Customer-driven sustainable business practices and their relationships with environmental and business performance-Insights from the European shipping industry

Understanding and meeting stakeholder demands for sustainability while striving for improved business performance (BP) presents a significant challenge. The shipping industry has been relatively slow in its sustainability efforts. However, it faces mounting pressure from various stakeholders, particularly customers (i.e., shippers directly or via logistics service providers), who increasingly demand reduced emissions from shipping operations. Consequently, environmental performance (EP) has become a key criterion in awarding shipping tenders, prompting shipping firms to adopt sustainable business practices (SBP). This study aims to investigate the relationships between customers' expectations (CE), the adoption of SBP and the EP and BP of European shipping companies. Structural equation modelling was employed to analyse the interrelationships among CE, SBP, EP and BP. The findings indicate a positive association between CE and the adoption of SBP, which in turn enhances EP and BP. Managers are encouraged to proactively allocate resources towards implementing SBP, as this not only improves EP but also enables better responsiveness to stakeholders' expectations, leading to increased profitability, customer satisfaction and corporate image. These outcomes yield benefits for all stakeholders involved in the European freight transport ecosystem.