What is Sustainable Innovation?

Professor Rajesh Chandy, a Professor at the London Business School, breaks down Sustainable Innovation into its component parts.

What is Innovation? The application of a new idea to create value.

Sustainability? This involves creating value for people and the planet.

The world faces serious environmental, economic, and social challenges. It is the job of corporations, government, regulators, and individuals to meet the legitimate aspirations of the world’s population in a way that the earth and society can bear and that will also allow the planet and society to flourish.

This dual focus on innovation and sustainability isn’t new. In fact, the concept of the “triple bottom line”—people, planet, and profit—was first articulated by John Elkington in the 1990s. Elkington’s framework challenged businesses to go beyond short-term financial gain and consider their environmental and social responsibilities as core to long-term success. Sustainable innovation, therefore, is not just about developing the next big product or process, but ensuring that these developments generate value across all three dimensions.

By integrating new ideas with environmental stewardship and social impact, sustainable innovation encourages organizations to rethink traditional business strategies. The goal: create solutions that drive economic growth while preserving resources and uplifting communities—now and for future generations.

The UN’s Sustainability goals are broader and more ambitious than any one country or company. The complexity of the issues facing the world in 2025 are not solvable by a superficial fix, long term sustainable solutions are required, including collaboration and inclusion with local communities and harnessing the latest disruptive technologies.

Alternative Terms for Sustainable Innovation

When talking about sustainable innovation, you might also encounter terms such as eco-innovation, green innovation, sustainable solutions, or sustainable development. These phrases are often used interchangeably to describe the process of developing new ideas that generate value–not just for business, but also for society and the environment.

How Sustainable Development is Defined

To put it simply, sustainable development is about meeting today’s needs without putting tomorrow at risk. As articulated by the Brundtland Commission back in 1987, this concept centers on progress that doesn’t deplete resources or opportunities for future generations. In other words, it’s future-focused growth—balancing what we need now with what the planet and society will require for years to come.

Key Frameworks and Approaches to Sustainable Innovation

To better understand sustainable innovation, it’s helpful to explore some of the foundational frameworks that have shaped how experts approach this topic.

One of the earliest and most influential definitions of sustainability comes from the 1987 Brundtland Report, which outlined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” This guiding principle continues to underpin modern sustainability thinking and strategy.

Building on this, John Elkington introduced the “Triple Bottom Line” (3P) model in the 1990s—a framework now widely adopted by organizations worldwide. The Triple Bottom Line encourages companies to look beyond just profit and consider:

• People: Focusing on the social impacts and wellbeing of employees, communities, and broader society.
• Planet: Addressing environmental stewardship, resource efficiency, and minimizing ecological footprints.
• Profit: Ensuring long-term economic viability alongside social and environmental responsibility.

By balancing these three dimensions, businesses and policymakers can drive innovation that is not only profitable but also socially just and environmentally sound.

These frameworks, alongside more recent approaches like circular economy principles and the UN’s Sustainable Development Goals, act as roadmaps for organizations committed to meaningful, long-term progress. Sustainable innovation isn’t just about technology or efficiency—it’s about adopting holistic strategies that set the stage for enduring value for people, the planet, and future generations.

Harnessing the Latest Technologies & Entrepreneurship to Drive Sustainability

The Food and Agricultural Organization (FAO) reports that, since 2020, approximately 420 million hectares of forest have been lost to deforestation. Global tree cover continues to reduce, contributing to an estimated 4.1 gigatons of annual carbon emissions. This has severe implications for climate change since trees play such a critical role, both as a carbon sink and as protection during climate disasters.

The London Business School, Columbia University, and Iowa State initiated a project to encourage communities to plant more trees to reduce the effects of deforestation in India. The female entrepreneurs at Dharma Life in Uttarakhand, India will sell saplings in villages using the latest technology.  AI-created marketing content will be utilized and communicated via the WhatsApp messaging app as cell phone use is ubiquitous in India. The project will also employ the latest generative AI tools to transform the interventions into various communication forms like videos and localized images. A mobile app-based geo-tagged tracking mechanism will be used to monitor tree growth and survival rates. At the back end, all tree-related data will be recorded on a block chain infrastructure to ensure accurate tracking.

