Business Models for Sustainability

Abstract

Human activity is increasingly impacting the environment negatively on all scales. There is an urgent need to transform human activity toward sustainable development. Business has a key role to play in this sustainability transition through technological, product and service, and process innovations, as well as innovative business models. Business models can enable new technologies, and vice versa. These models are therefore important in the transition to sustainability. Business models for sustainability, or synonymously, sustainable business models, take holistic views on how business is operated in relation to its stakeholders, including the society and the natural environment. They incorporate economic, environmental, and social aspects in an organization’s purpose and performance measures; consider the needs of all stakeholders rather than giving priority to owner and shareholder expectations; treat “nature” as a stakeholder; and take a system as well as a firm-level perspective on the way business is conducted. The research field of sustainable business models emerged from fields such as service business models, green and social business models, and concepts such as sharing and circular economy. Academics have argued that the most service-oriented business models can achieve a “factor 10” environmental impact improvement if designed the right way. Researchers have developed various conceptualizations, typologies, tools, and methods and reviews on sustainable business models. However, sustainable business models are not yet mainstream. Important research areas include the following: (a) tools, methods, and experimentation; (b) the assessment of sustainability impact and rebounds for different stakeholders; (c) sufficiency and degrowth; and (d) the twin revolution of sustainability and digital transition. First, a plethora of tools and approaches are available for inspiration and for creation of sustainable business model designs. Second, in the field of assessment, methods have been based on life cycle thinking considering the supply chain and how a product is (re)used and eventually disposed of. In the field of sufficiency, authors have recognized the importance of moderating consumption through innovative business models to reduce the total need for products, reducing the impact on the environment. Finally, researchers have started to investigate the important interplay between sustainability and digitalization. Because of the potential to achieve a factor 10 environmental impact improvement, sustainable business models are an important source of inspiration for further work, including the upscaling of sustainable business models in established businesses and in new ventures. Understanding how to design better business models and preempting their usage in practice are essential to achieve a desired positive impact. In the field of sufficiency, the macro-impacts of individual and business behavior would need to be better understood. In the area of digital innovation, environmental, societal, and economic values need scrutinization. Researchers and practitioners can leverage the popularity of this field by addressing these important areas to support the development and roll-out of sustainable business models with significantly improved economic, environmental, and societal impact.