Everything you need to know about sustainable business models

There is a lot of talk about sustainability and changing how we operate businesses in recent times. Studies show that if we don’t change anything in the way humanity functions and consumer trends continue, the Earth will be out of resources in approximately 27 years¹. Research published in “Decade of Disruption: Future of the Sustainable Workplace in the Age of Covid-19 and Climate Change” shows that 72% of multigenerational respondents stated that they were concerned about environmental ethics and almost two-thirds (65%) of respondents said that they were more likely to work for a company with strong environmental policies. Climate change and social equity are increasing in importance for younger employees².

While sustainability is generally marketed towards manufacturing processes and systems, true sustainability isn’t just for large corporations. In fact, businesses of any size can work toward a sustainable business model by following specific practices and adopting a sustainable strategy. By incorporating sustainability at the core of the business model, you can make a profit and be socially responsible.

How?
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. A sustainable business model is a company’s plan for making a profit sustainably, i.e. protecting people and the environment. It identifies the products or services the business sells, its target customers and the associated costs, supply and distribution chain. These businesses monitor the impact of their operations to ensure that their short-term decision-making also benefits long-term goals for resilience and sustainability³.

The four keys:

1. A sustainable business model is commercially profitable.
2. A sustainable business model can succeed far into the future.
3. A sustainable business model uses resources it can utilize for the long term.
4. A sustainable business model gives back.

Let us have a look at an example to illustrate this further in practice. Looking at the case of a new European startup in the tech and waste management space, WiSort. They develop high-tech hardware and software solutions for public spaces in order to improve the quality of waste and optimize the user’s experience while providing quantitative data analytics to collaborators for a better and more sustainable separate collection. By enabling accurate sorting at the source of waste collection, they enhance recycling rates by decentralizing and improving the sorting process from the beginning of the recycling value chain. Further to make the business’s computing eco-friendly, they implement cloud computing by allowing their employees to work remotely

At every step of their business model, their stakeholders and the earth is thought of and taken care of. Managing the balance between being commercially viable and staying sustainable is the ultimate goal. For advertisers, their product is also an ideal canvas for ads as well as a source for the collection and analysis of large-scale data. Through their unique business model, they are able to work towards the same.

In collaboration with Out Of Home Advertising agencies, they engage in the direct sale of the bin to display advertisements and offer subscriptions to display uniquely targeted ads. It helps the owners of the establishment where the product is placed by improving the levels of hygiene, recycling and optimising logistics subscriptions for smart full/empty status monitoring.

This holistic approach to sorting, recycling and data analysis and collection is an ideal foundation for a sustainable business model:

1. It is commercially viable for all parties involved.
2. It is a model based on a long-term approach rather than one dependent on limited/non-renewable resources. This makes it a model that can succeed far into the future and is based on long-term resource utilisation.
3. And by taking care of their stakeholders at every step of their process (be it employees or the environment or other collaborating companies), they are truly walking the walk.

As the climate crisis worsens, more and more companies need to employ a sustainable business model at every stage of their business process. It is heartening to see the new generation of entrepreneurs recognise that and recalibrate their model to focus on giving back to the environment.

Sources:

1. The 17 goals | sustainable development (no date) United Nations. Available at: https://sdgs.un.org/goals (Accessed: 01 July 2023).
2. McCloskey, S. (2022) ‘Development education in the age of COVID-19 and climate change’, Research Anthology on Environmental and Societal Impacts of Climate Change, pp. 472–492. doi:10.4018/978-1-6684-3686-8.ch024.
3. North, J. (2023) Sustainable Business Model Innovation, The Big Bang Partnership. Available at: https://bigbangpartnership.co.uk/sustainable-business-model-innovation/#:~:text=A%20sustainable%20business%20model%20is,costs%2C%20supply%20and%20distribution%20chain (Accessed: 01 July 2023).