How Can We Effectively Measure Sustainable Development?

Measuring sustainable development is no easy feat—it requires a holistic approach that captures both the progress we’re making and the challenges we still face. For organizations, policymakers, and communities, tracking sustainable development means keeping an eye on key indicators that reflect environmental health, social equity, and economic well-being.

Some common metrics include:

• Carbon footprint and greenhouse gas emissions: Monitoring how much CO₂ and other greenhouse gases are produced to identify areas for improvement.
• Resource consumption: Evaluating water use, energy consumption, and materials sourcing to ensure resources are being managed responsibly.
• Biodiversity and ecosystem health: Tracking the preservation and restoration of habitats, as well as the diversity of plant and animal life.
• Social impact: Measuring access to education, healthcare, fair wages, and community well-being.
• Economic inclusivity: Looking at indicators like job creation, income distribution, and support for local economies.

International frameworks, such as the United Nations Sustainable Development Goals (SDGs), offer a blueprint with clear targets and indicators that can be adapted for different regions and sectors. Combining quantitative data with qualitative insights from local communities ensures that sustainable development efforts are both measurable and meaningful.

Tools like impact assessments, environmental audits, and independent certifications (such as those from the Global Reporting Initiative or B Corp) can provide organizations with benchmarks, helping keep progress transparent and accountable, while also highlighting areas that need more innovation.

By using a variety of measures and embracing collaboration between sectors, we can ensure that our strategies for sustainable development are not just well-intentioned, but genuinely effective—and capable of creating lasting value for both people and the planet.

Open Innovation as a Catalyst for Sustainable Innovation Ecosystems

Open innovation has become an essential ingredient in building truly sustainable innovation ecosystems. By encouraging organizations to look beyond their internal resources and actively collaborate with external partners—such as startups, research institutions, NGOs, and even customers—open innovation accelerates the flow of new ideas, technologies, and practices.

This collaborative approach helps to:

• Break down traditional silos: Organizations can leverage diverse perspectives, reducing blind spots and uncovering solutions that may otherwise go unnoticed.
• Share risks and resources: Tackling sustainability challenges often demands substantial investment and expertise. By sharing risks, costs, and knowledge, partners can take on more ambitious projects than would be possible alone.
• Foster rapid experimentation and scaling: When multiple stakeholders pool their resources, promising ideas can move more quickly from pilot stages to broader adoption, amplifying positive environmental and social impacts.
• Enable local adaptation: Collaboration with local communities and innovators ensures that solutions are tailored for real-world impact rather than one-size-fits-all fixes.

For example, companies like Unilever and Procter & Gamble have embraced open innovation platforms to co-create sustainable packaging solutions with startups and suppliers. These efforts go beyond “not invented here” mindsets, unlocking new pathways to greener products and services.

By weaving openness, collaboration, and shared value creation into the fabric of innovation ecosystems, organizations can accelerate progress toward sustainability goals—ensuring both people and planet benefit in the long run.

Integrating Sustainable Development into Existing Management Systems

Sustainable development doesn’t require reinventing the wheel; rather, it’s about weaving responsible practices into frameworks organizations already use. The process often starts by reviewing current management systems—such as ISO 9001 for quality or ISO 14001 for environmental management—and identifying overlaps where sustainability goals can align with existing protocols.

Some practical steps include:

• Setting Measurable Objectives: Define specific sustainability targets within current performance indicators. This might mean reducing energy consumption, minimizing waste, or improving supply chain transparency.
• Employee Training and Engagement: Educate teams at every level about sustainability’s importance and demonstrate how day-to-day decisions contribute to broader goals. Even a small policy tweak can inspire more eco-friendly purchasing or production habits.
• Continuous Improvement: Use established feedback loops (like Plan-Do-Check-Act cycles) to monitor progress and refine sustainability initiatives over time. Companies that tie their sustainability aspirations directly to routine audits and management reviews often see the best results.
• Stakeholder Involvement: Invite input from employees, suppliers, and community members to ensure sustainability efforts are realistic, inclusive, and impactful. This collaborative approach not only generates fresh ideas but also builds buy-in across the organization.

