A framework for environmental evaluation of business models: A test case of solar energy in Kenya

Abstract

Business models have the potential to deliver environmental sustainability in companies through innovative approaches to creating and delivering value. Business model innovation has been shown as a means to integrate circular economy principles into companies' operations. Several frameworks have been created to guide the transition from traditional to circular business models. However, there is a need for a framework that quantitatively evaluates business models to inform the transition based on their relative environmental performance in creating and delivering value. This study presents a new framework for evaluating the Environmental performance of Business Models (EBuM). The EBuM framework consists of sequential steps of life cycle assessment, participatory decision-making, and business model innovation. It enables organisations to integrate environmental considerations in their decisions and operations. The framework was applied to solar energy companies in Kenya. Life cycle assessments of the photovoltaic systems were conducted through the lens of business models of participating companies to provide insights into the hotspots of environmental impacts. Each company participated in two workshops to evaluate the potential of business model innovation in mitigating the environmental impacts of their activities. Findings showed that the environmental impacts of incumbent business models were generally higher than of their circular economy-oriented substitutes. Business model innovation could, for example, lower the climate change potential by 12 %–55 % and the metal depletion potential by 40 %–70 %. While the framework has been applied to solar energy companies, it can be applied to other business models in different sectors.