How to Create a Sustainable Business Model
A sustainable business benefits your customers without jeopardizing the planet or future generations..
Creating a sustainable business model is a top priority for many companies. A sustainable business helps the planet and may prove more successful in the long run; customers want to work with companies that care about making a positive contribution to the world.
Sustainability isn’t just for large corporations. Businesses of any size can work toward a sustainable business model by following specific practices and adopting a sustainable strategy.
What is sustainability?
Sustainable means the ability to be maintained at a certain rate or level, and sustainable development meets current needs without compromising future generations’ ability to meet their own needs.
However, we must dig a little deeper to understand how the concept of sustainability is relevant to business development.
What is a sustainable business model?
To Rex Freiberger, president of Superlativ Media, a sustainable business model helps generate value for everyone involved, without draining the resources that help to create it.
“A business model meant to capitalize on a trend isn’t sustainable, for example, because the social resources that get it started won’t exist in years or even months,” Freiberger said.
Lia Colabello, managing principal of Plastic Pollution Solutions, noted that there’s a difference between a sustainable business model — a business that will likely achieve profitable growth — and a business model that prioritizes sustainability.
“A sustainable business model is what every business leader hopes to achieve — a business that will turn a profit quickly and stay afloat for the long term,” Colabello explained. “A business model that prioritizes sustainability is one that, at a minimum, considers all stakeholders, assesses and addresses environmental impacts, and is transparent and thorough in its reporting.”
Eco-friendly packaging practices are a way to commit to sustainability. Other methods include careful resource usage and donations to worthy organizations.
What makes a sustainable business model work?
There are four key elements of a sustainable business model.
1. A sustainable business model is commercially profitable.
You can make a profit and be socially responsible . No business can succeed or scale unless it attracts customers. What is your value proposition? Who are your target customers ? Why is your business valuable, and what niche do you fill?
2. A sustainable business model can succeed far into the future.
A trendy business or one that relies on limited resources may be profitable for a few months, but how will it fare in a year or two? Resource availability and pricing are never guaranteed or fixed; you don’t want to build your castle on a sinking rock.
3. A sustainable business model uses resources it can utilize for the long term.
You can’t have a sustainable business model without sustainable resources. Many business activities are limited by finite resources or exceptionally high prices. On the other hand, some resources may be readily available yet environmentally harmful.
Palm oil is a famous example of a cheap and plentiful resource. However, farmers are razing acres of land and causing severe environmental destruction by cultivating the crop. Cheap resources may be tantalizing for business, but consider the big picture instead of taking a shortcut now.
4. A sustainable business model gives back.
One theory is that a truly sustainable business model is one that gives as much as it takes. This concept is called the cyclical borrow-use-return model.
Bob Willard, expert and author on quantifiable sustainability strategies, contrasts this model with the current “linear take-make-waste model” that so many modern businesses are built upon, which he said is “culpable for contributing to [this world’s] unsustainability.”
Instead of taking from the Earth, a sustainable business “borrows” resources with the intent to replenish them. This concept of responsible consumption is one that both businesses and consumers can promote and practice.
Reducing resource burn — wasted time, money and other resources — is another way a business can prioritize sustainability.
What is a sustainable strategy?
A sustainable strategy takes the big picture into account. “A sustainable strategy is one that understands the flow of ‘in’ and ‘out’ — not just cash flow, but again, the resources, both tangible and intangible, that are required to create the product or service,” Freiberger explained.
Colabello noted that the most effective sustainability strategies start with an organization’s purpose. She encouraged businesses to ask these questions, similar to what you’d ask when crafting a vision or mission statement :
- Why does the organization exist?
- What problem is it solving?
- How is it going to improve the world, environment and society?
“From there, a strategy can emerge that engages the entire brand ecosystem — internally, the supply chain, its communities and its industry,” Colabello said. “The approach is prioritized and diagrammed out, complete with goals, KPIs [key performance indicators] and a timeline. These are communicated both internally and externally, in keeping with transparency.”
Why do we need sustainable business models?
There are many ways to approach the issue of sustainability, but the simplest one, which can unite all stakeholders, is this: Kind businesses attract more customers. According to the 2022 Global Buying Green report , 86 percent of consumers under 45 were willing to pay more for sustainable packaging, and 68 percent purchased items in the past six months based on companies’ sustainability credentials.
It’s OK to be open about your sustainability goals and use your sustainability as a selling point. Customers will ask, and the friendlier you are about it, the more likely they will be to share that news with their friends.
But maybe you’re not motivated entirely by money. Perhaps you’re driven by the desire to be the change you’d like to see in the world.
After all, the larger a business grows, the greater its impact is on the world and the people around it. And it’s better to start sustainably than to make the switch 10 years down the line — or when stakeholders begin pushing back on unreasonable business practices.
Going green can boost business and profits. Businesses are marketing green innovation to show consumers they prioritize environmental concerns.
How can you start and maintain a sustainable business model?
Getting started with a sustainable business model can be straightforward. Consider the following guidelines.
1. Plan your resource usage.
Consider the resources your business requires to operate, and then do the following:
- Make a list of the raw materials you’ll need. This list will vary dramatically by business type. Software-as-a-service companies, for example, don’t require the raw resources that clothing brands do.
- Consider where your materials might be sourced. Who is making or harvesting your product materials? How are they being sold?
- Consider where the resources are coming from and how they are being transported. How far do they have to travel to arrive at your home or warehouse? How can you cut down on fuel miles? What are the riskiest resources on your list, and how can you increase their productivity while lessening your dependence on them?
After you address your resource usage, outline your manufacturing and business processes. Ask yourself these questions:
- Which manufacturing processes are the most wasteful? How can you mitigate the adverse effects of these processes?
- For physical materials, is it possible to source locally?
- How are you packaging your products? (Sustainable, biodegradable packaging can reduce the amount of trash stuck in landfills.)
- Which materials on your list are the riskiest or least sustainable? How might you replace them? Could you replace them now?
- What are the end products of these processes? How can you reuse waste material? Does it have to be thrown away?
- Can the produced waste be used as a resource or be fed into a different process to be used again? How can you reduce unusable waste?
- Where can you reduce waste? How can you stretch your raw materials? Can you lower the number of resources used to create a specific product while maintaining its quality?
- What are the labor conditions like? Are your laborers being paid fairly? Is their quality of life improving or worsening because of your business processes? Is their time being respected?
To make your business’s computing eco-friendly , implement cloud computing, allow your employees to work remotely, and eliminate paper from your workflow.
2. Consider alternative forms of company ownership.
The traditional top-down business model can create unreasonable wage gaps between those at the highest rungs of the ladder (CEO, other C-level executives, founders, managers) and those at the lowest (laborers tasked with creating raw materials or carrying out the manufacturing processes). Including everyone in your sustainability goals can help you keep your business on track and give those who are typically disadvantaged a larger say.
