The sustainable business model gained traction in 2011, as more companies recognized the need to look beyond standard business practices and consider how they actually made money.
Environmental lobbyists pushed for a circular economy, a system of reuse and not waste. The global economy and credit crunch launched a period of austerity. Consumers looked to repurpose goods, recycle, and buy and sell online. Purchasing power shifted as a brands’ green credentials, or lack thereof, determined more buying outcomes.
Companies were–and still are–faced with increasing commodity and energy prices; and as natural resources diminish this will continue to be a business reality. Innovative products and services do their part to address these changes, but a sustainable business model can do so much more.
Sustainable business models
The UN World Commission on Environment and Development defines sustainability as meeting the needs of the present without compromising the ability of future generations to meet their own needs. There are three key distinctions of a sustainable business.
First, a sustainable business is future-ready. Leaders become innovators and harness new technology to work smarter, stay ahead of industry developments, and work creatively to foster new ideas.
Secondly, a sustainable business is part of a sustainable society which means it behaves, trades, and operates in a socially responsible manner. A January 2017 Oxfam report entitled, An Economy for the 99%, highlights the benefits of minimizing the impact on the environment, while enacting sustainable business solutions.
Lastly, a sustainable business model must create value for consumers and deliver goods and services in a way that will generate profit.
Sustainable development goals
In 2015, the United Nations developed a set of Sustainable Development Goals aimed to tackle poverty, improve the health and well-being of communities, and address environmental matters such as climate change, waste and emissions, and social responsibility.
Businesses can help to address these issues by working closely with community groups, local partners and government bodies.
These sustainable development goals present a tremendous opportunity to future-proof brands and generate profit. This opportunity is not just restricted to delivering value in your local market, but also to offerings in global markets that face similar problems.
Entrepreneurs poised to lead in sustainability
Here in Australia, for example, one of the fastest growing economic sectors is tourism. As recently as 2016, tourism outpaced the Australian economy. Tourism leaders have quickly adapted to sustainable business methods; understanding the important role tourism plays in regional development.
In fact, the World Economic Forum suggests, “An increasing number of travellers are significantly more likely to visit destinations and make purchases from travel companies based on their sustainable practices. Many destinations have strategies and plans in place to use tourism to help alleviate poverty and conserve their natural and cultural heritage…”
A company that aims to grow without exploiting natural resources is simply good business. For example, they use local facilities so income stays local. This in turn creates jobs thereby stimulating new economic growth.
Consumers demand sustainable options
Environmental and social impact is top of mind for today’s discerning consumer. “A new international study by Unilever reveals that a third of consumers (33%) are now choosing to buy from brands they believe are doing social or environmental good.
Unilever found that customers would buy more if the benefits of sustainable goods were made clearer. Customers essentially want to “give something back.” This offers insight and opportunity for businesses who actively promote sustainability ethos and values.
For example, as consumers become more informed about their food choices, organic food market is on the rise. For instance, “Organic is the fastest growing sector of the U.S. food industry. Organic food sales increase by double digits annually, far outstripping the growth rate for the overall food market.”
This demand impacts mainstream supermarkets to local restaurants that have begun to offer more organic options. Energy cost reduction schemes for commercial and residential buildings have also been on the rise, as buyers seek to save money and the planet.
Sustainable business is the future
A sustainable business is tied to its ethos, vision and company values. Consumers are smart. They’ll know if you’re greenwashing your efforts.
If you want to make sustainability a core business strategy, work with customers, the community and your sector to re-evaluate how we live and work, the lifespan of your product, and how we consume. Acknowledge that resources are finite, but cost savings can be tapped into through reusable and renewable methods. Meanwhile, it’s a model that can’t progress in isolation.
Sustainability drives innovation and engenders enthusiasm and loyalty from employees, customers, suppliers, communities and investors. As more businesses are discovering, this is the way forward. Can you afford not to take a step in the right direction?
This article has been edited.
Belinda Roach is the founder of Trailblazers Travel, a responsible travel company that creates adventures while also changing the world. With 20 years of independent travel experience under her belt, Bel constructs the company’s unique and immersive travel itineraries from scratch to ensure that her clients get a real, authentic experience. More importantly, Trailblazers Travel donates part of their proceeds to micro-finance entrepreneurs in developing countries as well as to WaterAid, which helps to give access to clean and safe drinking water.