In today’s fast-changing business environment, sustainability has evolved from a compliance requirement into a powerful driver of innovation. Forward-thinking companies across Europe are leading the way: redefining their business models, streamlining operations, and launching new products, all by embedding sustainability into their core strategies.

To understand how this shift is playing out in practice, osapiens surveyed 250 senior leaders across six major European markets. The findings are clear: companies that treat sustainability as a catalyst for innovation are setting themselves apart and setting the pace.

Sustainability: From Compliance to Competitive Advantage

Sustainability is no longer viewed as a limitation. It’s an opportunity. According to our latest research, 81% of sustainability leaders across Europe say that sustainability initiatives are driving both innovation and competitive advantage.

Alberto Zamora, Co-Founder and CEO of osapiens, captured this mindset shift in the report’s foreword:

“When I speak with business leaders across Europe, one thing comes up time and time again: sustainability has become a strategic priority. But turning that ambition into action is not easy. The biggest hurdle many companies face is data, more specifically, how fragmented it is.”

The message is straightforward: businesses that move beyond reporting for compliance and instead use sustainability insights to drive strategy are gaining a significant edge.

The Innovation Gap: What Sustainability Leaders Do Differently

So, what exactly sets sustainability innovators apart from the rest? Our report finds that 65% of companies in the DACH region have already driven product innovation through sustainability initiatives. France is catching up with 40%, while Spain (31%), Benelux (28%), and Italy (21%) are showing promising momentum.

Sustainability leaders tend to share three core traits:

• Strategic Integration
  Sustainability isn’t tacked onto the business, it’s woven into it. Leaders integrate sustainability into product development, supply chain design, and long-term planning.
• Proactive Investment
  Rather than waiting for deadlines, these companies act early. They invest in automation, build internal infrastructures, and prepare ahead of regulation deadlines, giving them time to focus on innovation, not just compliance.
• Cross-Functional Responsibility
  Innovation thrives when sustainability is embraced across departments. Leaders create a shared culture of accountability, enabling smarter decisions based on transparent, unified data.

From Data Gaps to Digital Gains: Overcoming the Innovation Blockers

Despite growing ambition, many companies still struggle with the basics. Our report reveals that nearly one in three businesses say supplier compliance is their biggest challenge when it comes to sustainability reporting.

In complex, deep value chains, achieving transparency is particularly difficult. Nearly a quarter of companies across Europe say they lack confidence in their ability to achieve full supply chain visibility, a critical factor for reporting, risk management, and innovation.

Outdated systems, siloed data, and manual processes are slowing progress. But there is a clear path forward.

Automation as an Accelerator of Innovation

Digital tools are helping businesses turn complexity into clarity. In fact, 64% of companies in Europe are either already using or planning to invest in automation for sustainability reporting. Automation not only improves data quality and reduces manual effort; it unlocks real-time insights that power innovation. Businesses can spot inefficiencies, assess risks earlier, and act faster on emerging opportunities.

However, a digital divide remains. While the DACH region leads with 88% automation adoption, Benelux lags behind at just 36%. This isn’t just a tech gap; it’s a strategic gap. Companies with lower automation adoption risk slower reporting cycles, missed insights, and a widening gap to competitors already using automation to drive efficiency and innovation. In today’s market, waiting means losing ground.

Proof in Practice: How Leaders Are Innovating Differently

Several industry leaders across Europe are already turning sustainability into a powerful competitive advantage through automation and strategic reporting:

• hagebau minimized manual effort in sustainability reporting and successfully completed its Double Materiality Assessment, a core requirement for CSRD compliance.
• Betty Barclay centralized supplier data, automated risk analysis, and enhanced supplier collaboration by digitizing its due diligence process.
• Hirschvogel implemented automated supplier assessments, improving data quality and increasing supplier acceptance of sustainability requirements across its network.
• Lohmann & Rauscher automated risk analysis to tackle complex healthcare regulations, boosting supply chain transparency and operational efficiency.
• Pfalzwerke streamlined compliance efforts to drive sustainability and operational efficiency through automation and supplier audit optimization.

These companies demonstrate that when sustainability data is consolidated, accessible, and actionable, reporting ceases to be a burden and instead becomes a launchpad for continuous innovation and sustainable growth.

Ready to Innovate? Download the Full Report

Our comprehensive report, The State of Sustainability Reporting in Europe, provides deeper insights, regional benchmarks, and actionable strategies to turn sustainability reporting into your innovation powerhouse.