By embedding these practices into their existing management structures, organizations can accelerate progress toward sustainable development—without sacrificing operational efficiency or creating unnecessary complexity.

Sustainability-Oriented Innovation in SMEs

A wealth of research has explored how small and medium-sized enterprises (SMEs) approach sustainable innovation. Systematic reviews point out that SMEs often face unique resource constraints yet remain pivotal in driving sustainability at a grassroots level. Rather than relying only on large-scale technological breakthroughs, SMEs frequently harness incremental innovations, adjusting existing processes, supply chains, and products to reduce environmental impact.

Some consistent threads from recent studies include:

• Drivers of Sustainable Innovation: Market demand, regulatory requirements, and stakeholder pressure are primary motivators for SMEs seeking sustainable solutions.
• Barriers to Adoption: Limited financial and human resources, lack of know-how, and unclear economic returns can slow progress for SMEs compared to larger corporations.
• Opportunities for Collaboration: Partnerships—with NGOs, research institutes, or supply chain partners—can be vital for accessing cutting-edge knowledge and sharing innovation costs.
• Competitive Advantage: SMEs that successfully embed sustainability into their business models often stand out to eco-conscious consumers, opening doors to new markets and enhancing brand loyalty.
• Continuous Learning: An ongoing commitment to employee education is crucial for fostering a culture of sustainability and keeping up with evolving best practices.

Systematic reviews ultimately highlight that while the road to sustainability may look different for SMEs than for multinational giants, their agility and close community ties allow them to be surprisingly effective innovators and early adopters in the sustainability landscape.

The Diversity of Eco-Innovations: Insights from Real-World Examples

Sustainable innovation doesn’t follow a one-size-fits-all approach. In practice, eco-innovations span a rich spectrum, from incremental tweaks to disruptive breakthroughs, all while targeting environmental impact across different sectors.

Eco-innovation diversity typically emerges in several ways:

• Product Redesigns: Many companies focus on lowering environmental footprints by reimagining everyday products. Biodegradable packaging, recyclable materials, and energy-efficient appliances are prime examples showing how modest changes can yield substantial benefits.
• Process Innovations: Improvements in manufacturing processes—like using renewable energy or cutting water usage—underscores how sustainability can be embedded behind the scenes. Think about major automakers optimizing production lines to minimize waste, or beverage companies developing closed-loop water systems.
• Business Model Shifts: Innovative business models also drive sustainability. Circular economy models, such as rental or product-as-a-service concepts (think: clothing rental platforms or subscription-based furniture), are gaining traction across industries.
• Systemic Solutions: Some eco-innovations address environmental challenges at the system level, tying together multiple stakeholders. Examples include collaborative supply chains focused on responsible sourcing, or citywide green infrastructure projects.

What unites these diverse efforts is a commitment to both planet and profit—demonstrating that eco-innovation can take many shapes depending on technological opportunities, regulatory environments, and customer demands.

The Role of Government Subsidies in University-Industry Collaboration

Government subsidies can play a crucial role in driving sustainable innovation, particularly when universities and industries join forces. These financial incentives help lower the barriers to research and development, enabling academic researchers and industry practitioners to collaborate on solutions that benefit both the economy and the environment.

When appropriately structured, government subsidies encourage:

• The formation of long-term partnerships between universities and private companies.
• The sharing of expertise, equipment, and resources that might otherwise be out of reach for either party alone.
• The acceleration of new technologies that address sustainability challenges—think cleaner manufacturing processes, eco-friendly materials, or energy-efficient systems.

Moreover, subsidies often promote risk-taking and experimentation that would be financially daunting for organizations acting alone. By absorbing part of the cost, governments empower teams to pursue bold ideas with real potential for positive impact. Ultimately, these collaborations can result in not only innovative products and services but also in building a skilled workforce that understands and prioritizes sustainability.

