Sustainable boost in sales from the green transition

Markets are expecting sustainable alternatives, and forerunners can now positively differentiate themselves in the competition for customers, investors and employees. Companies are advised to leverage competitive advantages from their sustainability reporting data.

“The market is currently extremely receptive,” highlights Ville-Veikko Laukkanen from VALOR Partners. “Therefore, exploring how sustainable trade could boost sales is crucial for every company.”

Laukkanen has delved into the development of sustainability markets and their growing importance for over ten years in his previous roles.

According to him, many companies struggle with EU’s reporting requirements. However, the reporting work simultaneously creates a comprehensive set of data, which can be analysed through a competitive advantage lens.

“The matter is neither complex nor difficult. The world wants to become more transparently sustainable, which is ensured by requiring reports,” Laukkanen says.

By analysing the reporting data, companies can identify factors that distinguish them from their competitors in terms of sustainability. Additionally, the regulation eliminates free riders while rewarding pioneers.

Winners integrate sustainability into business operations

VALOR’s core competence lies in fact-based analysis, where reporting data is used to create models that support corporate decision-making.

“We help companies identify where sustainable sales originate and how competitive advantages can be transformed into strategic and operational goals. Anticipating the wave and considering how a company can truly stand out in the green competition are areas we want to support,” Laukkanen explains.

Laukkanen notes that the winners are companies that integrate sustainability into their business operations. He mentions a Finnish lock company as an example, which he assisted in his previous role as CEO of a technology start-up.

The lock company evaluated how it could achieve net zero emissions and discovered a clear competitive advantage over other players in the industry. The advantage was productised with a service built around it, which has been successful.

Kuva henkilöstä Ville-Veikko Laukkanen
Ville-Veikko Laukkanen has delved into the development of sustainability markets and their growing importance for over ten years.

Improved reliability and comparability

Under EU regulations, companies will gradually become subject to the sustainability reporting directive, which broadens the requirements for reporting sustainability information. With supply chains also included, reporting will encompass a broader group.

“The greenwashing directive will ensure that published information is accurate. The verification process becomes more precise and merges with financial reporting as part of the financial statements, thereby improving reliability and comparability,” Laukkanen notes.

He adds that high-quality reporting can already become a competitive advantage, as client companies need detailed information about the sustainability of the entire supply chain.

Laukkanen believes that the formalization of data will have a significant economic impact. In the future, considerable amounts of capital will be allocated accordingly. The rest of the world will follow the EU’s lead and join the directive’s sphere of influence through trade relationships. In the United States, the IRA legislation package also allocates significant incentives for clean energy and sustainability.

New insights with AI technologies

To use the collected data in corporate decision-making, it must first be analysed based on facts. Utilising AI technologies for classifying data, companies can gain new insights into procurement strategies, tendering, investments, and customer promises.

Risk analysis reveals the practical significance to business operations. The same factors are increasingly identified in the valuations and terms of corporate arrangements.

“The thematic concept is one of the most important I have seen in my career and will become significant in future strategic choices,” Laukkanen emphasises.

To ensure efficiency, clear choices regarding actions and non-actions must be made. Increasingly, the choices also need to be justified to stakeholders. Additionally, sustainability can become a catalyst for larger changes, such as an investment that has been considered for an extended period.

“Through increased sales, costs are significantly offset when action is taken early. It is crucial for companies to analyse the market as soon as possible and view this as an opportunity for growth. Active participation and an innovative approach to sustainability not only fulfil the directive’s requirements but also establish the foundation for long-term success,” Laukkanen underlines.