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    Brain Circuits

    How to integrate sustainability and strategy: Three narratives

    by Frédéric Dalsace, Goutam Challagalla Published November 18, 2024 in Brain Circuits • 3 min read

    Sustainability is now a pivotal player in corporate strategy. Focusing on these ‘narratives’ or approaches will help you integrate sustainability into your overarching business strategy. 

    Narrative 1: License to operate  

    The concept of a “license to operate” asserts that sustainability is not a choice but a necessity. The primary objective is to establish legitimacy through compliance with regulations. This defensive mindset involves navigating through regulators, customers, investors, and top talent.  

     

    Narrative 2: Selling sustainability  

    This approach views sustainability as a strategic differentiator, presenting both opportunities and risks, where sustainability is leveraged as a business opportunity.  

    Leaders in this field adopt a comprehensive approach. For example, former Unilever CEO Paul Polman embedded principles in the group’s strategy that focus on: 

    • ownership of impacts, 
    • long-term benefits for business and society, 
    • positive returns for all stakeholders, and 
    • partnerships to drive systemic change.    

     

    Narrative 3: Strategic thrust  

    This approach integrates sustainability organically into the broader business strategy. The objective is not to alter customer beliefs about a firm’s “greenness” but to maximize customer value through meticulous scrutiny of key products. Companies must engage with all customer segments, aiming to maximize their incentives to make sustainable choices. This involves focusing on three crucial elements:   

    • sustainability benefits,  
    • traditional benefits, and  
    • pricing dynamics.  

    Balancing these factors is essential as the addition of sustainability benefits can often result in increased product prices.  

    The key lies in emphasizing how sustainability enhances traditional benefits. This approach allows companies to drive change more effectively than attempting to force sustainability onto customers.  

     

    Key learnings 

    • First move to integration if you want to play the sustainability game seriously. 
    • Avoid getting trapped into using slogans that seem inspirational but can lead you down the wrong path.  
    • The future lies in creating positive value equations for customers, showcasing how sustainability enhances traditional product benefits.  

     

    Further reading 

    Integrating sustainability and strategy: 3 narratives for success  

    What does biodiversity have to do with business? 

    Why double materiality is your secret weapon for more impact 

    Are you ready for the circular business revolution? 

    The nonmarket sustainability advantage – Integrated approach

     

    Authors

    Frédéric Dalsace

    Frédéric Dalsace

    Professor of Marketing and Strategy at IMD

    Frédéric Dalsace focuses on B2B issues sustainability, inclusive business models, and alleviating poverty. Prior to IMD, he spent 16 years as a Professor at HEC Paris where he held the Social Business / Enterprise and Poverty Chair presided by Nobel Laureate Professor Muhammad Yunus. Prior to his academic life, Frédéric accumulated more than 10 years of experience in the business world, both with industrial companies (Michelin and CarnaudMetalbox) and as a strategy consultant with McKinsey & Company. At IMD, he is Director of the Integrating Sustainability into Strategy program.

    Goutam Challagalla

    Professor of Marketing and Strategy and dentsu Group Chair in Sustainable Strategy and Marketing at IMD

    Goutam Challagalla is Professor of Strategy and Marketing and dentsu Group Chair in Sustainable Strategy and Marketing at IMD. His teaching, consulting, and research focuses on strategy with a focus on digital transformation, business-to-business commercial management, value-based pricing, sales management, distribution channels, and customer and service excellence. At IMD, he is Director of the Advanced Management Program (AMP), Digital Marketing Strategies (DMS), and Strategy Governance for Boards, and co-Director of the Integrating Sustainability into Strategy.

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