Sustainability-driven innovation has been on the rise with the increasing awareness of resource depletion and environmental degradation. In recent decades, corporations have begun to embrace sustainability, recognizing its dual potential to bolster environmental impact and economic performance. Concurrently, innovation has emerged as a pivotal avenue for companies to not only strengthen their market standing but also facilitate the transition to a sustainable economy.
Given the context of climate change, the transition to a sustainable economic paradigm has gained prominence. Over the long term, businesses embracing sustainable models tend to exhibit enhanced resilience against various risks through diversified production processes. Consequently, the decision to adopt a strategy centered around sustainability-driven innovation is influenced by shifts not only in activities, value chains, and stakeholder demands but also by the managerial capacity to anticipate future competitive advantages.
Studies have demonstrated a direct and compelling correlation between environmental stewardship and economic outcomes, with industry growth exerting a moderating influence. The interplay of sectoral dynamics significantly shapes the sustainable behaviors exhibited by companies. A notable study has revealed that a considerable proportion of companies are adopting advanced technologies to enhance raw material efficiency and environmental preservation. For instance, a recent investigation indicated that approximately 31% of manufacturing firms have presently integrated technologies aligned with sustainability objectives1. Moreover, an encouraging 30.2% of these companies are actively planning to incorporate sustainable technologies in the imminent future1.
Several key drivers that act as catalysts compel companies to engage in innovation initiatives aimed at shaping sustainable business models. This includes heightened investments in sustainability-driven innovation, the performance landscape at the national level, and the intricate interplay of regulations and market dynamics. These factors crystallize the intricate connection between innovation and business models aligned with sustainability imperatives.
When it comes to fostering the ecosystem that catalyzes innovation, skill development emerges as an indispensably pivotal cornerstone for companies meticulously focusing on sustainable innovation. Proficiency in technology, marketing, finance, leadership, creativity, and inventiveness play pivotal roles in supporting innovation aimed at sustainability objectives.
Yet, amidst these strides, many companies remain concerned that prioritizing environmental friendliness could hamper competitiveness by increasing costs without immediate and tangible financial rewards. While sustainability-driven business innovation garners significant attention, a research gap persists regarding the implementation of this model, its primary tools, and the challenges it presents. This gap is particularly noticeable among small and medium-sized enterprises (SMEs)2. Hence, charting the roadmap for future endeavors designed to promote green innovation within businesses requires a tailored approach that considers the unique needs of companies of all sizes, including SMEs. Customizing policies—ranging from financial incentives to specialized support services—is essential in making sustainability-driven innovation an enticing and accessible pursuit for businesses.
Companies that are innovating in this sector are likely to be eligible for several funding programs including government grants, and SR&ED.
Grigorescu A, Maer-Matei MM, Mocanu C, Zamfir A-M. Key Drivers and Skills Needed for Innovative Companies Focused on Sustainability. Sustainability. 2020; 12(1):102. https://doi.org/10.3390/su12010102
Klewitz, J.; Hansen, E.G. Sustainability-oriented innovation of SMEs: A systematic review. J. Clean. Prod. 2014, 65, 57–75.
Wu, K.; Liao, C.; Tseng, M.; Chou, P. Understanding Innovation for Sustainable Business Management Capabilities and Competencies under Uncertainty. Sustainability 2015, 7, 13726–13760.
Nidumolu et al. – Why sustainability is now the key driver of innovation. IEEE Engineering Management Review – 2013
D. Kiron, N. Kruschwitz, M. Reeves, and E. Goh, “The Benefits of Sustainability-Driven Innovation,” MIT Sloan Management Review 54, no. 2 (winter 2013): 69-73
