McKinsey report: identifying core sustainability for business profit

A recent report by the American advisory firm McKinsey proposes a critical shift in how companies approach Environmental, Social, and Governance (ESG) issues. The research moves past the pervasive challenge of regulatory complexity or normative entropy, instead emphasizing the fundamental importance of defining a company’s unique sustainability identity.

McKinsey argues that the traditional checklist approach, where companies merely comply with a growing list of regulations, is insufficient. This method often results in a reactive strategy that fails to generate genuine value. To effectively navigate the modern corporate landscape, a business must first establish its specific ESG identity—that is, the most relevant and impactful area of sustainable action for its operations—and then align its internal standards accordingly.

The key takeaway from the analysis is that sustainable initiatives must be intrinsically linked to a company’s core competencies and distinctive capabilities. By moving beyond simple adherence to external rules and focusing on its optimal sustainable scope of action, a company can proactively embed sustainability into its operations. This focused and strategic approach is what ultimately allows the business to create added value and secure a competitive advantage, transforming ESG from a compliance burden into a powerful lever for corporate performance.