Corporate social responsibility (CSR) is a practice of companies on their way towards sustainability. It allows them to measure their impact on environment and society, and to create a balance between economic, social and environmental aspects. Becoming more and more sustainable means that companies need to find new ways of operating throughout the whole value chain that creates competitive advantage by providing an innovation opportunity. Innovation that concerns environmental as well as economic impact of the product/service on the society; that is called eco-innovation. Eco-innovation can be a guarantee of sustainable competitive advantage (SCA) to the companies that practice sustainability. The purpose of this master thesis is to investigate the reasons companies practice sustainability and whether or not sustainability is a driver of innovation and competitive advantage. Since the global company IKEA is among top sustainability leaders in the Scandinavian region, we decided to study this company for our research. Qualitative research and case study design were chosen as appropriate research methods to conduct this study. The global company ‖IKEA‖ was chosen as the case for the empirical studies of this thesis.