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Four Steps to Sustainable Business Model Innovation
April 29, 2021 By David Young and Marine Gerard
This article is part of an ongoing series that describes the concept of “Sustainable Business Model Innovation” (SBM-I) and how companies are putting it to use.
You may have noticed that every day there’s another announcement about companies making new climate commitments, asset managers outlining their plans for ESG integration, or regulators proposing new disclosures or extending producers’ responsibilities. Corporate coalitions like the World Economic Forum International Business Council and the US Business Roundtable endorse a more stakeholder-inclusive corporate capitalism while industry coalitions work to solve their members’ shared sustainability challenges. And employees and consumers call on employers and brands to take environmental and social challenges seriously. All of this makes clear that we have entered a new era for business, one in which sustaining competitive advantage requires companies to transform their business models for sustainability.
Company leaders need a broader, more systemic understanding of these dynamic sustainability challenges and the ways that their companies can play a part in addressing them. Fortunately, as some farsighted businesses are discovering, the most powerful opportunities for profitable innovation are embedded in these same challenges. Let’s consider three examples.
The first is Telenor, the leading Norwegian mobile operator. In 2008, having entered Pakistan three years earlier, it joined forces with the microfinance bank Tameer. With support from the Bill and Melinda Gates Foundation, the International Finance Corporation (IFC), and the Consultative Group to Assist the Poor (CGAP), they launched a new service called Easypaisa, providing mobile-based financial services to the unbanked and underbanked. By the end of 2019, Telenor Microfinance Bank (the result of Telenor’s acquisition of Tameer) boasted the largest branchless banking service in Pakistan, growing its Easypaisa mobile wallet user base to 6.4 million, its depositor base to 17 million, and the transactions volume through its agent network to about PKR 1 trillion (approximately $6 billion). This service has significantly advanced financial inclusion in Pakistan and established Telenor as a major telecom enterprise there.
The Secrets of Sustainability Front-Runners
- How to Tell If Your Business Model Is Creating Environmental and Societal Benefits
- How to Tell If Your Business Model Is Truly Sustainable
- Why the New Competitive Advantage Demands Sustainability
- The Quest for Sustainable Business Model Innovation
To maintain competitive advantage, companies must transform their business models for sustainability.
Or consider Ajinomoto, a global food and biotech company based in Japan. It produces seasonings, sweeteners, and pharmaceuticals. As part of its 2030 vision and growth strategy to “help one billion people worldwide lead a healthier life,” Ajinomoto is exploring a new "personalized nutrition for health" business. Combining its core nutrition expertise and new technology, the company aims to provide customers with digitally enabled diagnostics, analytics, and product recommendations. These would guide people toward the kind of well-balanced amino acid intake that boosts cognitive and physiological functions and helps prevent aging-related diseases like dementia—a prominent societal issue in Japan.
Another example is Indigo Ag, a US-based agricultural technology startup that was valued at $1.4 billion in 2017. In 2019, the company launched a service called Indigo Carbon to help incentivize farmers to remove carbon from the atmosphere and sequester it in their soil. The service provides technologies and recommendations for regenerative agriculture practices. The ultimate goal is to pay farmers for each ton of carbon captured and then sell certifications to companies looking to offset their carbon footprints. By supporting a transparent carbon credit marketplace, Indigo Carbon creates benefits for all participants: the farmers, the companies buying the offsets, the planet, and its own business.
What do these three companies have in common? Regardless of industry, geography, or size, they (and dozens of others like them) are innovating business models—building on and expanding beyond their core assets and capabilities—to address significant environmental and societal challenges in their local contexts. In this way, they create new sources of value and competitive advantage for their business.
The Four-Step Innovation Cycle
In our research, we have studied more than 100 cases of companies that are practicing what we call “Sustainable Business Model Innovation” (SBM-I). We have found that the most advanced of these companies, the “front-runners,” combine environmental, societal, and financial priorities to re-imagine their core business models and even shift the boundaries of competition.
One might expect the front-runners to consist mainly of smaller enterprises, branded through their visible social or environmental missions. But most of them are actually global corporations that have gradually developed new business models that create both sustainability and long-term competitive advantage.
The core practice for SBM-I is an iterative innovation cycle, shown in Exhibit 1. With each round, the company gains scale, experience, and market presence for its initiative; these reinforce both the business advantage and the environmental and societal benefits generated.
1. Expand the Business Canvas
So how can you bring this cycle to life in your company? The first step is to develop a rich understanding of the broader stakeholder ecosystem in which the company operates and of the environmental and societal issues and trends that might affect this ecosystem. As part of this diagnosis, you explore the potential impacts of ecosystem dynamics and issues on your business model. This will allow you to identify a range of business vulnerabilities and opportunities tied to environmental and societal issues. Some of these are good starting points for focused SBM-I.