3. Engage your customers.
Going green can improve your brand reputation among consumers, but your dedication to sustainability may result in higher prices. But that’s OK; in a compelling blog post, series of posts or dedicated brand story page , tell your customers why they’re paying more for your products.
You might choose to engage customers by pledging a percentage of revenue to support a charity or by offering different shipping or packaging options. Customers who love your product can be converted into brand ambassadors when you create messaging that resonates with them.
If you involve your customers in your discussions about sustainability, they will become more invested in your company’s success and your products. You could also consider crowdsourcing sustainability ideas from consumers through a forum or online group.
Sustainable businesses must lead with transparency when dealing with customers and shareholders. This means sharing wins and being honest when things don’t work out as planned.
What roadblocks are there to a sustainable business model?
Building a sustainable business can be daunting. If your business is stuck, you may struggle with one or more of these issues:
1. You hold innovation meetings, but ideas don’t go anywhere.
Many good ideas arise when founders or leaders get together at a workshop or meeting. However, you must nurture these ideas and draft a plan of action.
2. Ideas are not implemented.
Another issue founders face is that the plans for change are never implemented. This could be because it seems too challenging to change the status quo or because the members of the company aren’t yet convinced of the need for a greener, kinder business model.
3. The implemented business models fail in the market.
Two of the most common reasons businesses fail to move toward sustainability include the wrong mindset and a reluctance to dedicate resources to change.
To address these issues, find your allies — those who believe sustainability is essential for the company’s bottom line and the larger world — and connect with them. Together, you can remove or alter harmful, outdated systems and encourage innovation.
Practicing and following through with your sustainability goals helps consumers feel closer to you and instills more trust in your brand. This is crucial at a time when customers expect more warmth and honesty from companies.
Why is sustainability important in business?
Shel Horowitz, an expert on green and transformative business profitability, raised three points about why sustainability is crucial in business:
- Sustainability allows you to be here decades from now because you’ve created something of lasting value.
- Sustainability makes you much more attractive in the eyes of customers, employees and other stakeholders who actively want to do business with companies that think beyond the single bottom line.
- Sustainability helps the planet and its creatures heal from the abuse humans have piled on it, especially in the past 250 years or so.
Aside from businesses’ immense environmental impact, Colabello noted these forces putting pressure on companies to build robust sustainability strategies:
How is a business sustainable?
Freiberger believes a business can make itself sustainable by focusing on the bare essentials it needs to survive and then growing from there. Make long-term projections, and keep an eye on the distant future instead of focusing on more immediate profits, he advised.
As part of making your business sustainable, consider these statistics from the SUMAS Sustainability Management School , and determine where you can cut back to reduce your business’s carbon footprint :
- An estimated 5 trillion plastic bags are used worldwide each year.
- 400 million tons of plastics are produced globally every year.
- Globally, only 9 percent of plastic ever produced has been recycled; 79 percent can now be found in landfills, dumps or the environment; and 12 percent has been incinerated.
- With rapid population growth and urbanization, annual waste generation is expected to increase by 70 percent from 2016 levels to 3.4 billion tons in 2050.
- If it continues at the same rate, the plastic industry will account for 20 percent of the world’s total oil consumption by 2050.
- The construction and later demolition of buildings produce 40 percent of all waste.
If you are thinking about implementing a sustainable business model, consider the short-term expenses you will incur. However, these costs are a small price to pay for a better future and a compelling brand value for increasingly eco-conscious consumers. In other words, sustainability sells.
Jamie Johnson contributed to this article.
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Related Expertise: Social Impact , Business Model Innovation
Four Steps to Sustainable Business Model Innovation
April 29, 2021 By David Young and Marine Gerard
This article is part of an ongoing series that describes the concept of “Sustainable Business Model Innovation” (SBM-I) and how companies are putting it to use.
You may have noticed that every day there’s another announcement about companies making new climate commitments, asset managers outlining their plans for ESG integration, or regulators proposing new disclosures or extending producers’ responsibilities. Corporate coalitions like the World Economic Forum International Business Council and the US Business Roundtable endorse a more stakeholder-inclusive corporate capitalism while industry coalitions work to solve their members’ shared sustainability challenges. And employees and consumers call on employers and brands to take environmental and social challenges seriously. All of this makes clear that we have entered a new era for business, one in which sustaining competitive advantage requires companies to transform their business models for sustainability.
Company leaders need a broader, more systemic understanding of these dynamic sustainability challenges and the ways that their companies can play a part in addressing them. Fortunately, as some farsighted businesses are discovering, the most powerful opportunities for profitable innovation are embedded in these same challenges. Let’s consider three examples.
The first is Telenor, the leading Norwegian mobile operator. In 2008, having entered Pakistan three years earlier, it joined forces with the microfinance bank Tameer. With support from the Bill and Melinda Gates Foundation, the International Finance Corporation (IFC), and the Consultative Group to Assist the Poor (CGAP), they launched a new service called Easypaisa, providing mobile-based financial services to the unbanked and underbanked. By the end of 2019, Telenor Microfinance Bank (the result of Telenor’s acquisition of Tameer) boasted the largest branchless banking service in Pakistan, growing its Easypaisa mobile wallet user base to 6.4 million, its depositor base to 17 million, and the transactions volume through its agent network to about PKR 1 trillion (approximately $6 billion). This service has significantly advanced financial inclusion in Pakistan and established Telenor as a major telecom enterprise there.
The Secrets of Sustainability Front-Runners
- How to Tell If Your Business Model Is Creating Environmental and Societal Benefits
- How to Tell If Your Business Model Is Truly Sustainable
- Why the New Competitive Advantage Demands Sustainability
- The Quest for Sustainable Business Model Innovation
To maintain competitive advantage, companies must transform their business models for sustainability.
Or consider Ajinomoto, a global food and biotech company based in Japan. It produces seasonings, sweeteners, and pharmaceuticals. As part of its 2030 vision and growth strategy to “help one billion people worldwide lead a healthier life,” Ajinomoto is exploring a new "personalized nutrition for health" business. Combining its core nutrition expertise and new technology, the company aims to provide customers with digitally enabled diagnostics, analytics, and product recommendations. These would guide people toward the kind of well-balanced amino acid intake that boosts cognitive and physiological functions and helps prevent aging-related diseases like dementia—a prominent societal issue in Japan.
Another example is Indigo Ag, a US-based agricultural technology startup that was valued at $1.4 billion in 2017. In 2019, the company launched a service called Indigo Carbon to help incentivize farmers to remove carbon from the atmosphere and sequester it in their soil. The service provides technologies and recommendations for regenerative agriculture practices. The ultimate goal is to pay farmers for each ton of carbon captured and then sell certifications to companies looking to offset their carbon footprints. By supporting a transparent carbon credit marketplace, Indigo Carbon creates benefits for all participants: the farmers, the companies buying the offsets, the planet, and its own business.
