When More Sustainability Isn’t Always Better for Business

International sustainability standards can help companies improve performance and boost market credibility—but there’s a tipping point where adding more standards starts to hurt, not help. This research, spanning 1,600 firms across 47 countries, reveals that while early adoption of standards lifts both real-world outcomes and market value, extra standards eventually create a “penalty zone” where actual performance keeps rising but investors respond negatively.

The Penalty Zone: Understanding Market Signals

After adopting two international sustainability standards, firms’ market value peaks—even if adding a third still improves sustainability. Beyond this point, investors begin to view additional standards as costly rather than beneficial, misreading deeper sustainability efforts as a drag on value. This disconnect between genuine sustainability progress and market perception forms a barrier for businesses willing to go further.

What This Means for Business and Policy

For business leaders and policymakers, the clear message is that more isn’t always better when it comes to sustainability credentials. Companies need to balance the costs and market signals of multiple standards, while regulators and investors should rethink how they evaluate sustainability so they don’t discourage progress. Fixing these market signals is key to accelerating business action on global sustainability challenges.