More specifically, we recommend the following:
- Expand the business canvas by mapping the wider ecosystem of stakeholders and societal issues in which the business operates. Ask yourself: Who are the key stakeholders in the system? What are the material environmental and societal issues and trends? How do stakeholders and environmental and societal issues directly or indirectly impact all the different parts of the business model?
- Stress-test the business model (current or potential) within this broader map. How do stakeholder dynamics and environmental and societal issues constrain or hold back your business model? Where do limitations in the system create vulnerabilities for the business model?
- Extrapolate trends and build materiality scenarios. Look at today’s environmental and societal trends and think about how they might evolve over time. In addition, build scenarios to envision completely different, more extreme versions of the future (as opposed to linearly projecting trends) to stretch your thinking. And then, under these scenarios, ask yourself: How might environmental and societal issues change over time? How might stakeholders’ perceptions of and attitudes toward those issues shift? What would be the effects on the system map and the business model?
- Explore scaling up the business. Imagine the business model at different scales of activity. Suppose your business grew three- or five-fold over the next few years. Where might breaking points or opportunities arise? What happens to the externalities the business creates? How do risks and opportunities change?
- Identify innovation opportunity spaces or “strategic intervention points” (SIPs). These are points at which targeted action or innovation could alter stakeholder dynamics, positively impact the environmental or societal issues, reduce the vulnerabilities of the business model, or even create new business value opportunities.
Look for difficulties, gaps, and risks to arise from the analysis. For example, your company’s own lines of business might contribute to the environmental or societal issue and impact the growth of the business today. Also, don’t just rely on your own thinking. Cultivate outsiders who can provide complementary and thought-provoking perspectives.
In a recent interview , Christine Rodwell, former vice president of business development cities at Veolia, explained that “to walk the talk on sustainability, companies need to listen to their external stakeholders. They should create a committee of critical friends (across public, social, and academic sectors) who will challenge them and advise them to develop business solutions that create meaningful environmental and societal benefits.”
To understand what expanding a business canvas looks like in practice, consider the hypothetical example of a consumer packaged goods (CPG) manufacturing company engaged in a real-world dilemma: the toxic effect of plastic packaging on natural habitats, particularly in the world’s oceans. About 18 billion pounds of plastic waste enter the world’s oceans each year. This is equivalent to five grocery bags of trash on every foot of coastline. Plastic pollution causes extensive damage to life on land and at sea, including toxic contamination, strangulation, blockage of digestive passages, and endocrine-related reproductive problems for people as well as animals. Concerns about this problem reached a tipping point in the mid-2010s, as studies confirmed the damage.
As industrial leaders in this field know all too well, the complexities of gathering, cleaning, sorting, recycling, and reusing plastics have made it costly and difficult to address this issue. Companies that step forward with effective and financially viable solutions will not only gain enormous goodwill but are also likely to build high-growth businesses.
But where do you start? And where do you focus innovation efforts and investments to tackle such a complex, multifaceted environmental issue? Reflecting the SBM-I cycle approach, Exhibit 2 shows what a stakeholder-centric systems map for the plastics issue could look like from the point of view of a CPG company. This map uses basic systems dynamics principles to capture the most significant interrelationships among the CPG company, the environmental issue at stake, and key stakeholders (consumers, policymakers, civil society, waste collectors and recyclers, and plastics manufacturers). The arrows show patterns of cause and effect. For example, when urbanization increases, so does the cost of landfilling.
The power of this diagram (versus more traditional, linear depictions) comes in part from its ability to reveal where delays, rebound effects, or tipping points might be active in the system. For instance, the node labeled “environmental and recycling awareness” will influence changes in several consumer habits—but only after a delay. Such awareness cannot be seen as a quick-fix solution, but over time it will help change the dynamics of the entire system.
Companies that bring viable solutions to the plastics problem will gain enormous goodwill and likely build high-growth businesses.
The boxes in the exhibit represent the opportunity spaces or strategic intervention points (SIPs) that become evident during this step. In this example, a few of the SIPs for our CPG company are as follows: shifting to new packaging formats; setting up plastic collection initiatives; lobbying for government programs like deposit return systems; joining precompetitive coalitions that invest in recycling infrastructure and new recycling technology; and educating and nudging consumers to consume and dispose of packaging in more sustainable ways.
2. Innovate for a Resilient Business Model
The first step in the cycle will have led you to identify the opportunity spaces that hold potential for both financial returns and societal value. You must then transform your business model, or imagine an entirely new one, so that you can seize these opportunities. In this second step, you innovate and develop new aspects of that new business model. You are seeking to bypass current constraints, break tradeoffs, deploy technological advances, and perhaps integrate activities that were previously kept separate. You should ideate a new business model to integrate and reinforce both business advantage and environmental and societal benefits.