What do these three companies have in common? Regardless of industry, geography, or size, they (and dozens of others like them) are innovating business models—building on and expanding beyond their core assets and capabilities—to address significant environmental and societal challenges in their local contexts. In this way, they create new sources of value and competitive advantage for their business.
The Four-Step Innovation Cycle
In our research, we have studied more than 100 cases of companies that are practicing what we call “Sustainable Business Model Innovation” (SBM-I). We have found that the most advanced of these companies, the “front-runners,” combine environmental, societal, and financial priorities to re-imagine their core business models and even shift the boundaries of competition.
One might expect the front-runners to consist mainly of smaller enterprises, branded through their visible social or environmental missions. But most of them are actually global corporations that have gradually developed new business models that create both sustainability and long-term competitive advantage.
The core practice for SBM-I is an iterative innovation cycle, shown in Exhibit 1. With each round, the company gains scale, experience, and market presence for its initiative; these reinforce both the business advantage and the environmental and societal benefits generated.
1. Expand the Business Canvas
So how can you bring this cycle to life in your company? The first step is to develop a rich understanding of the broader stakeholder ecosystem in which the company operates and of the environmental and societal issues and trends that might affect this ecosystem. As part of this diagnosis, you explore the potential impacts of ecosystem dynamics and issues on your business model. This will allow you to identify a range of business vulnerabilities and opportunities tied to environmental and societal issues. Some of these are good starting points for focused SBM-I.
More specifically, we recommend the following:
- Expand the business canvas by mapping the wider ecosystem of stakeholders and societal issues in which the business operates. Ask yourself: Who are the key stakeholders in the system? What are the material environmental and societal issues and trends? How do stakeholders and environmental and societal issues directly or indirectly impact all the different parts of the business model?
- Stress-test the business model (current or potential) within this broader map. How do stakeholder dynamics and environmental and societal issues constrain or hold back your business model? Where do limitations in the system create vulnerabilities for the business model?
- Extrapolate trends and build materiality scenarios. Look at today’s environmental and societal trends and think about how they might evolve over time. In addition, build scenarios to envision completely different, more extreme versions of the future (as opposed to linearly projecting trends) to stretch your thinking. And then, under these scenarios, ask yourself: How might environmental and societal issues change over time? How might stakeholders’ perceptions of and attitudes toward those issues shift? What would be the effects on the system map and the business model?
- Explore scaling up the business. Imagine the business model at different scales of activity. Suppose your business grew three- or five-fold over the next few years. Where might breaking points or opportunities arise? What happens to the externalities the business creates? How do risks and opportunities change?
- Identify innovation opportunity spaces or “strategic intervention points” (SIPs). These are points at which targeted action or innovation could alter stakeholder dynamics, positively impact the environmental or societal issues, reduce the vulnerabilities of the business model, or even create new business value opportunities.
Look for difficulties, gaps, and risks to arise from the analysis. For example, your company’s own lines of business might contribute to the environmental or societal issue and impact the growth of the business today. Also, don’t just rely on your own thinking. Cultivate outsiders who can provide complementary and thought-provoking perspectives.
In a recent interview , Christine Rodwell, former vice president of business development cities at Veolia, explained that “to walk the talk on sustainability, companies need to listen to their external stakeholders. They should create a committee of critical friends (across public, social, and academic sectors) who will challenge them and advise them to develop business solutions that create meaningful environmental and societal benefits.”
To understand what expanding a business canvas looks like in practice, consider the hypothetical example of a consumer packaged goods (CPG) manufacturing company engaged in a real-world dilemma: the toxic effect of plastic packaging on natural habitats, particularly in the world’s oceans. About 18 billion pounds of plastic waste enter the world’s oceans each year. This is equivalent to five grocery bags of trash on every foot of coastline. Plastic pollution causes extensive damage to life on land and at sea, including toxic contamination, strangulation, blockage of digestive passages, and endocrine-related reproductive problems for people as well as animals. Concerns about this problem reached a tipping point in the mid-2010s, as studies confirmed the damage.
As industrial leaders in this field know all too well, the complexities of gathering, cleaning, sorting, recycling, and reusing plastics have made it costly and difficult to address this issue. Companies that step forward with effective and financially viable solutions will not only gain enormous goodwill but are also likely to build high-growth businesses.
But where do you start? And where do you focus innovation efforts and investments to tackle such a complex, multifaceted environmental issue? Reflecting the SBM-I cycle approach, Exhibit 2 shows what a stakeholder-centric systems map for the plastics issue could look like from the point of view of a CPG company. This map uses basic systems dynamics principles to capture the most significant interrelationships among the CPG company, the environmental issue at stake, and key stakeholders (consumers, policymakers, civil society, waste collectors and recyclers, and plastics manufacturers). The arrows show patterns of cause and effect. For example, when urbanization increases, so does the cost of landfilling.
The power of this diagram (versus more traditional, linear depictions) comes in part from its ability to reveal where delays, rebound effects, or tipping points might be active in the system. For instance, the node labeled “environmental and recycling awareness” will influence changes in several consumer habits—but only after a delay. Such awareness cannot be seen as a quick-fix solution, but over time it will help change the dynamics of the entire system.
Companies that bring viable solutions to the plastics problem will gain enormous goodwill and likely build high-growth businesses.
The boxes in the exhibit represent the opportunity spaces or strategic intervention points (SIPs) that become evident during this step. In this example, a few of the SIPs for our CPG company are as follows: shifting to new packaging formats; setting up plastic collection initiatives; lobbying for government programs like deposit return systems; joining precompetitive coalitions that invest in recycling infrastructure and new recycling technology; and educating and nudging consumers to consume and dispose of packaging in more sustainable ways.
2. Innovate for a Resilient Business Model
The first step in the cycle will have led you to identify the opportunity spaces that hold potential for both financial returns and societal value. You must then transform your business model, or imagine an entirely new one, so that you can seize these opportunities. In this second step, you innovate and develop new aspects of that new business model. You are seeking to bypass current constraints, break tradeoffs, deploy technological advances, and perhaps integrate activities that were previously kept separate. You should ideate a new business model to integrate and reinforce both business advantage and environmental and societal benefits.
In related research , we introduced and defined seven archetypal business models that optimize for both societal and business value. Here we illustrate how they might apply to the plastics waste challenge.
- Own the origins. Change production inputs to generate societal and environmental benefits. For instance, HP is working with waste collectors in a partnership with the First Mile Coalition in Haiti. HP has invested $2 million in a local facility to produce clean, high-quality recycled plastics that can then be used as input in an array of HP personal computer products and ink cartridges, reducing the environmental footprint of those products. Four years after its launch in 2016, the program had already diverted approximately 1.7 million pounds (771 metric tons) of plastic materials (equivalent to more than 60 million plastic bottles) from waterways and oceans and created income opportunities for 1,100 Haitians (with 1,000 more expected in coming years). Thanks to this and other efforts, HP boasted the world’s most sustainable PC portfolio in May 2020. This included, for example, the HP Elite Dragonfly, the first PC manufactured with ocean-bound plastic.
