The document discusses sustainability as a megatrend and how three companies - Albini Group, BMW, and Philips - have incorporated sustainability into their long-term business strategies. Albini Group invests in renewable energy sources and sources high-quality, chemical-free materials to reduce costs and environmental impact. BMW sees sustainability as key to its mobility business and aims to reduce vehicle emissions and resource use. Philips invests in green innovations and aims to transition to a circular economy through product reuse. All three companies view sustainability as driving financial viability and competitive advantage over the long run.

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Q4) Sustainability: a Megatrend
With the world population expected to grow to over 7.7 billion by 2020, as projected by OECD
(2014), in part due to people living longer lives and increases in child survival rates, global citizens
are having to face issues such as climate change, food supply, garbage disposal, and the water
supply. Organizations, comprised of those global citizens, have not remained isolated from having
to deal with these issues, and whilst many have not aligned core business practices with areas of
the environment, health, or safety, many others have taken advantage of the megatrend of
sustainability to turn it into a long-term competitive advantage and thus have aimed to bridge the
environmental and financial worlds. With the growing pressure from non-governmental
organizations (NGOs), governments, policy makers, private investors, and citizens, just to name a
few stakeholders, businesses are being forced to manage and measure the impacts and outcomes
of their operations and business practices to reflect not only financial, or economic, but also their
environmental and social performance, or 3BL (Elkington 1998). Triple bottom line (3BL)
reporting is one approach for business to demonstrate to stakeholders that the footprint they are
leaving behind, including the products and services they produce or manufacture, the jobs they
provide, and the network of suppliers and business partners they develop as examples, is not only
a consideration, but is a core focus of the organization that is both a driver and an outcome of its
performance. These actions ensure financial viability, which then are able to become a resource
for “improvements, innovations, and returns to investors” (Kanter 2011).
Corporate Social Responsibility (CSR) is a strategy for organizations in response to the pressures
of globalization, including the increasing demands by groups and citizens on businesses to make
ethical decisions and to be held accountable for those decisions. However, CSR has been criticized
as a way for corporations to divorce sustainability from business objectives (Nidumolu et al. 2009).
Nonetheless, there are many companies in the world which exemplify how a sustainability strategy
is implemented, proving to go beyond the superficial front just to satisfy external stakeholders,
and can drive internal performance, be a point of differentiation, and lead to a long-term
competitive advantage in the global market. Albini Group in Italy, BMW Group in Germany, and
Philips in the Netherlands, are three companies which have taken different approaches, but faced
similar challenges, in incorporating sustainability into their companies to achieve the same
outcome which is long-term success and viability within their respective markets.

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Albini Group is a proud “made in Italy’ textiles company that has incorporated sustainability into
their operations. President Silvio Albini views this as directly impacting the financial bottom line
and a way of extending responsibility to consumers to purchase eco-friendly fabrics (Albini, S.
2014). Due to rising energy costs, Albini has invested in hydro-electric power in the plant in
Brebbia, Italy, installed photovoltaic and wind power into the mill at Matolla, Italy, and
refurbished all central air-conditioning in the factories of the Group (Albini 2013). Additionally,
keeping in line with their high quality brand, Albini sources raw materials of the highest quality
without the use of pesticides or chemicals, and uses a production process that requires a reduced
amount of water, allowing them to save energy, reduce cost, and use renewable resources while
reducing fuel consumption and emissions of carbon dioxide into the atmosphere (Albini 2013).
Further, Albini is vertically integrated with suppliers which allows quality control in sourcing and
at all stages in the process, including style and product innovation, so as to allow them to compete
on other aspects than price such as service quality and product excellence (Albini, S. 2014). Albini
must maintain its clear vision and strategy as Italy faces many challenges going forward such as a
stagnating Italian economy, political instability, corruption, and organized crime (Mazzucchelli
2014). However, Albini’s initiatives show even in tough economic times, the decision to invest in
sustainable sourcing and production is a strategy to differentiate its product and build awareness
of its high quality, Italian brand.
BMW is an example of a German company that is also taking sustainability seriously. BMW sees
itself not in the automotive industry but in the mobility business and has a holistic approach to
sustainability by incorporating it along the entire value chain (BMW 2014). From product and
process innovation to employee training and further education, BMW shows that sustainability is
a key component of their long term strategy. For example, their sustainable vehicle project –
Project i – is focused on conducting customer research in megacities to determine urban individual
mobility needs. This has led to development of innovative concepts around vehicle architecture
and sustainable solutions for production (BMW 2013). BMW’s concern for the environment is
evident in their commitment to reduce the CO2 emissions by at least 50 percent compared to 1995
on their European new vehicle fleet and also a plan to reduce resource consumption per vehicle by
45 percent by 2020 compared to 2006 on production lines (BMW 2013). BMW also reports on its
sustainable practices via its Sustainability Report which it has been doing since 2008. Additionally,
BMW Group, since 2005, has been awarded the world’s most sustainable premium automobile

