How to integrate sustainability and strategy: Three narratives

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.