Profitable Sustainability: How Green Practices Can Enhance Company Value
In today's business landscape, sustainable innovation and green business models have gained significant attention. The integration of sustainable practices not only benefits the environment but also has the potential to enhance a company's value and profitability.
Research has shown that sustainable innovation is grounded in wider normative concepts such as environmental sustainability or sustainable development (Boons & Lüdeke‐Freund, 2013). This indicates that businesses incorporating green practices are aligning themselves with broader societal and environmental goals, which can positively impact their overall value proposition.
Sustainability drivers, such as footprint reduction, poverty alleviation, fair distribution, waste reduction, and transparency, have been associated with the creation of sustainable value for businesses (Evans et al., 2017). These drivers emphasize the multifaceted benefits that green practices can bring to a company, ranging from environmental impact to social responsibility and operational efficiency.
Moreover, studies have identified key drivers that economically justify a sustainability-oriented business case, further highlighting the potential for profitability within sustainable business models (Abdelkafi & Täuscher, 2015).
The influence of green practices on consumer behavior and purchasing intentions has also been a subject of research. It has been found that consumer ethical beliefs play a mediating role in determining the influence of cynicism and empathy on green buying intention (Dissanayake, 2022). This suggests that consumer perceptions of a company's green initiatives can directly impact their purchasing decisions, affecting their financial performance.
Furthermore, the impact of legitimacy pressure and corporate profitability on green innovation has been studied, revealing that higher profitability can incentivize companies to engage in green practices with substantial resources (Li et al., 2017). This indicates that profitability and sustainability are not mutually exclusive but rather interconnected, with profitability catalyzing green innovation.
In addition, sustainable business models have been recognized as a key driver of competitive advantage, embedding sustainability into business processes and purposes (Franceschelli et al., 2018). This highlights the strategic significance of sustainability in shaping a company's long-term value and market positioning.
Moreover, the implementation of green industry strategies through ISO-14001 has been shown to have a mediating role in enhancing firm value, further emphasizing the link between sustainability and financial performance (Helmina et al., 2022).
In conclusion, the evidence from various studies supports the notion that green practices and sustainable business models can enhance company value and profitability.
By aligning with broader societal and environmental goals, integrating sustainability drivers, and responding to consumer ethical beliefs, businesses can create a compelling value proposition that resonates with stakeholders and contributes to long-term financial success.