BEYOND COMPLIANCE: SUSTAINABILITY AS A DRIVER OF COMPETITIVENESS

Sustainability is increasingly becoming nonnegotiable in international trade and supply chains.

- By Subhashini Abeysinghe

Sri Lanka's path to competitiveness lies in aligning industry, innovation, and sustainability, encompassing ethical manufacturing, renewable energy, and responsible investment. FILE PHOTO

Companies and countries are integrating sustainable practices into their policies and mandates. For smaller developing countries like Sri Lanka, the shift poses both a challenge and an opportunity. The primary challenge is higher compliance costs, which can restrict market access, especially for small and medium-sized enterprises (SMEs).

Yet this very challenge can be transformed into an opportunity. By meeting—and, where possible, exceeding—sustainability requirements, Sri Lanka can position itself as a trusted and competitive partner. In a region dominated by larger neighbours with scale and cost advantages Sri Lanka cannot match, strong sustainability credentials could become a distinctive edge, helping the country stand out in global markets.

Four key forces drive this trend:

Consumer demand - A growing societal awareness of climate change and environmental issues has led to increased demand for sustainably produced goods. A 2024 PwC global survey of 20,000 consumers across 31 countries found that 80% of respondents are willing to pay a premium for sustainably produced goods.

Climate litigation - Grantham Research Institute on Climate Change and the Environment, in its "Global trends in climate change litigation: 2025 snapshot", noted a striking surge in climate litigation. The number of cases filed annually has more than doubled from 2014 to 2019, from just under 100 to over 200. In 2021, the cases filed surpassed 300. Climate activists increasingly target companies: around one-fifth of the climate cases filed in 2024 targeted companies, their directors, or officers.