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New report: Green business efforts and competitiveness go hand in hand

There is a positive correlation between companies' green efforts and their competitiveness. This has been documented for the first time in a new analysis by The Danish Industry Foundation.

Green business is increasingly proving to be smart business. The new report “Green Competitiveness”, launched by The Danish Industry Foundation, highlights how green initiatives not only drive sustainability but also strengthen companies’ competitive edge in a challenging global landscape.

About the Danish Industry Foundation

The Danish Industry Foundation develops and supports innovative, inspirational and economically sustainable projects and initiatives that strengthen the competitiveness of the Danish industry. The Foundation is an engaged philanthropic foundation with the purpose of supporting and enhancing the competitiveness of the Danish industry.

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Green efforts pay off

The first of its kind, the report “Green Competitiveness” provides clear evidence that green business is good business. Based on a survey conducted among 366 Danish industrial companies, the report reveals that the more green initiatives companies implement, the better the integration of these measures, and the longer the companies have been on the journey, the greater the competitive advantages they gain.

Specifically, companies report experiencing benefits such as enhanced innovation capacity, improved ability to meet customer demands, and better access to new markets. Those furthest along in their green transition are also beginning to see positive effects on revenue and exports.

“To succeed with the green transition, it is crucial that companies’ investments in sustainability also translate into bottom-line results and improved competitiveness. This report documents that connection, and the hope is that it will inspire more companies to aim even higher in their green transition efforts,” says Anders Ziegler Kusk, Programme Manager for Sustainable Manufacturing at the Danish Industry Foundation. And the timing for encouraging results like these couldn’t be more apt:

“Companies are under pressure from many directions at the moment – geopolitics, the ability to implement new technology, and not least regulation. That’s why it’s vital that the incentives for pursuing green transition are clear, so this agenda doesn’t get pushed into the background,” he adds.

 

The relationship between green efforts and competitive advantages

The figure illustrates the relationship between industrial companies’ efforts in green transition and the competitive advantages achieved from these efforts. Each dot in the figure represents a company from the survey. The trend line shows a positive correlation, indicating that green transition enhances competitiveness. The more companies have worked on their green transition, the greater their likelihood, all else being equal, of achieving improved competitiveness.

Untapped potential

The report’s findings are based on 16 green transition indicators, assigning participating companies an average score on their progress in implementing green initiatives. Companies then indicate how these measures have impacted their competitiveness across 11 indicators.

The report shows that companies have made the most progress in reducing energy, water, and material consumption. However, there’s still a clear untapped potential for most companies when it comes to supply chain initiatives. Additionally, though nine out of ten companies have implemented at least some green initiatives, only two out of ten have developed a plan or strategy for their green transition.

Although green transition cannot be reduced to a formula, the report highlights that it is the interplay between green initiatives that particularly strengthens competitiveness.

For example, companies may develop new products with lower climate impacts, but without understanding demand or actively communicating these efforts, the business gains can be difficult to realise.

Archetypes of green transition

To deepen the understanding of the relationship between green transition and competitiveness, the analysis divdes companies into five archetypes – Visionaries, Goal-Oriented, Pragmatic, Exploratory, and Reactive – based on how far they have progressed, the pressures they face, and how they approach the agenda. And this is an important additioin to make the evidence of the report more actionable.

“In addition to illustrating the connection, the report provides a deeper understanding of the challenges and opportunities companies face. This offers a solid foundation for targeting future initiatives and ensuring that we, as a foundation, focus where the challenges are greatest while helping companies identify where they can reap the most benefits,” concludes Anders Ziegler Kusk.

 

About the report

The report demonstrates the correlation between green transition and competitiveness through a combination of quantitative and qualitative data, including a questionnaire survey with responses from 366 Danish industrial companies as well as in-depth interviews with 12 case companies.

The questionnaire survey was completed in May-June 2024. The report has been prepared by IRIS Group on behalf of Industriens Fond.

Read the report (in Danish)

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