In related research , we introduced and defined seven archetypal business models that optimize for both societal and business value. Here we illustrate how they might apply to the plastics waste challenge.
- Own the origins. Change production inputs to generate societal and environmental benefits. For instance, HP is working with waste collectors in a partnership with the First Mile Coalition in Haiti. HP has invested $2 million in a local facility to produce clean, high-quality recycled plastics that can then be used as input in an array of HP personal computer products and ink cartridges, reducing the environmental footprint of those products. Four years after its launch in 2016, the program had already diverted approximately 1.7 million pounds (771 metric tons) of plastic materials (equivalent to more than 60 million plastic bottles) from waterways and oceans and created income opportunities for 1,100 Haitians (with 1,000 more expected in coming years). Thanks to this and other efforts, HP boasted the world’s most sustainable PC portfolio in May 2020. This included, for example, the HP Elite Dragonfly, the first PC manufactured with ocean-bound plastic.
- Own the whole cycle. Create environmental and societal impact by influencing the product usage cycle from cradle to grave. Since the 1990s, Grupo AlEn, a leader in home cleaning products based in Monterrey, has invested and scaled up its in-house plastic recycling operations to become one of the largest plastic recyclers in Mexico. AlEn now operates 30 routes and 6,200 collection points in the Monterrey area, recycling more than 50,000 tons of PET and HDPE per year. This business expansion has given AlEn an exclusive supply of recycled plastics, enabling it to create distinctive, greener packaging at a relatively stable cost.
- Expand societal value. Expand the environmental and societal value of products and services, and capture value in pricing, market share, and loyalty. In 2018, PepsiCo acquired Sodastream, the world’s leading at-home sparkling water maker. Building on this technology, PepsiCo has begun to bring packaging-free, customizable beverages to workplaces, college campuses, and airports. This new business positions PepsiCo to win in the increasingly personalized beverage market and to save an estimated 67 billion single-use plastic bottles by 2025.
- Expand the value chains. Innovate by layering onto the business ecosystems of customers or of partners in other industries. In Chile, Algramo’s innovative bulk distribution system replaces single-use plastic with RFID-equipped reusable containers. Since 2013, the startup has scaled up its business by partnering with more than 2,000 family-owned stores across Santiago. They dispense affordable food and staple products “al gramo” (Spanish for “by the gram”) and reward customers for reusing containers. Algramo’s model not only helps the environment but also benefits the urban poor, who previously had to pay high prices for small quantities of products, in wasteful, individually wrapped packets.
- Re-localize and regionalize. Shorten and reconfigure global value chains to bring societal benefits closer to home. In Brazil, BASF has developed a solution to a local issue: waste certificate fraud. Some collectors and recyclers claim credits for recycled materials that they didn’t actually process or that aren’t actually recycled. Partnering with Kryha, a digital blockchain studio, and Recicleiros, an NGO that supports waste collectors and their cooperatives, BASF developed an online platform called ReciChain. This platform enables accurate and secured data tracking throughout the recycling value chain, to improve the quality of operations and guarantee the validity of manufacturers’ certificates and claims.
- Energize the brand. Encode, promote, and monetize the full environmental and societal value of products and services, and use that leverage to engage customers in novel ways. The innovative manufacturing company 3M released the latest version of its Thinsulate insulation product in 2019. This is “100% recycled featherless insulation” made from recycled plastic bottles. Building on this accomplishment, 3M worked with the high-end apparel brand Askov Finlayson to create “the world’s first climate-positive parka,” producing 3,000 parkas in 2019 as an inspiring demonstration project.
- Build across sectors. Create new business models in collaboration with government and nonprofit organizations, particularly in rapidly developing economies, to improve the business ecosystem and societal proposition. Together, SC Johnson and the social enterprise Plastic Bank have opened nine recycling centers in Indonesia to collect and recycle plastic before it reaches the ocean. This partnership also plays an important societal role, helping families in impoverished areas who collect plastic waste by buying it at a premium from them. In 2019, the partnership announced a ground-breaking, three-year deal to create 509 plastic collection points, including locations in Thailand, the Philippines, Vietnam, and Brazil. In aggregate, these points are expected to collect 30,000 metric tons of plastic over three years—the equivalent of stopping 1.5 billion plastic bottles from entering waterways and the ocean. On the business side, among other benefits, this collaboration will secure a steady supply of high-quality recycled plastics and help SC Johnson meet its 2025 packaging goals.
These seven archetypes can be starting points for developing your own business model innovation. Adapt them, and combine several together to develop a more comprehensive solution to environmental and societal issues relevant to your enterprise. Interestingly, among the 102 in-depth SBM-I cases that we explored in our research, 75% of the SBM-I leaders (the “front-runners”) combine three or more archetypes. This contrasts with less than 30% in the two other groups: the “ecosystem leaders” and the “initiative leaders,” whose efforts tend to be more narrowly focused.