- Own the whole cycle. Create environmental and societal impact by influencing the product usage cycle from cradle to grave. Since the 1990s, Grupo AlEn, a leader in home cleaning products based in Monterrey, has invested and scaled up its in-house plastic recycling operations to become one of the largest plastic recyclers in Mexico. AlEn now operates 30 routes and 6,200 collection points in the Monterrey area, recycling more than 50,000 tons of PET and HDPE per year. This business expansion has given AlEn an exclusive supply of recycled plastics, enabling it to create distinctive, greener packaging at a relatively stable cost.
- Expand societal value. Expand the environmental and societal value of products and services, and capture value in pricing, market share, and loyalty. In 2018, PepsiCo acquired Sodastream, the world’s leading at-home sparkling water maker. Building on this technology, PepsiCo has begun to bring packaging-free, customizable beverages to workplaces, college campuses, and airports. This new business positions PepsiCo to win in the increasingly personalized beverage market and to save an estimated 67 billion single-use plastic bottles by 2025.
- Expand the value chains. Innovate by layering onto the business ecosystems of customers or of partners in other industries. In Chile, Algramo’s innovative bulk distribution system replaces single-use plastic with RFID-equipped reusable containers. Since 2013, the startup has scaled up its business by partnering with more than 2,000 family-owned stores across Santiago. They dispense affordable food and staple products “al gramo” (Spanish for “by the gram”) and reward customers for reusing containers. Algramo’s model not only helps the environment but also benefits the urban poor, who previously had to pay high prices for small quantities of products, in wasteful, individually wrapped packets.
- Re-localize and regionalize. Shorten and reconfigure global value chains to bring societal benefits closer to home. In Brazil, BASF has developed a solution to a local issue: waste certificate fraud. Some collectors and recyclers claim credits for recycled materials that they didn’t actually process or that aren’t actually recycled. Partnering with Kryha, a digital blockchain studio, and Recicleiros, an NGO that supports waste collectors and their cooperatives, BASF developed an online platform called ReciChain. This platform enables accurate and secured data tracking throughout the recycling value chain, to improve the quality of operations and guarantee the validity of manufacturers’ certificates and claims.
- Energize the brand. Encode, promote, and monetize the full environmental and societal value of products and services, and use that leverage to engage customers in novel ways. The innovative manufacturing company 3M released the latest version of its Thinsulate insulation product in 2019. This is “100% recycled featherless insulation” made from recycled plastic bottles. Building on this accomplishment, 3M worked with the high-end apparel brand Askov Finlayson to create “the world’s first climate-positive parka,” producing 3,000 parkas in 2019 as an inspiring demonstration project.
- Build across sectors. Create new business models in collaboration with government and nonprofit organizations, particularly in rapidly developing economies, to improve the business ecosystem and societal proposition. Together, SC Johnson and the social enterprise Plastic Bank have opened nine recycling centers in Indonesia to collect and recycle plastic before it reaches the ocean. This partnership also plays an important societal role, helping families in impoverished areas who collect plastic waste by buying it at a premium from them. In 2019, the partnership announced a ground-breaking, three-year deal to create 509 plastic collection points, including locations in Thailand, the Philippines, Vietnam, and Brazil. In aggregate, these points are expected to collect 30,000 metric tons of plastic over three years—the equivalent of stopping 1.5 billion plastic bottles from entering waterways and the ocean. On the business side, among other benefits, this collaboration will secure a steady supply of high-quality recycled plastics and help SC Johnson meet its 2025 packaging goals.
These seven archetypes can be starting points for developing your own business model innovation. Adapt them, and combine several together to develop a more comprehensive solution to environmental and societal issues relevant to your enterprise. Interestingly, among the 102 in-depth SBM-I cases that we explored in our research, 75% of the SBM-I leaders (the “front-runners”) combine three or more archetypes. This contrasts with less than 30% in the two other groups: the “ecosystem leaders” and the “initiative leaders,” whose efforts tend to be more narrowly focused.
In addition to exploring the possibilities inherent in these seven archetypes, take inspiration in the lessons learned from SBM-I front-runners. Front-runners see sustainability as a source of competitive advantage. In line with their long-term strategies, they continuously iterate and fine-tune their business models, always seeking to deepen their beneficial impact. They explicitly seek to understand and fix the root causes of environmental and societal challenges—as some of our plastics recyclers did, addressing not just the environmental concerns but also the social aspects of the issue. These companies also use digital technologies wherever possible, to break economic constraints and unlock new solutions. They practice an intensive form of stakeholder engagement: partnering with nonprofits and governments, operating across organizational boundaries, and pooling resources with other enterprises, even competitors. Last but not least, they experiment with new forms of value capture, such as blended financing sources, to de-risk and amplify their own investments. After all, notwithstanding their environmental and social track records, the front-runners are still in business to show a profit and return investment to shareholders.
3. Link to Drivers of Value and Competitive Advantage
In the third stage of the cycle, test, iterate, and refine your business model ideas or concepts (from the second step) to ensure that they will yield the environmental and societal benefits intended, and that the benefits will translate into value and advantage for the company. A business with weak profit margins cannot invest in innovation to amplify and scale environmental and societal benefits.
The objective of this step is to keep assessing and reengineering the business model, so that it continually improves the resilience of the business and the benefits to society. The following questions, based on our research into the characteristics of robust, resilient business models , can help you navigate this part of the process:
- Can the business model scale effectively? Can it be replicated across all your business units or the markets you serve, without diminishing returns?
- Will the business model differentiate your brand or product and make it more competitive in the marketplace?
- Will it reduce the risk of commoditization, by being hard for others to imitate? Will its distinctiveness help you retain some control over pricing?
- Can it leverage network effects? For example, can it attract the kinds of customers and suppliers that make other customers feel compelled to join?
- Does the business model harness business ecosystems—including the larger industry, the value chain, and everyone who interacts with your products, services, and practices—for advantage and sustainability?
- Does the business model naturally create meaningful environmental and societal benefits?
- Will the environmental and societal benefits remain durable against changing trends over time, even as the business model scales up?
- Does the business model increase returns to shareholders as well? Are the financial benefits linked to the environmental and societal benefits in some significant way?
- Finally, does the model animate your company’s purpose? Does it boost engagement and loyalty between the company and its employees, customers, investors, and other stakeholders?
Exhibit 3 shows how a company might assess its business model against these nine questions. The resulting footprint reveals how robust and resilient the business model is and identifies where it could be improved to unlock further advantage and value for the company.
The fuller the footprint, the better. Among the front-runners in our sample, 90% score “high” on at least five of the nine attributes, as opposed to only 30% in the other groups. The front-runners also show superior average scores on every single dimension.
