Why Sustainability & Ethics Matter in International Expansion
Meeting Consumer Expectations
As you look to enter international markets, understanding your customers’ values is critical. Gone are the days when a superior product or service alone could captivate the market. Today’s consumers demand that businesses demonstrate corporate responsibility. Your reputation as an ethical and sustainable business can be one of your greatest assets in capturing and retaining customers worldwide.
A Bain & Company survey revealed that 88% of global consumers expect companies to focus on purpose beyond profit. This expectation is particularly strong in the APAC region, where 80% of consumers consider sustainability when making purchasing decisions. Brands like Unilever have successfully tapped into this trend with their “Sustainable Living” brands, such as Dove and Ben & Jerry’s, which accounted for 75% of their growth in 2021. By prioritizing sustainability in your marketing, you can connect with socially conscious consumers and build brand loyalty in new markets.
Navigating Regulatory Compliance
Expanding into international markets also means adhering to local regulations, many of which have become stricter to tackle unsustainable practices. For instance, the EU’s Corporate Sustainability Reporting Directive (CSRD) requires companies to disclose how they’re addressing environmental, social, and governance (ESG) issues. Similarly, the US Climate Disclosure Rule mandates that publicly traded companies report climate-related risks and greenhouse gas emissions. Non-compliance can result in hefty fines and significant damage to your reputation.
On the other hand, companies that proactively embrace regulatory requirements can turn compliance into a competitive advantage. Take Tesla, for example. Tesla’s commitment to producing zero-emission vehicles not only helps it comply with Europe’s stringent emissions regulations but also positions it as a leader in the growing electric vehicle market. In fact, Tesla’s Model 3 has become one of the best-selling EVs in Europe, outpacing traditional automakers in several countries.
Building Operational Resilience
Incorporating sustainable and ethical practices isn’t just about meeting expectations—it’s also about building a resilient foundation for your business. Global operations expose businesses to various risks, including labor violations, supply chain disruptions, and environmental controversies. By focusing on sustainability, you can mitigate these risks and ensure your company’s long-term stability.
Failure to address ethical sourcing can lead to severe consequences. For example, H&M faced a global backlash over wasteful clothing practices and unethical labor conditions, leading to boycotts and inventory challenges. In 2018, the company reported being stuck with $4 billion in unsold inventory, highlighting the mismatch between its strategy and shifting consumer expectations for sustainable fashion.
Moreover, sustainable practices can give your business a significant edge over competitors. Research by McKinsey shows that companies with sustainable supply chains see a 15% improvement in operational efficiency, particularly when navigating changing market conditions and evolving customer expectations.
How You Can Take Action
For micro, small, and medium-sized enterprises (MSMEs), sustainability doesn’t require hefty budgets or complex strategies. Even small, focused actions can create a significant impact and lay the groundwork for long-term growth.
- Start with Small Carbon Reductions: You don’t need to make drastic changes right away. Begin with simple, cost-effective steps, such as switching to energy-efficient lighting or optimizing logistics routes to reduce fuel consumption. Even modest carbon reductions can improve your operational efficiency and set you on a path toward more substantial changes over time.
- Give Back to the Community: Align your sustainability efforts with local environmental or social challenges, such as water conservation or waste management. These initiatives often require minimal financial investment but can have a positive impact on your community. For example, a small business could introduce water-saving practices or support local environmental projects, demonstrating its commitment to sustainability while building goodwill.
- Focus on Transparent Communication: You don’t need a full ESG report to share your sustainability progress. Use your website, social media, or newsletters to communicate the steps you’re taking toward sustainability. Being transparent about your efforts helps build trust with customers and other stakeholders, which is key to brand loyalty in today’s market.
Conclusion
Sustainability and ethical practices are not costs to bear—they are investments in your business’s future. By meeting consumer expectations, complying with regulations, and fostering trust, you position your company for long-term global success.
As you expand internationally, integrating sustainability into every aspect of your business isn’t just the right thing to do—it’s the smart thing to do. It strengthens your brand, enhances operational resilience, and secures your place as a leader in the international marketplace.
