Topic 1 Characteristics of sustainable business models

There are numerous challenges and pressures on businesses to be ready for whatever the future holds. Sustainability should not be seen as just another buzzword, but an integral part of any business model. A sustainable business model focuses on value – the value it can add to stakeholders, the environment and society – whilst continuing to make a profit, improve and grow.

✔Just like any business model, it needs to be commercially successful, so it should have a value proposition and describe how this should be delivered.

✔It needs to be future ready, so it should be able to succeed in a world of changing prices for energy and commodities, not to mention operate in a volatile world, both environmentally and socially.

✔It must look at its role within a society and the environment. It is not possible to be a sustainable business within an unsustainable economy. For example, does it rely on nature-providing services or materials being free?

✔ It needs to explain how you will be competitive and how you will create the required conditions to be part of a sustainable society.

Organisations have to look at all the drivers and reasons for sustainability, but it is up to them how they adapt their business models to incorporate them. There are many tools and approaches that can be used. However, all sustainable business models have some common features.

A sustainable business model (SBM) considers a wide range of stakeholder interests, including environment and society. This can help to embed sustainability into the business purpose, then into processes, and explore what the key drivers are for competitive advantage. 

  • It defines how materials can be maximised and more energy-efficient.
  • It defines how value can be created from waste, like recycling, cradle-to-cradle initiatives.
  • It pays attention to social value and environmental issues.
  • It explores cooperation and partnerships, and co-production of value.
  • it encourages sufficiency, so understanding when needs are met. 

A sustainable business model recognises and represents the contexts in which it exists, particularly its relationship with society and the environment, and takes responsibility for the part it plays within these contexts. 

Source: Bocken (2014) – A canvas for sustainable business models.