Sustainability is a Litmus Test for Robustness of the Overall Strategy

Sustainability is a Litmus Test for Robustness of the Overall Strategy

Compared to 10 even 5 years ago, there is a well-established consensus that incorporating and integrating sustainable strategies for a stronger, more ethical future is non-negotiable. And while industry accepts the need for a more sustainable and environmental future, the challenges for businesses and corporations are considerable when it comes to converting this sentiment into action. 

Can sustainable practices truly deliver tangible business value, if so, how quickly and at what cost? What are the drivers and barriers associated with value creation? The questions are still on many decision makersand investors minds: Is being a sustainable business, good for business? If we don’t tackle these questions openly, we risk a divergence of narratives and actions. We want to avoid a collective sense of ‘Sustainability Fatigue’ and loss of younger talent who will lose patience and take their passion and skills elsewhere.  

One of the key issues often highlighted in the lubricant industry is that it lacks common frameworks and metrics to facilitate the efficient and measurable adoption of sustainability strategies. Yet, more and more companies are progressively willing to adopt voluntary sustainability commitments, put a stake in the ground and aim high, even though the increasingly stringent and ever-evolving regulatory and compliance framework is not an easy path to navigate.

Industry associations have an important role to play. UEIL (the Union of European Lubricants Industry) and ATIEL (the Technical Association of the European Lubricants Industry) are leading the implementation of Product Carbon Footprint (PCF) methodologies, based on global standards that calculate emissions associated with raw materials and the process of production. New regulatory acts are being added to clarify and harmonize the definitions and requirements, including standardization through Environmentally Acceptable Lubricant (EAL) certificates, the EU Ecolabel, and the Environmental Product Declaration (EPD), and Extended Producer Responsibility (ERP) schemes. The efforts of industry associations will be essential to progress the topics of industry wide importance to give a fairer playing field to SMEs which are the backbone of many regional markets.

It is becoming clear that while everyone is facing challenges, some companies take those up and use them as an opportunity to create new meaning and re-define their value proposition in this otherwise mature industry. Others choose to focus on the compliance aspects and wait until the uncertainty settles. We would argue that the latter position is strategically risky for longer-term competitiveness, and there is plenty of evidence from other industries showing how precarious a “wait and see” stance can be.

Making progress will require both industry-wide action (the tide that carries all boats) as well as individual leadership from the companies from across the whole spectrum of size and geographies to champion and push forward despite the uncertainty. Ultimately, most viable businesses have enough agency to choose if and where they will lead or follow.

Choices on Sustainability are not unlike any other fundamental choices related to company Strategy (i.e. where-to-play and how-to-win). When making these choices, we should remember that Sustainability transcends PCF, CCF, ratings and claims. Being clear and authentic on what Sustainability means for your business, and how you act on it, will play a role in a company’s ability to attract and retain talent and being able to rally them around something bigger than just business-as-usual. We are lucky in a way that the lubricant industry offers genuine good stories to tell. We need to get a lot better at expressing those.

For essential knowledge and insights on the complex issues businesses need to address and understand, both from the strategy and action standpoint, Kline is keen to play a part as an insight partner in helping the lubricant industry to convert sustainability “will” into impactful and credible “way”.

Kline Energy Vice President, Yana Wilkinson, addressed the question of Sustainability at her recent presentations: ‘Overcoming Sustainability Fatigue: Unlocking Business Value and Learning from Diverse Industries’ at LubeExpo23 (Sept ‘23) and at the United Kingdom Lubricant Association (UKLA) conference on Sustainability and Succession (Oct ‘23).

For more information and to learn more about our projects in the new product pipeline, including the Sustainability Index and Green Value Compass, connect with Yana Wilkinson and our team of Kline experts here.

Kline is a worldwide consulting and research firm dedicated to supporting our clients with in-depth B2B market intelligence reports, as well as expert consulting services focused on the niche market segments that we serve. With more than 60 years of industry experience, our portfolio of offerings and bespoke advisory assists our clients in measuring, monitoring, and forecasting sustainability impact and trends.

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