Sustainability has long been portrayed as a bureaucratic formality, an ethical obligation or, at best, a chapter on corporate reputation. Today, that narrative is redundant: the ecological and energy transition has become the main driver of competitiveness for the manufacturing sector and for the country as a whole. In a global context where access to capital, acquisition of talent and resilience of supply chains depend on the capacity to generate long-term value, Italy finds itself at a crucial juncture.
Paolo Taticchi, Professor of Strategy and Corporate Sustainability, and Co-Director of the UCL Centre for Sustainable Business at the UCL School of Management in London and Knight of the Order of Merit of the Italian Republic, teaches and applies a pragmatic, scientific and measurable approach to the transition. In this interview for Lightbox, Mr Taticchi outlines the factors driving the paradigm shift for businesses and sets out the framework for transforming the DNA of “Made in Italy” – long characterised by quality and circularity – into a genuine data-driven industrial strategy.
From sustainability as a cost to the scientific measurement of impacts: Professor Paolo Taticchi analyses how decarbonisation, the circular economy and social inclusion are redefining the rules of global business and the future of Italian supply chains.
How has the transition become the key driver of competitiveness for businesses, also for a country such as Italy?
«For many years, we all viewed sustainability as a cost or, at best, as a moral obligation. Today, that narrative has been superseded by the facts. The transition has become the key driver of competitiveness because it is changing the very rules of the game: who has access to capital and at what cost; who remains part of the value chains of major international groups; who attracts the best talent; and who reduces their exposure to energy, climate and regulatory risks.
In my work with businesses, I often refer to five key factors that explain why sustainability is a worthwhile investment: cost reduction, risk management, innovation and new markets, access to capital, reputation and the ability to attract talent. None of these are ethical arguments: they are all economic in nature. And this is precisely where the paradigm is shifting.
For Italy, the situation is even more particular. We have few natural resources and our energy costs are structurally higher than those of our competitors: efficiency, the circular economy and renewables are not an ideological choice – they're a matter of industrial survival. At the same time, our SMEs are deeply integrated into global supply chains: when a major German or American client asks for supply chain emissions to be measured, sustainability effectively becomes a prerequisite for remaining in the market. The good news is that we start with an advantage. 'Made in Italy' has always stood for quality, durability, craftsmanship and a connection to the community: values that are deeply sustainable. When it comes to recycling and the circular economy, we are among the best in Europe. The challenge now is to translate this DNA into strategy, data and innovation».
Decarbonising the country requires industrial-scale speeds; how can we reconcile this with the need to ensure an inclusive transition that does not create new inequalities?
«I believe that the disjuncture between speed and inclusivity is largely a false one. A transition that leaves behind regions, workers and families is not only unfair: it is fragile. It creates resistance, fuels opposition and ultimately slows things down. We have seen this in Europe, from France’s 'Yellow Vests' to the farmers’ protests. In other words, speed depends on inclusivity, not the other way round.
I can see three practical ways of reconciling these two requirements. Firstly, there is the issue of skills: the retraining of workers must be planned before a plant is transformed or closed down, not afterwards. Businesses, trade unions, universities and institutions must be brought together around the same table. The ecological transition is also taking place alongside the digital transition and the development of AI, and this makes the issue of work even more central. The second concerns supply chains: large companies cannot simply pass on obligations and costs to their suppliers; they must support them with funding, technology and know-how. In a country like Italy, where SMEs are so prevalent, the transition is either supply-chain-led or it is not. The third is targeted public policy: European instruments, starting with the European Climate Fund, must be used wisely to protect vulnerable families and the most exposed regions, ranging from traditional industrial districts to Southern Italy.
Then there is a cultural aspect. We must stop portraying the transition solely as a series of sacrifices and start promoting it also as a development project: new professions, new industries, lower energy bills in the long term, and more liveable cities. People accept change when they see its benefits, not when they are forced to accept it».
You are an advocate of scientific and measurable sustainability. At a time when the market is saturated with “green” messaging and European regulations on ESG criteria are becoming stricter, what key metrics do companies need to focus on to demonstrate a genuine and not merely reputational impact?
«I want to point something out first. European regulation is moving in two different directions. Reporting has been simplified, with the Omnibus package reducing the scope of the businesses concerned. But as regards communication, the rules have become much stricter: the European directive came into force just a few days ago, prohibiting generic and unverifiable environmental claims – such as 'eco-friendly' or 'zero-impact' – based solely on carbon offsetting. The message is clear: you can communicate less, but what you do communicate must be true and measurable. Simplification does not mean 'anything goes'.
That said, there is no one-size-fits-all metric: the starting point is always a materiality analysis – understanding which impacts really matter to that business. But in my view, there are certain indicators that distinguish genuine sustainability from mere window-dressing. The first one is emissions across the entire value chain, not just direct emissions: for most companies, the bulk of their impact lies within Scope 3, i.e. in suppliers, logistics and product use. And the reduction targets must be aligned with the science and verified by third parties, as is the case with the Science Based Targets Initiative. The second indicator is intensity of resource use – energy, water and materials – per unit of value produced, together with the circularity rate. The third, and perhaps the most revealing, is where the money goes: what proportion of investments and revenue is aligned with the European taxonomy. A strategy that is not reflected in the business plan is merely communication. The fourth area concerns people: safety, training, the gender pay gap and working conditions throughout the supply chain. The fifth is governance: what proportion of management remuneration is linked to measurable sustainability targets.
My advice to companies is simple: measure what matters, not what is easy to measure. And beware of the opposite risk to greenwashing – known as 'greenhushing': when companies do good things but don't publicise them for fear of getting it wrong. Silence also costs in terms of competition».
Your appointment as a Knight of the Order of Merit of the Italian Republic honours a career dedicated to promoting a culture of sustainability. How much has awareness of corporate social responsibility grown in Italy, and what are the main cultural barriers we still need to overcome?
«This honour has moved me deeply, and I feel it should be shared with my students, my colleagues and the many companies I have worked with over the years. As an Italian who conducts research and teaches abroad, it also has special significance for me: it is confirmation that you can contribute to your own country even from afar.
Awareness has increased enormously. Fifteen years ago, corporate social responsibility in Italy was often equated with philanthropy or social reporting; today, sustainability has become an integral part of boardrooms, business plans and relations with banks and investors. Italy has also pioneered Benefit Corporations in Europe, and there are now thousands of them. And the younger generations of entrepreneurs, managers and consumers regard it as a natural part of doing business.
However, there are still significant pockets of cultural resistance. The first is to treat sustainability as a bureaucratic formality: producing reports rather than changing the business model. The second is short-term thinking: many sustainable choices take three to five years to pay off, and not all companies are used to thinking in those timeframes. The third is a culture that is more focused on communication than on measurement, which gives rise to greenwashing and, nowadays, greenhushing. The fourth concerns skills and governance: in many family businesses, sustainability hinges on the generational handover, and that is where training is needed. Finally, we must avoid falling prey to the polarisation we see in other countries. Sustainability is neither a 'right-wing' nor a 'left-wing' issue: it is about good management. And, ultimately, culture is changed through education. That is why I continue to believe that schools, universities and business schools have a crucial role to play».