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How companies can create a sustainable business model

19th November 2022 Print

Sustainability is emerging as an important aspect for businesses, especially with the growing concerns of climate change. Implementing a sustainable business model will not only help a given company reduce its carbon footprint, but it will also appeal to and attract consumers who are environmentally conscious and looking for sustainable companies. 

Therefore, how can companies achieve a sustainable business model?

What is a sustainable business model?

A sustainable business model should not be confused with a business model that prioritises sustainability. The former future-proofs a company, utilising resources without draining them, and adding value to the products or services the business offers, whereas the latter has short-term objectives and is only sustainable when it suits the company to be.

Academic literature also discusses a sustainable business model as one that gives back to its community or has a ‘shared value’. In essence, its practices provide a competitive advantage to the company whilst helping the environmental and even societal conditions of its local community.

It is no wonder, then, that a sustainable business model is more valuable and profitable than a business model that focuses on current trends. While trends constantly change, a sustainable business is set for the future, building a long-term competitive advantage.

So, how can companies create such a business model? 

Understanding the ecosystem of your business

First and foremost, it is important to think about the operations of a company and investigate any environmental or societal problems that arise as part of this. Think about both direct and indirect impacts, as well as potential issues in the future as your business grows. In developing a deeper understanding of the company’s ecosystem, you will be able to spot its weaknesses and vulnerabilities that will help shape a sustainable business model. 

The goal in mind

It is easy to state that your company cares about the environment and is aiming to become more sustainable, but how can you show this to consumers? 

Companies need to consider what their ultimate goal is. Or if not a goal, then clear targets that they are attempting to meet and work towards. 

For example, reaching zero carbon emissions by a specific year, or no plastic packaging in all stages of logistics. With these, your company as a whole can progress and be motivated in achieving its set goals or objectives. 

Encouraging stakeholders to be eco-friendly

Sustainability begins with the right mindset, and this way of thinking should lead to behaviours that support sustainable practices. By encouraging this behaviour to company stakeholders, you are already taking a step in the right direction. 

In particular, listening to employees’ ideas and feedback can help foster an environment where employees feel empowered to share ideas and the company as a whole can be held accountable. This is incredibly crucial if your company wants to evolve – who knows better than the very people working within it?

Furthermore, never forget that your consumers are also stakeholders, meaning that you must engage with them if you are planning on innovating your business model to become a sustainable one. It is true that a sustainable business model could lead to increased product prices, but you should let your consumers know why this is. 

You need to be able to convince them that although the price is higher, the quality and value of your products have also improved, and that by investing in your products, they are also investing in the environment. It may be worth pledging a portion of revenue towards charities or trustworthy environmental organisations to engage your customers.  

Sustainable supply chain

A sustainable business model must have a sustainable supply chain, and by this, we mean possibly localising supplies and sources. By using local suppliers, you are already reducing your carbon footprint. 

However, simply procuring items from local suppliers is not enough - are their processes sustainable? Look for suppliers with recyclable packaging that has been sustainably sourced to ensure you are exercising sustainability every step of the way from cradle to grave. 

When products do reach you, is your company responsibly recycling? What happens to the waste? Software developers such as Sort Flow can help your company with sustainable waste management, so it may be worthwhile investing in this. 

Additionally, you should consider your own packaging as well as carbon emissions when it comes to delivering products to customers – is there a way to reduce these? For example, a one-way trip with as many deliveries as possible is surely less harmful to the environment than multiple trips with only a few deliveries. 

It is critical that you ensure your supply chain is sustainable for an effective sustainable business model, given that a company is only as ethical and sustainable as its logistics network.