4. Scale the Initiative
The full potential value of sustainable business model innovation is achieved only when the new business model is brought to scale: engaging people in the company, across the supply chain, in the company’s networks, and in its ecosystems to expand impact and advantage.
To accomplish this, companies can leverage three enablers. First, partnerships with other organizations, within or across industries or sectors, can help a company pool resources, fill capability gaps, and unlock new markets. Almost 90% of the front-runners have broadened their efforts this way. Second, digital technology (leveraged by 80% of the front-runners) can help create new distribution channels that reach previously unserved or underserved populations at a fraction of the cost of their predecessors. Third, companies that adopt SBM-I tend to develop cultures and leadership values that attract and engage people inside and outside their boundaries. Indeed, all of the front-runners explicitly mention the environmental and societal impact they seek to deliver in their vision, purpose, or mission statements.
Consider the example of BIMA, a mission-driven provider of mobile-delivered health and insurance services that started operations in Ghana in 2010. Its innovative digital technology platform and its partnership model (which comprises telecom providers, mobile money providers, and insurance underwriters) have enabled it to rapidly scale its innovative business model. BIMA now provides affordable, easy-to-manage life and health insurance to more than 35 million low-income customers across ten emerging economies. BIMA’s customers have access to its services through their mobile phones. Many of them are lower income families who earn less than $10 a day. About 75% of them are obtaining insurance for the first time in their lives. These societal benefits are at the core of BIMA’s strategy and mission; the company’s website says explicitly that its “purpose is to protect the future of every family.”
The four-step innovation cycle we propose in this article offers companies a way to systematically integrate and solve for social and business value in one business model. Most of the companies that begin this journey are already skilled at optimizing for business advantage. They may already recognize the importance of taking into account their environmental and societal impacts. With this approach, they are now ready to take on innovation for a business that optimizes for both business and social value.
The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring and developing valuable new insights from business, technology, and science by embracing the powerful technology of ideas. The Institute engages leaders in provocative discussion and experimentation to expand the boundaries of business theory and practice and to translate innovative ideas from within and beyond business. For more ideas and inspiration from the Institute, please visit our website and follow us on LinkedIn and Twitter .
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Working Definitions of “Sustainable Business Model” & “Business Model for Sustainability”
by Florian Lüdeke-Freund
Research on “sustainable business models” (SBM) and “business models for sustainability” (BMfS) is gaining momentum and shows first traits of a field in its own right ( Lüdeke-Freund & Dembek, 2017 ). An important questions in this area is:
How to define a “sustainable business model” or “business model for sustainability”?*
Such a definition would be an important ingredient for further conceptual and theoretical work.
Below you find a list of definitions that emerged and evolved in our research over the last ten years. They take different theoretical starting points (such as re-defining customer value or connecting to the business case for sustainability) and emphasise different business model functions (such as creating competitive advantage or supporting different kinds of innovation).
This list is neither complete nor does it provide final or ultimate definitions. It should rather be seen as a collection of snapshots of an ongoing research process and an impulse for your own work in this field.
Our latest thinking on this issue has been presented in this posting .
(*A question directly related is: What is the difference between an SBM and a BMfS? Is this all just words, or does it point to some profound differences?)
6. Definition (2016) – BMfS to offer a sustainable value proposition and maintain or regenerate natural, social, and economic capital
“A business model for sustainability helps describing, analyzing, managing, and communicating (i) a company’s sustainable value proposition to its customers, and all other stakeholders, (ii) how it creates and delivers this value, (iii) and how it captures economic value while maintaining or regenerating natural, social, and economic capital beyond its organizational boundaries.”
- Main purpose defined as maintaining or regenerating natural, social, and economic capital through offering a sustainable value proposition to cutomers and further stakeholders
- Inspired by classic business model theory, stakeholder theory (Freeman, 1984), and a focus on critical capitals as in ecological economics (cf. Ehrenfeld & Hoffman, 2013)
- Puts particular emphasis on major business model functions, which are decribing, analyzing, managing, and communicating (cf. Osterwalder et al., 2005)
Schaltegger, S.; Hansen, E. & Lüdeke-Freund, F. (2016): Business Models for Sustainability: Origins, Present Research, and Future Avenues (Editorial), Organization & Environment, Vol. 29, No. 1, 3-10. DOI | ResearchGate
5. Definition (2014) – SBM to create positive value for all stakeholders
“[A] sustainable business model can be defined as a business model that creates, delivers, and captures value for all its stakeholders without depleting the natural, economic, and social capital it relies on.”
- Main purpose defined as “creating, delivering, and capturing value for all business model stakeholders while acknowleding natural and social/societal limitations”, i.e. co-create societal and business value through considering any effect on any possible stakeholder, while the involved (external) systems’ limitations are considered
- Inspired by stakeholder theory and a focus on critical capitals as in ecological economics (cf. Ehrenfeld & Hoffman, 2013)
- Tries to connect the value creation function of business models with the idea of (strongly) sustainable capitals management (cf. Upward & Jones, 2016)
Breuer, H. & Lüdeke-Freund, F. (2014): Normative Innovation for Sustainable Business Models in Value Networks, in: Huizingh, K.; Conn, S.; Torkkeli, M. & Bitran, I. (Eds.): The Proceedings of XXV ISPIM Conference – Innovation for Sustainable Economy and Society, 8-11 June 2014, Dublin, Ireland. ResearchGate | SlideShare
4. Definition (2013) – SBM for technological, organisational, and social innovation
“… sustainable business models with a focus on technological innovation are market devices that overcome internal and external barriers of marketing clean technologies; of significance is the business model’s ability to create a fit between technology characteristics and (new) commercialization approaches that both can succeed on given and new markets.
Business model change on the organizational level is about the implementation of alternative paradigms other than the neoclassical economic worldview that shape the culture, structure and routines of organizations and thus change the way of doing business towards sustainable development; a sustainable business model is the aggregate of these diverse organizational aspects.
… sustainable business models enable social entrepreneurs to create social value and maximize social profit; of significance is the business models’ ability to act as market device that helps in creating and further developing markets for innovations with a social purpose.”
- Main purpose defined as supporting different kinds of sustainability innovation (technological, organisational, and social); differentiating these innovation functions allows for a more encompassing view on sustainable business models
- Theoretically inspired, inter alia, by Doganova and Eyquem-Renault’s (2009) definition of what business models do, and Chesbrough and Rosenbloom’s (2002) definition of the business model as a mediating, value-creating device
- Tries to create a bridge between the mainstream business model discourse and the field of sustainability innovation research; proposes general topics for a possible research agenda
Boons, F. & Lüdeke-Freund, F. (2013): Business Models for Sustainable Innovation: State-of-the-Art and Steps towards a Research Agenda, Journal of Cleaner Production, Vol. 45, pp. 9-19. DOI | ResearchGate
3. Definition (2012) – BMfS to create business cases for sustainability
“Based on the understanding of a business case for sustainability, a business model for sustainability can be defined as supporting voluntary, or mainly voluntary, activities which solve or moderate social and/or environmental problems. By doing so, it creates positive business effects which can be measured or at least argued for. A business model for sustainability is actively managed in order to create customer and social value by integrating social, environmental, and business activities.”
