Is green the new gold? Being sustainable is glorious in name, but what is the cost for companies? This article explores how and when companies balance profit and planet.
[Hilda is currently pursuing a Bachelor of Law and Bachelor of Commerce, majoring in Accounting, at Monash University. She is passionate about examining how legal and financial frameworks influence corporate responsibility and sustainability. With a strong interest in ethical business practices, Hilda enjoys exploring the role of commerce in shaping a more equitable and environmentally conscious future.]
The adoption of greener practices have never been more apparent in the procedures of businesses, with a growing base of consumers seeking to engage with corporations that emphasise their corporate social responsibilities. However, the question of “is sustainability profitable?” exemplifies the true cost of being green, with companies facing higher price tags for their production processes and materials.
At the end of the day, companies embody a core objective to generate revenue, but this is often not met with high sustainability costs. This article explores an intersection between green and gold, with companies going all in on going green.
Renewcell: sustainability killed the cat
Sustainability, although glorious and appealing in its name, drives up production costs for companies. Renewcell is a prime example of such.
Renewcell embarked on a bold journey- to solely use textile waste to make second-hand clothing in the market (Daniilidou, 2024). However, the process needed to achieve this goal included implementing recycling technology that enabled these materials to turn into circulose, which Renewcell would then pass onto companies that manufacture yarns using a network of 150 suppliers (Daniilidou, 2024). The costs of going from vertical to circular proved to drive up the investment costs, especially with the lack of infrastructure to support the procedure of processing old clothing.
In 2024, Renewcell’s Chairman was faced with the harsh reality of this ideal, and declared bankruptcy, demonstrating its failure in changing the pace of the fashion industry (Daniilidou, 2024).
Renewcell’s ambitious sustainability goal was the forefront of revolutionising the fashion industry to move away from unethical, and environmentally harmful fast-fashion to sustainable materials. Is it possible to achieve both planet and profit?
Build Your Dreams (BYD): Going Green Means Making Green
BYD is a global forefront known for producing Electric Vehicles with a brand mission to provide families with ‘electric vehicles on the streets… (that) connect the city with zero emissions and zero pollution.’ (BYD, Brand Mission) BYD’s electric vehicles shift away from internal combustion engine vehicles that increase air pollution. The company states that its sales of electric vehicles equate to a carbon dioxide reduction of over 8 million tonnes (Business wire, 2023).
BYD did not stop there! BYD expanded into more sustainable sectors such as energy storage systems and solar panels, further demonstrating their success in leveraging sustainability to make profits.
Why did BYD drive ahead of Renewcell?
Vertical Integration
One key reason for BYD’s success is its vertical integration. BYD’s battery production, car manufacturing and assembly are all controlled internally. This allowed BYD to reduce production costs and avoid supply chain issues. On the other hand, Renewcell relied on suppliers, driving up costs, which was reflected in the pricing of its clothing. Customers were unwilling to pay the prices Renewcell offered, in a market full of cheaper fast fashion alternatives. BYD managed to maintain competitive pricing due to their vertical integration, ultimately driving their success.
Government Incentives and support
The Chinese government provided $3.7 billion to BYD in subsidies between 2018 and 2022 (Shan, 2024). This aids BYD to continue to offer competitive prices, giving it global recognition as one of the top selling automakers in the world (Nelson, 2025). Therefore, the subsidies encourage electric vehicles on the road as opposed to petrol cars that release carbon dioxide. Whereas, Renewcell received no such government support, forcing it to drive up prices to the extent customers were unwilling to pay for it.
Conclusion
Ultimately, sustainability has both shown to drive the success of companies like BYD, and lead to the financial collapse of companies such as Renewcell. Overall, two major reasons for the cost of sustainability leading to success are vertical integration and government support. For companies that fail to achieve vertical integration and government aid, it can be seen that such clean dreams have led to harsh realities. Nevertheless, it is completely possible to achieve green and gold, but such eco ideals need to be balanced with profitability.
References
Business Wire. (2023, December 12). BYD Highlights Leadership in Sustainable Solutions at COP28. Www.businesswire.com. https://www.businesswire.com/news/home/20231212056037/en/BYD-Highlights-Leadership-in-Sustainable-Solutions-at-COP28
Daniilidou, E. (2024, March 17). Renewcell’s Bankruptcy Shocked the Fashion World, Exposing Sustainability Crisis. Sustainable Lifestyle Hub. https://sustainablelifestylehub.org/2024/03/17/renewcells-bankruptcy-shocked-the-fashion-world-exposing-sustainability-crisis/
Shan, J. (2024). The Impact of Government Subsidies on Electric Vehicle Sales: A Regression analysis of BYD in China. SHS Web of Conferences, 207, 03017. https://doi.org/10.1051/shsconf/202420703017
Storz, N. (2025, January 29). What China’s BYD really wants from EV investments in Mexico. Atlantic Council. https://www.atlanticcouncil.org/blogs/energysource/what-chinas-byd-really-wants-from-ev-investments-in-mexico/