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manufacturer by the most influential stock index for sustainability-driven companies worldwide,
i.e. The Dow Jones Sustainability Index (DJSI 2014). BMW faces challenges such as ensuring a
sustainable workforce in Germany, as well as increasing pressure to move offshore due to lower
costs and growing markets. Implementing those sustainable practices into emerging countries will
require BMW to have strong planning and control mechanisms in place. Nonetheless, such
ambitious actions, plans, and acknowledgements show that BMW is driving the way for the
automotive industry in sustainability by demonstrating that even well-established companies must
keep re-inventing themselves, innovating new products and services, and evolving with global
trends.
In the Netherlands, Philips has incorporated sustainability into their company and operations since
1970 (Philips 2014(a)). In 1994, Philips started its first program to measure key targets on
sustainability (Philips 2014(b)) and today has integrated its social and environmental approaches
into its annual report. Since then, Philips has continued to develop and integrate sustainability into
their products, processes, and services in order to minimize the impact on the environment and
stimulate business growth through its people. Philips invested 509 billion euros in 2012 on green
innovations to develop green products and technologies (Philips 2014(a)). Their EcoVision project
is a two-dimensional approach to sustainability and aims to improve the lives of 3 billion people
by 2025. The project’s social aspect focuses on product and solutions that support the care and
well-being of peoples’ health. The ecological aspect is the driver behind transitioning from a linear
economy to a circular economy where innovation is the result of the effective use of resources
through material, product, and component reuse (Philips 2014(b)). Circular economies have
economic profit potential of 250-500 billion euros annually for Europe alone, as reported by Mr.
Marinelly based on a McKinsey study (Philips 2014(c)). As pointed out, the implementation of
these initiatives does not come easily, and are often challenged by traditional thinking, for example
hierarchical organizations, silo structures, and views of the customer as a commodity, which in
Philip’s case is reported to come from internal Marketing and Sales (Philips 2014(c)). However,
Philips is transitioning to shared value creation through establishing the building blocks necessary
to accomplish such a vision. Philips is committed to enhancing transparency in the supply chain
and building long term relationships through collaboration with suppliers, whilst promoting and
marketing energy efficient solutions to business consumers, and pursuing a circular economy for
the smart use of resources and energy (Philips 2014(c)). With such programs and efforts, Philips

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has not only addressed sustainability as a megatrend but has demonstrated that it is ingrained in
their organization and is the long term approach to maintaining their strong brand positioning and
place in the global market in the energy and healthcare space.
The sustainability movement has attained megatrend status, in large part, due to the
acknowledgement and attention having been afforded on the inefficient use of our planet’s
resources in current products and production processes. Overall, these three well-established
companies, with presence and facilities around the world, show that the megatrend of sustainability
is a driving factor in the development of their business strategies and a way to ensure their long
term viability. All three companies have faced hardships due to recent, tough economic times, but
they have continued to invest and pursue these sustainability initiatives which demonstrate that
such actions are the way to not only recovery, but future growth.

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