- Main purpose defined as “supporting activities which solve or moderate social and/or environmental problems”, i.e. co-create societal and business value through the support of (mainly) voluntary, measurable, and deliberate entrepreneurial activities aiming for business cases for sustainability
- Based on the business case for sustainability concept (BCfS) (Schaltegger & Wagner, 2006, 2011)
- Tries to make a theory-based and direct connection between the BCfS, corporate sustainability strategies, and business model innovation
Schaltegger, S.; Lüdeke-Freund, F. & Hansen, E. (2012): Business Cases for Sustainability: The Role of Business Model Innovation for Corporate Sustainability, Int. Journal of Innovation and Sustainable Development, Vol. 6, No. 2, pp. 95-119. DOI | ResearchGate
2. Definition (2010) – SBM to create extended customer value
“A business model that creates competitive advantage through superior customer value and contributes to a sustainable development of the company and society can be interpreted as a sustainable business model … Since customer value is the strategic nexus of any business model, sustainable business models are crucial for creating extended customer value for individual customers and society, i.e. private and public benefits.”
- Main purpose defined as “creating extended customer value”, i.e. co-creating societal and business value through an extended approach to customer value – for the focal firm itself, for its customers in a narrow sense, and for society at large (incl. stakeholders who are non-customers)
- Based on conceptions of customer value and public customer value (Meynhardt, 2009; Meynhardt & Stock, 2009)
- Tries to broaden the common value creation function of business models
Lüdeke-Freund, F. (2010): Towards a Conceptual Framework of Business Models for Sustainability, in: Wever, R.; Quist, J.; Tukker, A.; Woudstra, J.; Boons, F. & Beute, N. (Eds.): Knowledge Collaboration and Learning for Sustainable Innovation, ERSCP-EMSU Conference, 25-29 October 2010, Delft, The Netherlands. Delft: Delft University of Technology. ResearchGate
1. Definition (2009) – BMfS to overcome the public/private benefit discrepancy
“A business model for sustainability is the activity system of a firm which allocates resources and coordinates activities in a value creation process which overcomes the public/private benefit discrepancy. That is, a business model for sustainability is the structural template of a business logic which creates the business case for sustainability. This can be achieved by
- extending value propositions to integrate public and private benefits (product/value proposition pillar),
- making customers involved and responsible partners in value creation processes (customer interface pillar),
- taking advantage of partnerships which enhance resources and activities (infrastructure pillar),
- evaluating combined measures like Environmental Shareholder Value and Environ-mental/Social Business Model Value (financial aspects pillar), and
- dedicating resources and activities to secure free, legitimate and legal behaviour and to explore currently neglected opportunities in non-market spheres (non-market pillar).”
- Main purpose defined as “overcoming the public/private benefit discrepancy”, i.e. co-creating societal and business value through business cases for sustainability
- Based on Osterwalder’s (2004) earlier BMO approach
- Tries to extend the basic four-pillar-concept by adding a fifth “non-market” pillar according to the Sustainability Balanced Scorecard concept (Schaltegger & Dyllick, 2002)
- Merges Amit and Zott’s (2010) activity system with Osterwalder’s structural template view
Lüdeke-Freund, F. (2009): Business Model Concepts in Corporate Sustainability Contexts: From Rhetoric to a Generic Template for “Business Models for Sustainability”. Lüneburg: Centre for Sustainability Management. ResearchGate
Chesbrough, H. & Rosenbloom, R. (2002): The role of the business model in capturing value from innovation: evidence from Xerox Corporation’s technology spin-off companies, Industrial & Corporate Change, Vol. 11, No. 3, 529–555.
Doganova, L. & Eyquem-Renault, M. (2009): What do business models do? Innovation devices in technology entrepreneurship, Research Policy, Vol. 38, No. 10, 1559–1570.
Ehrenfeld, J. & Hoffman, A. (2013): Flourishing: A Frank Conversation About Sustainability. Sheffield: Greenleaf Publishing.
Osterwalder, A. (2004): The business model ontology: A proposition in a design science approach. PhD Thesis. Lausanne: Universite de Lausanne.
O sterwalder, A., Pigneur, Y., Tucci, C.L., 2005. Clarifying Business Models: Origins, Present and Future of the Concept. Communications of the Association for Information Systems 16, Article 1.
Meynhardt, T. (2009). Public value inside: what is public value creation? International Journal of Public Administration, 32(3/4), 192–219.
Meynhardt, T. & Stock, R. (2009). Customer Value und Public Value. Der Kundennutzen im Bauch der Gesellschaft [Customer value for the society]. Marketing Review St. Gallen, (01-2009), 53–57.
Schaltegger, S. & Dyllick, T. (Eds.) (2002): Nachhaltig managen mit der Balanced Scorecard. Konzept und Fallstudien. Wiesbaden: Gabler.
Zott, C. & Amit, R. (2010): Business model design: an activity system perspective, Long Range Planning, Vol. 43, No. 2/3, 216–226.
Schaltegger, S. & Wagner, M. (2006): Managing and measuring the business case for sustainability. Capturing the relationship between sustainability performance, business competitiveness and economic performance, in: Schaltegger, S. & Wagner, M. (Eds.): Managing the business case for sustainability. Sheffield: Greenleaf Publishing, 1–27.
Schaltegger, S. & Wagner, M. (2011): Sustainable entrepreneurship and sustainability innovation: categories and interactions, Business Strategy and the Environment, Vol. 20, No. 4, 222–237.
Upward, A. (2013): Towards an Ontology and Canvas for Strongly Sustainable Business Models: A Systemic Design Science Exploration. Masters of Environmental Studies / Graduate Diploma in Business + Environment. Toronto: York University.
Upward, A. & Jones, P. (2016): An Ontology for Strongly Sustainable Business Models: Defining an Enterprise Framework Compatible With Natural and Social Science, Organization & Environment, Vol. 29, No. 1, pp. 97-123.
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According to my understanding the difference is below, but it would be great to get feedback from native speakers.
SBM- the aim is the sustainability of the particular organization, i.e. the duration of existence of the company that is employing this BM. It does not need to be related to environmental aspects. Similarly as you can say “sustainable competitive advantage”.
BMfS- the aim is the sustainability of society (locally, nationally, or globally). This includes the economic, environmental and social aspects. Scalability and replicability are crucial here. If this is achieved, then from the global perspective it does not matter if the organization that for the first time used it, eventually stops existing.
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This is a book for sustainability not about sustainability
Sustainable Business Model Design presents 45 patterns for the design of next generation business models for sustainability.
