Integrating sustainability into innovation: the challenge of the future for managers?
In the modern age of business, the word ‘innovation’ resonates like a constant mantra in the boardrooms and corridors of successful companies. However, while innovation is traditionally associated with cutting-edge technologies and revolutionary market strategies, sustainability is an equally powerful concept making its way into business discussions. But how are sustainability and innovation linked, even to the point of being able to say that sustainability is innovation? Conversely, does the impact of innovation over time become sustainable? There are many reasons why managers, ESG experts, and HR should embrace this connection as a commitment to lead organizations towards a more responsible future. Let us see why.
Sustainability as the basis for innovation
To fully grasp the connection between sustainability and innovation, it’s crucial to view sustainability not just as an ethical or regulatory duty, but as a core value driver for businesses. Sustainability involves managing environmental, social, and economic resources responsibly to meet present needs without compromising future generations. This forward-thinking approach is inherently tied to innovation, which necessitates the discovery and implementation of inventive, advanced solutions to complex and emerging issues. This practical application of sustainability in innovation can lead to significant benefits for companies, such as improved market positioning and enhanced performance.
How the combination of innovation and sustainability is as essential as it is virtuous for companies has also been demonstrated by several studies, including The Relationship between Innovation and Sustainability: A Meta-analytic Study, published as early as 2020 in Science Direct. This study, in fact, clearly highlights a positive relationship between the two terms and how much this benefits company performance: analyzing the results, the close correlation between economic and environmental innovation and a higher level of sustainability becomes evident. Equally clear, however, is that this territory of correspondence is also little explored, especially in practical terms, by companies, thus indicating a vast space to be occupied by organizations that want to stand out in the market.
Innovating through sustainability: how and through which roles?
Sustainable innovation can take many forms within an organization. For example, many companies are adopting green technologies to reduce the environmental impact of their operations, such as implementing renewable energy, reducing waste and optimizing supply chains. These initiatives help reduce costs in the long run and improve corporate image and brand reputation.
Moreover, sustainable innovation also extends to human resource management practices. Companies that invest in the training and development of their employees not only improve their productivity and loyalty but also contribute to creating a more inclusive and diverse working environment, thus promoting social sustainability and internal cohesion.
Companies must integrate these principles into their corporate DNA to achieve real progress in promoting innovation through sustainability. In order to do so, a commitment at all levels, from top to bottom, is required to adopt a mindset of change and responsibility.
Company managers are crucial in driving this transformation, providing the strategic vision and guidance to turn sustainability principles into concrete actions. This also means being prepared to challenge the status quo and proactively identify opportunities for sustainable innovation within the company.
Also central to this are ESG experts in organizations whose deep understanding of environmental, social and governance issues can play a valuable advisory role, providing in-depth analysis and recommendations to improve the company’s sustainable performance and mitigate associated risks.
HR can also promote innovation and sustainability by actively fostering an inclusive and employee-friendly corporate culture. Through recruitment and retention policies focused on diversity, fairness, and inclusion, HR can help cultivate a working environment that values and respects individual differences.
The governance, environmental and social aspects that we have summarised in these three macro-categories of roles are also central to the assessment of the state of the art of sustainability in companies through a tool such as the internal sustainability assessment: in partnership with LIITO, we at Performant by SCOA can give the organizations we work with an accurate picture of how they are doing in the transformation process. In our experience, the companies with the highest levels of openness to change, innovation and green culture achieve the best scores (as well as higher business performance).
Tangible benefits of the integrated approach
Adopting an integrated approach to sustainability and innovation brings ethical and tangible benefits to companies. First, companies that embrace sustainability as a driver of innovation often enjoy greater resilience to economic and environmental shocks, as they can adapt more quickly to changing market conditions and regulatory pressures.
Moreover, sustainable innovation can be a powerful driver of growth and competitive advantage. Companies that succeed in developing sustainable products and services in response to the needs of increasingly environmentally conscious consumers can differentiate themselves in the marketplace and gain valuable market share. Research by Ernst & Young, entitled Seize the Change, shows that companies with a ‘high level of sustainability’ achieve a performance differential of between 4% and 6% compared to unstructured companies.
A change of mindset in this case is necessary, but more is needed. Creating a context in which sustainability and innovation go hand in hand also means focusing on skills that enable this, such as vision, curiosity, know-how, problem-solving, interpersonal communication, listening, and sharing. The essential transition is to understand that there is also a relational and human part, besides technical expertise, at the basis of the transformation process that the contemporary world requires us to face.
Therefore, sustainability and innovation are not separate concepts but two sides of the same coin, which must be held together by training in specific skills at this time in history. It is crucial for managers to understand and embrace this connection and an approach of openness to change to lead their organizations towards a more sustainable and profitable future. By integrating sustainability at the heart of business operations and promoting innovation driven by responsibility and an understanding of all factors involved, companies can create long-term value for shareholders and contribute significantly to the preservation of the planet and the prosperity of future generations.
