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This chapter explores the strategic responsiveness of commodity multinationals operating in developing countries to the uncertainties raised by the emergent European Union (EU) sustainability regulation. The study applies deductive theory triangulation to derive five response propositions, subsequently contrasted with inductive insights from an exploratory single-case study. The research involves in-depth interviews with a mix of senior and middle management and numerous external stakeholders. Empirical findings are discussed through storytelling and retrospective sensemaking and cross-checked against corporate documents, archive material, and online articles for added validation. This chapter concludes that an authentic commitment to corporate social responsibility and creating shared value can enhance the multinational enterprise (MNE)’s resilience and responsiveness to regulatory uncertainty, especially when combined with early signal scanning and real options reasoning. Through varied, first-hand insights, the case study demonstrates the role of reputation, core values, and ethical leadership in support of effective stakeholder engagement capabilities and the MNE’s ability to develop viable collaborative solutions to uncertainties implied by evolving sustainability regulation and stakeholder expectations. Taking an evolutionary view, this chapter introduces a process perspective on sustainability transition, relevant to firms seeking a shift in focus from mere compliance toward strategic responsiveness founded on adaptability and renewal.

Published in June 2020, the European Union (EU) Taxonomy Regulation is an important tool for the reorientation of capital flows toward sustainability, establishing a classification system that enables investors to identify green economic activities. Confronted by the reporting demands of this regulation, companies are caught in a sustainability economic revolution. This study seeks primarily to understand firms’ responses to the EU taxonomy, and whether they recognize value creation opportunities by aligning market and nonmarket strategies with the taxonomy goals. For that, we conducted expert interviews and adopted a conceptual framework based on institutional theory, dynamic capabilities view and nonmarket strategy research. Our findings indicate that most firms respond reactively, while firms with sustainability-driven business models tend to respond in an anticipatory way, and firms with high greenhouse gas (GHG) emissions and low taxonomy eligibility in a defensive way. We also find evidence for mimetic isomorphism related to the influence of consulting and auditing services. Further, high levels of uncertainty, ambiguity and lack of clarity has a great impact on firms’ responses and motives. Finally, this study highlights the EU taxonomy considering a paradigmatic shift toward sustainability, which is not recognized by most firms. To this end, we find that most companies have not identified opportunities arising from nonmarket integration and, rather, see the taxonomy only as an extra regulation to be compliant with. Hence, we argue that it is crucial that firms contextualize the taxonomy within its larger institutional paradigmatic shift to capture the importance of going beyond mere compliance.