What sustainable business models do we already have, how do innovative companies and visionary entrepreneurs implement them, what sustainability challenges have they solved and what innovation opportunities have they embraced, sustainable business model design provides answers to questions such as these. discover the sustainability potential of patterns such as differential pricing, customer financing, social freemium, subscription, crowdfunding, or green razor and blade..
Dr. Julia Binder , Prof. of Sustainable Innovation and Business Transformation at IMD
Bruno Oberle , Director General IUNC, International Union for Conservation of Nature
Connie Hensler , Global Director Environmental Management & Product Stewardship, Interface, Inc.
Pratima (Tima) Bansal , Canada Research Chair in Business Sustainability, Ivey Business School
Dorothée Baumann-Pauly , Director Geneva Center for Business and Human Rights & Research Director, NYU Stern Center for Business and Human Rights
Jan Auernhammer , Executive Director People-centered Business Design, Center for Design Research, Stanford University
S. Ramakrishna Velamuri , Professor and Dean, School of Management, Mahindra University
Oliver Gassmann , University of St. Gallen, author of ‘The Business Model Navigator’
The patterns
Sustainable business model design presents 45 business model solutions to ecological, social, and economic challenges. these 45 patterns help managers and entrepreneurs to develop new businesses that create sustainable value. three examples:.
Customer Financing
When potential customers cannot afford or do not want to purchase a new, uncommon, or radically different offering, the Customer Financing pattern can help. Leasing, renting, or progressive purchasing schemes can be a door opener for sustainable offerings.
Green Razor and Blade
Most companies still depend on growth – but how to avoid similarly growing negative impacts on the environment? The Green Razor and Blade pattern unbundles long-living products and short-lived consumables and thus allows mitigating the negative effects of growing businesses.
Social Freemium
Ecologically and socially superior offerings often face a lack of demand. Limited purchasing power of target groups or competitors’ lower prices can lead to critical market barriers. The Social Freemium pattern helps in overcoming these barriers with free basic offerings.
Download the new book preview, download a 75-page preview for free. it contains chapter 1 ‘introduction to sustainable business model design’, chapter 2 ‘background’, chapter 3 ‘understanding and navigating patterns’, and all patterns from group 1 ‘pricing and revenue patterns’. enjoy.
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Florian Lüdeke-Freund
Florian Lüdeke-Freund is Professor for Corporate Sustainability at ESCP Business School Berlin and founder of SustainableBusinessModel.org . He studies sustainable business models for more than a decade and published various highly-cited journal articles in this field, for example, in Business & Society, Journal of Business Ethics, Journal of Industrial Ecology, and Organization & Environment. As Associate Editor of the Journal of Business Models and Co-Chair of the International Conference on New Business Models he is passionate about developing a vibrant community of sustainable business model experts.
Henning Breuer
Henning Breuer is Professor for Business Psychology at HMKW Berlin, and runs a small innovation consultancy named UXBerlin. Since 2001 he works with large companies, public organisations, and start-ups, providing consulting on innovation management and culture, sustainable business models, future scenarios, and ethnography. Henning co-authored numerous scientific publications including a book on Values-Based Innovation Management. As an academic, he worked at the University of Chile (Santiago) and Waseda University (Tokyo).
Lorenzo Massa
Lorenzo Massa researches, teaches, consults, and speaks in the fields of strategy, innovation, design and sustainability. He is Managing Director of the Business Design Lab and Professor at Business School Aalborg University. Lorenzo is also member of the World Economic Forum’s expert network for Innovation and adjunct faculty for executive education at École Polytechnique Fédérale de Lausanne (EPFL), the International Academy of Sport Science and Technology (AISTS), Frankfurt School of Finance and Management as well as Bologna Business School (BBS).
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Over the years, researchers have presented different concepts regarding business models. There is no unanimity, but there is a general agreement that a business model is the representation of how a company conducts its business. Subsequently, interest in the topic has increased and has come to be considered by companies that, driven to incorporate a positive contribution to sustainability into their values, began to face economic development that considers social and environmental aspects instead of worrying only about profit for the shareholders.
1. Business Models
2. conceptual model, 3. sustainable business models, 4. business model canvas and sustainable business model.
5. Logistics, Supply Chain, and Sustainable Supply Chain
6. Innovation in Sustainable Management
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Consumers, investors, and partners are increasingly making decisions about your business based on sustainability. These stakeholders have always demanded value, quality, and speed. Today, a sustainable business model is just as important.
According to the old maxim, if you want something cheap and fast, it won’t be good. But if you value speed and quality, what you get won’t come cheap. Companies have long had to view their complex and nuanced priorities, goals, and KPIs through this reductive lens. Now, they also need to factor sustainability into this equation.
But consumers and stakeholders don’t want to pick between sustainability and speed, price, or quality. They want a sustainable business model as a default.
How to embed sustainability in your business – and bottom line
Sustainable business model: Value for all
The “shareholder value” model of capitalism can be blamed in part for our dedication to fast, cheap, or good.
The world’s major capital markets are dominated by this model, where a company’s success is measured only by how well it generates returns for shareholders. In the shareholder value model, firms need to consistently maximize shareholder return.
However, a new business model is on the rise and becoming pervasive in more markets, giving greater control to more than shareholders. The “stakeholder value” model advocates maximizing value for all stakeholders – including customers, employees, community members, and others – when making business decisions.
What sustainability means depends on who’s talking
While sustainability is more important than ever, it’s also more ambiguous than ever. Sustainability means something different to virtually everyone, and stakeholders’ concepts of sustainability may differ wildly from yours.
Your investors may be focused entirely on the sustainability of your supply chain, while consumers might prioritize eco-friendly products that reaffirm their own beliefs.
But beware: More-discerning consumers have coined the term “ greenwashing ” to describe companies who spend a lot of time and effort trying to make themselves seem sustainable without truly becoming sustainable.
You probably think plastic you throw into recycling bins will be… recycled. The reality, however, is the vast majority heads to the landfill — only around 5% of plastic is actually being repurposed, according to a Greenpeace report. Here’s why🧵 https://t.co/C7QsxonLJP — NPR (@NPR) October 25, 2022
Product packaging that merely looks “green,” paired with unfulfilled promises about your environmental impact, may do more harm than good when it comes to winning over these consumers.
Sustainability trends 2023: 7 ways retailers will make a difference.
Building a sustainable business model
Sustainability and the stakeholder value model go hand in hand. Companies that want to make their supply chains more sustainable often collaborate with a wide range of stakeholders including suppliers, distributors, retailers, local communities, technical experts, nongovernmental organizations, and governments.
A few steps are needed in order to build successful multi-stakeholder partnerships:
- An ambitious shared purpose and common goal
- A healthy dose of realism about the amount of time and effort required to achieve goals
- Mutual accountability and clear goals , roles, and responsibilities for each partner
- A governance mechanism to enable accountability and, potentially, an independent third-party partner to monitor and evaluate performance
- Time invested into building respect and understanding of each partner
Closed loop production: Sustainability across the supply chain
Determine your metrics
Environmental, social, and governance metrics (also known as esg metrics) can give investors a more holistic view of your company’s operations, including its investments in sustainability..