The Role of Knowledge Management in SME Innovation

Small and medium enterprises (SMEs) face distinct challenges when pioneering sustainable innovation, but one key to unlocking their potential lies in effective knowledge management. By systematically capturing, sharing, and leveraging organizational knowledge, SMEs create a solid foundation for fresh ideas to flourish.

When teams have access to collective insights—be it from previous projects, customer feedback, or emerging industry best practices—they’re better equipped to identify new opportunities and adapt quickly to change. This continuous learning environment accelerates the flow of innovative concepts from the drawing board to real-world application.

In practice, what does this look like? It could involve creating easy-to-access digital repositories of lessons learned, encouraging cross-team brainstorming, or investing in platforms that connect employees with subject matter experts. With these strategies, SMEs can streamline decision-making, reduce duplication of effort, and shorten the path from concept to market.

Ultimately, prioritizing knowledge management doesn’t just improve efficiency. It acts as a catalyst—helping organizations overcome resource limitations and move forward with scalable, sustainable innovation solutions.

Lessons from Dynamic Product Development

Dynamic product development processes offer several important insights for organizations looking to excel in new product development—especially when speed and responsiveness are critical. Engaging in fast-paced, iterative development enables teams to adapt quickly to feedback and changing market requirements, which is increasingly essential in today’s competitive environment.

Key takeaways include:

• Continuous Feedback Loops: Involving stakeholders early and often helps ensure that the end product genuinely meets user needs. This kind of participatory approach can minimize costly missteps down the line.
• Iterative Prototyping: Regular prototyping and testing allow teams to identify potential issues and innovate in real-time, rather than waiting for a lengthy development cycle to conclude.
• Cross-Functional Collaboration: Successful dynamic development requires input from a range of disciplines—engineering, marketing, sustainability, and more. This diversity of perspectives fosters more robust, market-ready solutions.
• Flexibility and Readiness to Pivot: Teams must remain open to changing direction as new challenges or opportunities emerge. This adaptability supports not just technical innovation, but also sustainable practices.

Ultimately, dynamic product development emphasizes rapid learning and agility—both essential ingredients for companies aiming to deliver impactful, sustainable innovations.

Environmental Justice and the Path to Sustainable Cities

A key component of building sustainable cities lies in achieving environmental justice. At its core, environmental justice ensures that all individuals and communities—regardless of income, race, or location—have equal access to a healthy environment and the benefits of sustainable development.

Urban sustainability can’t be realized if environmental burdens—like air pollution, lack of green spaces, or exposure to hazardous waste—are disproportionately borne by low-income or marginalized groups. True sustainable innovation considers not just ecological and economic factors, but also the fair distribution of resources and risks.

For example:

• Urban planning initiatives must prioritize affordable housing that minimizes exposure to pollution and incorporates energy-efficient technologies.
• Equitable access to public transportation, green infrastructure, and clean water are essential for thriving, inclusive cities.
• Community engagement is crucial—residents should have a voice in shaping policies that affect their lives and neighborhoods.

Achieving environmental justice in cities isn’t just a moral imperative; it’s a practical necessity for resilience and long-term success. By weaving equity into the fabric of urban innovation, we create cities where everyone can participate in—and benefit from—sustainability.

The Role of Carbon Capture and Storage in Climate Change Mitigation

When it comes to tackling climate change head-on, carbon capture and storage (CCS) stands out as a promising strategy. By capturing carbon dioxide emissions directly from industrial processes and energy production, CCS prevents vast amounts of CO₂ from entering the atmosphere and contributing to global warming.

Looking ahead, the future potential of CCS hinges on several key factors:

• Technological Advancements: Ongoing innovations are making CCS systems more efficient and cost-effective. Improvements in capture materials, storage methods, and the integration of CCS with renewables are helping to expand its real-world application.
• Economic Considerations: For CCS to scale, costs must continue to fall. This is where collaboration—between governments, private enterprise, and research institutions—comes into play. Policies like carbon pricing and international incentives can help bridge the gap between current expenses and wider adoption.
• Risk Management: Ensuring the safe and permanent storage of CO₂ is critical. Advances in monitoring and verification technology, combined with transparent regulatory frameworks, will be crucial in building public trust and minimizing the risks associated with underground storage.

