UCL School of Management

25 March 2022

The trade-off between corporate greening alongside corporate growth

Headshot of Brunello Cucinelli

Organisations are increasingly embracing substantiality practices, but many face the challenge of achieving growth whilst being truly sustainable. In Paolo Taticchi’s latest research with his co-authors, Tahiru Azaaviele Liedong (Bath School of Management), Tazeeb Rajwani (Surrey Business School) and Niccolò Pisani (IMD), they offer actionable recommendations and a process framework to support “gracious growth” and help leaders manage the trade-off between corporate greening and corporate growth.

Through an in-depth study of Brunello Cucinelli, one of the world’s leading companies in the luxury fashion industry, Paolo and his co-authors introduce the management philosophy of “gracious growth” which enables a company to protect earth’s ecosystem while realising long-term realistic profitability. The philosophy will help organisations manage the green-growth trade-off and pursue truly substantial practices rather than symbolic sustainability.

It is challenging to find the right balance required to achieve sustainability and growth, and in some cases doing one may hinder the other. For instance, sustainability targets may impede plans to build new factories or exploit cheaper supply chains for growth. Further to this, managers can face pushback from shareholders as CSR initiatives can generate costs that reduce a company’s profitability. This trade-off between growth and sustainability presents a dilemma for leaders, who face conflicting demands from stakeholders and investors which can result in them being tempted to conveniently reconcile the sustainability-growth dilemma and resort to CSR-washing whereby they signal sustainability to the outside world but do not implement it.

Positive examples, such as Brunello Cucinelli, do not only show how true sustainability and profitable growth can be co-achieved. They also represent beacons of hope in a time when temptations to reduce sustainability to a legitimizing fad remain worryingly strong.

The paper provides new insights into how growth and sustainability can be simultaneously achieved. These new findings can help managers enhance their organisations’ economic and environmental performance while also avoiding the legitimacy risks associated with greenwashing.

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Last updated Friday, 25 March 2022