These kinds of metrics can help investors more accurately value these investments and ensure that companies aren’t judged purely on short-term financial results. To focus on your ESG metrics, you first need to define what sustainability means for you – and your stakeholders.
Win over all your stakeholders – be they consumers or investors – by investing in a wide range of sustainable opportunities, especially those supported by third-party sustainability organizations.
US companies can become “benefit corporations,” which are recognized for their established purpose of creating general public benefit. B corporations are legally required to consider the impact of their decisions – not only on their shareholders, but also on society and the environment.
Giants don’t leave (carbon) footprints. Future-proof your business – and the world. Start HERE .
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Sustainable business model innovation: exploring evidences in sustainability reporting ☆.
In order to incorporate sustainability into business, firms need to go beyond voluntary social and environmental initiatives. Sustainable business model (SBM) can support managers to better understand how it can contribution to global sustainable development through firm's value proposition and including methods of value creation, delivery and capture. In this sense, opportunities to innovations in firms’ SBM can be derived from the assessment of their business model using corporate sustainability as dominant paradigm. So, a comprehensive and integrative performance measurement framework for SBM is proposed to support the identification of sustainability innovations. In this context, the purpose of this paper is to explore the contributions and limitations of the proposed framework. The methodological approach chosen is secondary data analysis, by using content analysis to extract evidences from sources such as corporate websites, annual and sustainability reports of four industry group leaders according to Dow Jones Sustainability Indices in 2014. Two of them belong to consumer goods manufacturing and the others are retailers.
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Peer-review under responsibility of the International Scientific Committee of the 13th Global Conference on Sustainable Manufacturing.
The Sustainability Pack enables companies and startups to build a sustainable organisation. The patterns are based on a study by Carroux (2017) and Lüdeke-Freund et al. (2018). The goal of this study was the creation of a taxonomy for sustainable business model patterns, which can be used by scholars and practitioners from different disciplines and industries.
A sustainable business model pattern can be defined as follows: “A sustainable business model pattern describes an ecological, social, and/or economic problem that arises when an organisation aims to create value, and it describes the core of a solution to this problem that can be repeatedly applied in a multitude of ways, situations, contexts, and domains. An SBM pattern also describes the design principles, value-creating activities, and their arrangements that are required to provide a useful problem-solution combination.”
Carroux (2017) and Lüdeke-Freund et al. (2018) developed a review-based approach to create a Sustainable Business Models pattern taxonomy. It consists of the five steps “identifying and reviewing relevant literature”, “extracting SBM patterns from the literature”, “developing initial pattern groups”, “using the Modified Delphi Card Sorting method to create SBM pattern groups”, and “associating the SBM patterns and groups to sustainable value creation”. With the help of the Modified Delphi Card Sorting exercise and ten international experts, 45 business model patterns were classified into meaningful groups and were evaluated on their potential for sustainable value creation. The six major categories “patterns to support ecological effectiveness”, “social effectiveness”, “economic effectiveness”, “eco-efficiency”, “socio-efficiency”, and “integrative value creation” contain 11 thematic pattern groups, which you can see next to the graph above.
Try the Sustainability Pack and explore the universe of sustainable business models.
- Making your company more sustainable
- Creating sustainable startups
- Teaching sustainable business models
Lüdeke-Freund, F., Carroux, S., Joyce, A., Massa, L., & Breuer, H. (2018). The sustainable business model pattern taxonomy—45 patterns to support sustainability-oriented business model innovation. Sustainable Production and Consumption, 15, 145-162.
About the Creators
Florian Lüdeke -Freund is leading the Chair for Corporate Sustainability at the ESCP Europe Business School in Berlin and is academic director of the master in entrepreneurship and sustainable innovation. He is an expert in research and teaching on corporate sustainability management and sustainable entrepreneurship, with a particular focus on innovation and business models. As well as publishing numerous journal articles and book chapters on these topics, he has co-edited several journal special issues, including an Organization & Environment special issue on “Business Models for Sustainability”. His publications on sustainable business models are regularly among the most downloaded and most cited papers in their respective journals (e.g., Journal of Cleaner Production, Organization & Environment). Florian founded www.SustainableBusinessModel.org as an international research hub with 25 members from more than 10 countries.
Sarah Carroux is a research associate and doctoral candidate at the University of Hamburg. As member of the Chair of Management and Sustainability, led by Timo Busch, Sarah researches topics related to sustainable finance with a strong focus on impact investing as well as sustainable business models.
Alexandre Joyce , B.D.I., M.Sc.A., ADIQ, NPDP, works as an advisor in sustainable development for the Institute for Product Development (IPD). In concert with the leaders of the Quebec manufacturing industry, he helps innovation teams take environmental concerns into account during the design phase and integrate sustainability in their product development process.
Lorenzo Massa is adjunct professor at the University of Bologna, department of Management and faculty at EPFL-EMBA, at the École Polytechnique Fédérale de Lausanne. His research lies at the intersection of Strategy, Innovation and Sustainability. He holds graduate degrees with distinctions in Mechanical Engineering and a Ph.D. in Management from IESE Business School.
Henning Breuer is professor for business and media psychology at the University of Applied Sciences of Media, Communication and Management in Berlin and founder of UXBerlin – Innovation Consulting.
How It Works
Use the Pattern Pack to Build your Business Model
The Smart Business Modeler allows you to explore the different suitable business model patterns, gives you guidance and relevant information.
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Every time you drag&drop a pattern onto your business model canvas, our ‘wizards’ will indicate, which elements of your business model should follow that patterns’ logic and automatically insert the pattern where it is most-suitable.
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Sustainability isn't just for large corporations. Businesses of any size can work toward a sustainable business model by following specific
Four Steps to Sustainable Business Model Innovation ... such as blended financing sources, to de-risk and amplify their own investments.
by Florian Lüdeke-Freund Research on "sustainable business models" (SBM) and "business models for sustainability" (BMfS) is gaining momentum
What sustainable business models do we already have? How do innovative companies and visionary entrepreneurs implement them? What sustainability challenges
business models sustainable business models merger of companies logistics ... Des. 2017, 6, 6–8. Otola, I.; Grabowska, M.; Szajt, M. Value Composition for
Consumers, investors, and partners are increasingly making decisions about your business based on a sustainable business model.
Marly Monteiro deCarvalhoa ... Sustainable business model (SBM) can support managers to better understand how it can contribution to global sustainable
Sustainable Solutions for Your Business Model. The Sustainability Pack enables companies and startups to build a sustainable organisation. The patterns are
[8], provides a collection of the definitions to the concept. of sustainable business model. According to Lüdeke-Freund [13], sustainable
Sustainable business models (SBMs) draw on economic, environmental ... described from a value-based perspective (e.g. value proposition and