Importantly, organizations such as Shell, Chevron, and National Grid are already investing in large-scale CCS pilot projects across North America, Europe, and Asia, signaling a growing commitment from industry leaders. According to the International Energy Agency, CCS could play a decisive role in meeting global emission reduction targets—especially in sectors where decarbonization remains a stubborn challenge, such as cement and steel production.

In summary, while CCS alone isn’t a silver bullet, it is positioned to be a pivotal component in the broader portfolio of solutions needed for meaningful climate change mitigation. By supporting innovative policy, cross-sector collaboration, and sustained investment, we can unlock the full potential of carbon capture and storage alongside other sustainable interventions.

Guidelines for Collecting and Interpreting Innovation Data: The Oslo Manual Approach

To better measure and foster sustainable innovation, it’s helpful to understand some best practices laid out by internationally recognized frameworks like the Oslo Manual. This guide—developed by the OECD and Eurostat—serves as the gold standard for collecting and analyzing innovation data, especially in the context of scientific and technological activities.

The Oslo Manual advocates for a consistent, structured approach to identify, document, and evaluate innovation efforts. Key guidelines include:

• Clear Definitions: Distinguish precisely between types of innovation—such as product, process, marketing, and organizational innovation—to ensure that data collected is meaningful and comparable across organizations and sectors.
• Standardized Data Collection: Use consistent data collection methods (like surveys and interviews) to gather information on inputs, activities, outputs, and impacts related to innovation. This ensures transparency and reproducibility.
• Inclusivity Across Sectors: Capture data not just from manufacturing, but also from services and the public sector, recognizing that meaningful innovation often happens beyond traditional R&D labs.
• Focus on Novelty and Implementation: Track both new-to-the-world and new-to-the-organization innovations, noting that adaptation and diffusion are just as crucial as invention itself.
• Capture Barriers and Enablers: Record both successful and unsuccessful innovation activities, as well as the barriers encountered (such as funding shortages, regulatory hurdles, or skills gaps).
• Contextualization: Collect data on the overall environment influencing innovation, including market trends, company size, and collaboration networks.

By following these guidelines, organizations, policymakers, and researchers can generate reliable, comparable insights that not only benchmark progress but also guide future sustainable innovation efforts.

Corporations Leading Sustainable Innovation

Eco-Innovation: Powering Green Growth in Industry

Eco-innovation acts as a catalyst for sustainable progress within industries, enabling companies to reduce their environmental impact while maintaining competitiveness. By rethinking traditional business practices and integrating smarter, cleaner technologies, industries can significantly minimize waste, lower emissions, and conserve vital resources.

Whether it’s manufacturers using renewable energy to power their production lines, or supply chains embracing circular economy principles, eco-innovation paves the way for long-term growth that benefits both business and the planet. Companies that invest in sustainable product design, energy efficiency, and closed-loop systems are not just responding to environmental regulations but also future-proofing themselves in a world that increasingly values sustainable solutions.

Ultimately, eco-innovation doesn’t just result in greener operations—it underpins entire strategies for responsible growth, opening up fresh opportunities in emerging green markets and fostering a culture of continuous improvement across industries.

Corporate Social Responsibility and Innovation: A Resource-Based Perspective

From a resource-based theory perspective, corporate social responsibility (CSR) is much more than a box-ticking exercise—it can actually fuel innovation within organizations. By investing in responsible practices, companies build valuable assets such as strong reputations, trusted relationships with stakeholders, and organizational goodwill. These unique resources become difficult for competitors to replicate, acting as a foundation for ongoing innovation.

CSR encourages organizations to rethink their existing processes, adopt sustainable technologies, and stay ahead of regulatory changes—ultimately leading to the development of new products, services, and business models. For example, when companies prioritize environmentally and socially conscious operations, they’re more likely to tap into new markets, form strategic alliances, and attract forward-thinking talent. All this provides them with a competitive edge grounded in capabilities that support both responsible growth and creative problem-solving.

