Why you should analyse environmental sustainability of the business model upfront – and how /from BioCircular.eu

Why you should analyse environmental sustainability of the business model upfront – and how

Would you start a business without making a business case? – or at least have a very good idea of the business model you are pursuing? – I wouldn’t! Here we look at the potential of using the Business Model Canvas for assessing the environmental sustainability of business ideas.

Today the Business Model Canvas has received quite some traction and is being used in many settings for getting a shared picture of a business concept or to discuss new approaches to the business model.

It is broadly recognised that new businesses should be “sustainable businesses”. Yet, it is very few teams that do an upfront assessment of the environmental sustainability prior to starting their endeavour. Some companies do a Life Cycle Assessment of a key product or product range. However, these evaluations are typically performed after the decision of moving ahead and a production is going on. Usually the findings will not impact the business model fundamentally, but lead to tweaks of a few parameters along the way.

Some of the ”progressive” financial investors have implemented a due diligence process in order to scrutinize the environmental and social impacts of a company before an investment is decided. However, this process is not challenging the business model, but is focusing on minimizing the impact on the environment in the production (emissions, energy consumption, etc.) or ensuring the health and safety of workers.

I am convinced that novel and much more sustainable (also economically) businesses would emerge, if the environmental implications of a business idea were to be taken into account in the planning phase.

What-if you actually considered the environmental sustainability up front and made it an integral part of choosing the right business model?

Sustainability works as a constraint that inspire us to seek creative solutions and can thus be a key driver of innovations. Innovating not only products or services, but also entire business models to create new ways of delivering and capturing value. This can serve as a new basis of competition altogether!

Some ideas would have benefitted from thinking environmental sustainable into the product or service from the start. E.g. the idea of adding micro-plastic beads to cosmetics or toothpaste, that enters the environment when you flush it into the sink. Or, would you design a new e-currency with a distributed accounting system, that requires an enormous amount of energy to run, exceeding that of countries? And that is even before the system has really taken off as a transactional currency, but still is more of an investment in itself.

Where to start if you are not familiar with environmental issues?

In general, the Business Model Canvas (BMC) provides an intuitive framework for developing a business model. It does not take long to grasp the concept and start playing around with the building blocks. If you are a small team, filling in the canvas provides a useful shared picture for discussing ideas. To dig deeper in your analysis or discussion of aspects, you would probably supplement the Business Model Canvas with other tools, such as SWOT or PESTEL understand your business proposition in a business context.

Now is the time for the next steps…

Environmental sustainability tools are still an emerging field, and there is not yet established methods out there to use. Nevertheless, there are some. If you are familiar with the Business Model Canvas – why not try some of the tools that work as add-ons to this? Below I will suggest a few that you could start with.

These tools help you address other bottom lines than the economic; the environmental and the social. It is adding to the complexity of developing the right business model, especially as the costs and benefits are measured in various other metrics than money.  Therefore, the tricky part comes when you need to balance the trade-offs and select the business model to pursue.

When you work with the Business Model Canvas, you should go through iterative loops of increased knowledge before you home in on the business model of your choice. As you refine your concept, you need to utilise other tools. Traditionally you would use Porter’s five forces, 4Ps, etc. to analyse various economic aspects. The method is the same here, but you will need additional tools for exploring the environmental aspects of your options.

The Triple Layer Business Model Canvas (TLBMC) is developed to be a practical tool for developing, visualizing, and communicating sustainable business model innovations. It consists of three canvases. The standard Business Model Canvas for economics, and two additional layers, one for environmental aspects, and the second for social. As with the standard Business Model Canvas, you can begin your exercise using an existing business as a starting point and from there explore possible innovations to the existing model and the potential impact of such innovations. The downside of the TLBMC is that the environmental layer is based on lifecycle assessment thinking and data. Thus, it relies on numbers, which you need to have access to or lookup in order to provide a convincing foundation. You can use it without numbers, but then the TLBMC tool provides no guidance as to how and what to consider.

The Sustainable Business Model Canvas developed by Threebility provides additional cells to the standard Business Model Canvas with guiding questions that make you consider some sustainability aspects. In addition to the extension of the original Business Model Canvas you can find supporting tools that allow you to consider different sustainability aspects of your business in more detail, e.g. the Sustainability Impact Canvas, a Product Ethics Canvas, Sustainability SWOT, and a balanced score card. It is a fine package; however, the tools do not have environmental sustainability in focus, and thus miss out considering environmental aspects in more detail. A key challenge with these tools (as in most sustainability frameworks) is that it is difficult to prioritize or rank the pros and cons that you elucidate through your efforts.

The Flourishing Business Canvas expands the 9 building blocks of the original Business Model Canvas to 16 questions that has a wider perspective on the organisation rephrasing the canvas and embedding it into the societal and environmental scene. The concept seems appealing but it is currently not easy to use as the ‘Flourishing Enterprise Innovation Toolkit’ allowing you to further elaborate on the questions is behind a pay-wall.

Other efforts

Several other organisations, projects and initiatives have developed modified Business Model Canvas templates to include sustainability aspects, often adding extra boxes within the canvas. However, even though these indicate that in order to build a sustainable business, you need to consider other elements, I fail to see that they truly assist your thinking to create environmental sustainable businesses.

alternative Business Model Canvas templates adding sustainability aspects into the overview. Found at https://rethinkbusiness.dk/ and https://www.case-ka.eu/wp/wp-content/uploads/2017/05/SustainableBusinessModelCanvas_highresolution.jp
Alternative Business Model Canvas templates adding sustainability aspects into the overview

Two alternative versions: The Sustainable Business Model Canvas with two extra blocks below. and The Sustainable Business Model Canvas with an additional block under distribution.

Conclusion: How to proceed adding environmental sustainability considerations in your business model development?

The above mentioned extensions to the Business Model Canvas may serve as tools to help users conceptualize, understand, and communicate the impact of a business model and thus assist in developing new and exciting sustainability-oriented innovative businesses.

However, only a couple of them really challenges your systems thinking, so that you truly consider environmental aspects in designing new business models. Among the extensions mentioned in this blog post, I would recommend giving the Triple Layer Business Model Canvas a go. It seem to be the best rooted approach, but may require some preparation in order to dig out data from a Life Cycle Assessment database or at least have established an overarching idea of the impact in different parts of a product life cycle and not only impacts within your business activity. In your efforts you could add e.g. the Sustainability Impact Canvas or balanced score card tool from Threebility.

I would of course also encourage you to learn more about the environmental elements that you should consider in developing a sustainable business, e.g. ecosystem services, systems thinking, Life Cycle thinking, Nature-based Solutions, cradle-to-cradle, bioeconomy principles, and circular economy principles.
– Concepts in which we at BioCircular.eu could offer some 101 for you to get a general idea about.

Good luck!

(Should you know of other add-ons, extensions or other relevant tools to supplement the original Business Model Canvas, then please do not hesitate to contact us)

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