Creating a competitive advantage whilst using ( or through) sustainable development practices.

Many companies have done much to improve the social and environmental consequences of their activities, yet these efforts have not been nearly as productive as they could be for two reasons:

  1. The existing method pits businesses against society, when clearly the two are interdependent.
  2. Companies are pressured to think in generic ways instead of the way that is most appropriate to a companies’ strategy. (M.E Porter, 2006)

The is fact that the prevailing approaches are so fragmented and so disconnected from business and strategy that they obscure many of the greatest opportunities for companies to benefit society and themselves.

If instead companies were to analyse their prospects for sustainable practices using the same frameworks that guide their business choices they would discover that sustainability can be more than a cost, a constraint and a charitable deed, but it can be a source of unprecedented opportunity, innovation and competitive advantage[1]. Through developing products and services which are ‘directly’ used by the customer and are environmentally friendly companies can gain; first mover advantage, marketing opportunities and gain a good corporate reputation. (M.E Porter, 2006)

According to Porter and Kramer (2006), achieving this involves analysing the companies’ value chain for sustainable opportunities that both add value to the company and contribute to the environment. Often times this method will unearth a unique position, lower costs and better serve customer’s needs. For instance Toyota developed the Pruis (innovation), a hybrid-car (electric and petrol) in response to global concerns over car emissions. The Pruis has only 10% of the emissions of a regular car and as a result won car of the year in 2004 thus creating marketing opportunities. This has both utilised Toyota core competencies of automobile design and improved Toyotas public and brand image. I.e. it’s marketed as an eco-friendly car.

Irelands own AIB (bank) has also showed similar innovativeness. AIB offers its customers the opportunity to receive their bank statements electronically through their internet banking website. This innovation has led to both the public becoming aware that AIB is environmentally conscious (marketing) and AIB saving on; postal costs, paper costs and labour costs. It also introduces the customer to their internet banking service. I believe AIB’s long term strategy is to switch its customers from manual banking (e.g. teller in a bank) to dealing with their transactions over the internet (from bricks to clicks), thus further reducing; the need for premises, and labour’ costs.

AIB have also advertised loans (green-loans) at a reduced interest rate to those customers that utilise the loans for energy saving home improvements.


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Posted in corporate sustainability, sustainable development
2 comments on “Creating a competitive advantage whilst using ( or through) sustainable development practices.
  1. jeremy says:

    This has actually been a topic of interest for your UCD forebears at Reims, Colin:

  2. dhaveloose says:

    According to Top Gear (‘the’ most reliable source) the Toyota Prius isn’t as ‘green’ is the company says.
    If we investigate the impact from cradle 2 cradle than the car is worse than a Land Rover, Discovery. First of all, the Prius consumes 6,5 liter per 100 km which isn’t that great within it’s category. Secondly, to produce the car, Toyota needs to ship materials from every corner of the planet to assembly the car.

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