's society is developing a greater awareness of issues related to environmental and social sustainability. This offers companies new opportunities for development and economic consolidation. We talk about this with Michael Gibbert, Professor of Marketing and Sustainable Consumption at USI Institute of Marketing and Corporate Communication.
The concept of sustainable competitive advantage is central to business strategy. The term, coined by Michael Porter at the turn of the seventies and eighties of the twentieth century, initially had a purely economic meaning: "sustainability" was understood as the set of company assets and products or services that, in the long run, create added value and differentiate the offer from that of competitors in the eyes of the consumer.
Forty years later, sustainability as a competitive factor has taken on a more complex and comprehensive scope, in line with the development of the same concept in society.
An "unsophisticated" approach
To understand this evolution, we can start with the example of Carlsberg. This famous Danish beer producer shows us how the concept of sustainability can be interpreted through three main tracks: consumer health, worker safety and environmental protection.
Carlsberg's choice was to focus above all on the social aspect of the company, highlighting, for example, the fact that it did not relocate production to save on labour. It is an approach that we could call "unsophisticated" because the proposed type of sustainability does not profoundly affect the "value proposition", hence why a consumer should choose a specific product. Moreover, it does not lead to a change in the business model, which remains based on a "generic" consumption of a product that, in large quantities, can be harmful to health (think of the risk of alcohol abuse) and to the environment (use of large amounts of water to produce beer). A business model that risks cracking in the long run.
Making a virtue out of necessity
On the other hand, Patagonia, San Pellegrino and Ikea offer three examples of how the commitment deriving from environmental and social sustainability can lead to a reassessment and innovation of the business model, thus becoming factors of competitive advantage and therefore of economic sustainability. Three examples, in short, of how one can make a virtue out of necessity by coherently integrating the UN sustainability goals with corporate strategy, and vice versa.
Patagonia promoted a famous campaign that encouraged people not to buy their jackets. People were thus invited to consider the effect of consumerism on the environment. This is from a company that uses environmentally friendly materials and has set its value proposition and market positioning on the strength and durability of its clothing. Sustainability thus reinforces the company's competitive advantage because it does not sound like an empty statement created for "greenwashing" purposes. On the contrary, it matches the type of business and clientele that the company pursues and seeks.
San Pellegrino, on its side, based its message on the experience of "fine dining", associating bottled water with special moments such as a dinner in a starred restaurant, a concept that will be valid even in five years and which is compatible with the general sensibility of reducing the consumption of bottled water. In contrast, Evian has remained anchored to the "value proposition" of hydration, namely that drinking water is good for you. This "value proposition" is no longer so solid when we look critically at the environmental impact of bottled water. We can all have the same benefit proposed by Evian by drinking tap water.
Competitive means sustainable, sustainable means competitive
Finally, Ikea - to go back to the examples of a "strong" link between sustainability and competitiveness - has proposed the concept of a sustainable circular economy. For example, instead of throwing away broken furniture, it encourages its customers to repair it and change its functions. At the same time, it is (re)designing its furniture to be disassembled and reassembled at will to give it a second life, and it is also testing a furniture leasing solution.
Therefore, we can say that without competitiveness, there will be no (economic) sustainability. Still, somewhat ironically, we can say that there is no competitiveness without (environmental and social) sustainability. Companies, therefore, are and will increasingly be called upon to make a virtue of necessity, and, as mentioned, there is no lack of examples of those who have already set out in this direction.