How Corporate Maturity Drives Social Responsibility and Sustainable Innovation

As companies evolve and mature, their approach to social responsibility and sustainable innovation often deepens. More mature organizations typically have established processes, greater stakeholder engagement, and the resources needed to move beyond compliance and into leadership roles in sustainability.

• Stronger Commitment: Well-established businesses tend to invest more in sustainable innovation, recognizing its impact on both the environment and long-term business performance.
• Enhanced Capabilities: With experience comes the ability to integrate sustainability into core operations, fostering a culture where eco-friendly practices are part of everyday decisions.
• Holistic Impact: Mature companies often see corporate social responsibility (CSR) not just as a set of isolated initiatives, but as a strategic pillar that can drive market growth, improve risk management, and reinforce their brand.

In short, the longer a company has been around, the greater its potential to implement meaningful, scalable interventions that benefit both society and the bottom line.

How Innovation Strengthens Corporate Social Responsibility and Business Performance

Innovation plays a pivotal role in enhancing the connection between a company’s corporate social responsibility (CSR) efforts and its overall performance, especially in the context of sustainable development. By introducing new processes, products, or technologies, organizations can amplify the impact of their CSR initiatives—making them more effective and measurable.

For example, when companies integrate innovative solutions into their CSR strategies—such as developing more energy-efficient manufacturing methods or utilizing renewable materials—they not only reduce their environmental footprint but also improve operational efficiency. This, in turn, can lead to cost savings, stronger brand loyalty, and increased investor confidence.

Moreover, the application of innovation in CSR often helps companies stay ahead of evolving regulations and consumer expectations. Pioneering new eco-friendly products, harnessing digital tools for transparent reporting, or adopting circular business models can set businesses apart from competitors, unlocking new market opportunities while delivering social and environmental benefits.

Ultimately, innovation acts as a catalyst: it magnifies the positive outcomes of CSR activities, transforming them from one-off projects into core drivers of business success and sustainable growth.

Best Practices to Achieve Successful Sustainable Innovation

How Knowledge Management Fuels Sustainable Innovation

A cornerstone of fostering sustainable innovation within organizations—especially in small and medium enterprises—is robust knowledge management. By systematically capturing, sharing, and leveraging collective expertise, organizations can unlock new avenues for creative solutions and efficient processes. Effective knowledge management not only streamlines communication and breaks down silos but also accelerates the adaptation of best practices, making it easier to integrate sustainability principles into everyday operations.

Research demonstrates that when organizations actively invest in knowledge-sharing systems and continuous learning, they create an environment where innovation can thrive. Employees are empowered to experiment with new ideas, collaborate across departments, and ultimately develop products or services that are both innovative and sustainable. In short, knowledge management acts as the engine that drives sustainable innovation forward—ensuring that great ideas don’t just happen, but endure and evolve.

Our planet is under huge pressure to provide for the needs of the world’s population. Businesses must innovate and company executives must recognize that not only is Sustainable Innovation essential but that Sustainability equals innovation. They are two parts of the same equation without which businesses will fail.

Engaging Stakeholders for Impactful Results

Successful sustainable innovation requires more than just internal initiatives—it depends on the active involvement of stakeholders. Understanding which sustainability initiatives your stakeholders value most can amplify both impact and buy-in. This means reaching out to customers, suppliers, community members, and partners to explore and rank the issues that matter most to them. By building strong relationships and fostering open dialogue, companies can create holistic solutions that benefit both business and society.

Collaboration as the Cornerstone

Ideation and collaboration for sustainable innovation are facilitated best through Ezassi software //ezassi.com/innovation-management/ solutions. Leveraging collaborative platforms makes it possible to integrate diverse perspectives, tap into collective expertise, and accelerate the development of innovative solutions.

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Integrating insights from stakeholders and adopting structured approaches to collaboration have been shown—across industries from energy to consumer goods—to drive meaningful progress on sustainability goals, ensuring both long-term viability and positive brand reputation.