Business model life cycle assessment: A method for analysing the environmental performance of business

Abstract

This paper introduces business model life cycle assessment (BM-LCA), a new method for quantifying the environmental impacts of business models. Such a method is needed to guide business decisions towards decoupling economic activity from environmental impact. BM-LCA takes the business model itself as the unit of analysis and its economic performance as the basis of comparison. It can be applied to any type of business model involving material or resource use. In BM-LCA, monetary flows are coupled to material and energy flows. The methodology expands on conventional life cycle assessment (LCA) by elaborating the goal and scope definition and dividing it into two phases. The first descriptive phase details the business models to be compared. It includes a mapping of product chain actors and identifying business operations and transactions related to the product. The second coupling phase defines a profit-based functional unit and sets up the coupling equations expressing the economic relations to the product. Thereafter, conventional LCA procedures are followed to assess environmental impacts. The key innovation on LCA methodology is the development of a functional unit that captures the economic performance of a business model and links it to a product system. BM-LCA provides thus an important link between LCA and business competitive advantage.