In addition to exploring the possibilities inherent in these seven archetypes, take inspiration in the lessons learned from SBM-I front-runners. Front-runners see sustainability as a source of competitive advantage. In line with their long-term strategies, they continuously iterate and fine-tune their business models, always seeking to deepen their beneficial impact. They explicitly seek to understand and fix the root causes of environmental and societal challenges—as some of our plastics recyclers did, addressing not just the environmental concerns but also the social aspects of the issue. These companies also use digital technologies wherever possible, to break economic constraints and unlock new solutions. They practice an intensive form of stakeholder engagement: partnering with nonprofits and governments, operating across organizational boundaries, and pooling resources with other enterprises, even competitors. Last but not least, they experiment with new forms of value capture, such as blended financing sources, to de-risk and amplify their own investments. After all, notwithstanding their environmental and social track records, the front-runners are still in business to show a profit and return investment to shareholders.
3. Link to Drivers of Value and Competitive Advantage
In the third stage of the cycle, test, iterate, and refine your business model ideas or concepts (from the second step) to ensure that they will yield the environmental and societal benefits intended, and that the benefits will translate into value and advantage for the company. A business with weak profit margins cannot invest in innovation to amplify and scale environmental and societal benefits.
The objective of this step is to keep assessing and reengineering the business model, so that it continually improves the resilience of the business and the benefits to society. The following questions, based on our research into the characteristics of robust, resilient business models , can help you navigate this part of the process:
- Can the business model scale effectively? Can it be replicated across all your business units or the markets you serve, without diminishing returns?
- Will the business model differentiate your brand or product and make it more competitive in the marketplace?
- Will it reduce the risk of commoditization, by being hard for others to imitate? Will its distinctiveness help you retain some control over pricing?
- Can it leverage network effects? For example, can it attract the kinds of customers and suppliers that make other customers feel compelled to join?
- Does the business model harness business ecosystems—including the larger industry, the value chain, and everyone who interacts with your products, services, and practices—for advantage and sustainability?
- Does the business model naturally create meaningful environmental and societal benefits?
- Will the environmental and societal benefits remain durable against changing trends over time, even as the business model scales up?
- Does the business model increase returns to shareholders as well? Are the financial benefits linked to the environmental and societal benefits in some significant way?
- Finally, does the model animate your company’s purpose? Does it boost engagement and loyalty between the company and its employees, customers, investors, and other stakeholders?
Exhibit 3 shows how a company might assess its business model against these nine questions. The resulting footprint reveals how robust and resilient the business model is and identifies where it could be improved to unlock further advantage and value for the company.
The fuller the footprint, the better. Among the front-runners in our sample, 90% score “high” on at least five of the nine attributes, as opposed to only 30% in the other groups. The front-runners also show superior average scores on every single dimension.
4. Scale the Initiative
The full potential value of sustainable business model innovation is achieved only when the new business model is brought to scale: engaging people in the company, across the supply chain, in the company’s networks, and in its ecosystems to expand impact and advantage.
To accomplish this, companies can leverage three enablers. First, partnerships with other organizations, within or across industries or sectors, can help a company pool resources, fill capability gaps, and unlock new markets. Almost 90% of the front-runners have broadened their efforts this way. Second, digital technology (leveraged by 80% of the front-runners) can help create new distribution channels that reach previously unserved or underserved populations at a fraction of the cost of their predecessors. Third, companies that adopt SBM-I tend to develop cultures and leadership values that attract and engage people inside and outside their boundaries. Indeed, all of the front-runners explicitly mention the environmental and societal impact they seek to deliver in their vision, purpose, or mission statements.
Consider the example of BIMA, a mission-driven provider of mobile-delivered health and insurance services that started operations in Ghana in 2010. Its innovative digital technology platform and its partnership model (which comprises telecom providers, mobile money providers, and insurance underwriters) have enabled it to rapidly scale its innovative business model. BIMA now provides affordable, easy-to-manage life and health insurance to more than 35 million low-income customers across ten emerging economies. BIMA’s customers have access to its services through their mobile phones. Many of them are lower income families who earn less than $10 a day. About 75% of them are obtaining insurance for the first time in their lives. These societal benefits are at the core of BIMA’s strategy and mission; the company’s website says explicitly that its “purpose is to protect the future of every family.”
The four-step innovation cycle we propose in this article offers companies a way to systematically integrate and solve for social and business value in one business model. Most of the companies that begin this journey are already skilled at optimizing for business advantage. They may already recognize the importance of taking into account their environmental and societal impacts. With this approach, they are now ready to take on innovation for a business that optimizes for both business and social value.
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Related Content
How to Create a Sustainable Business Model
A sustainable business benefits your customers without jeopardizing the planet or future generations..
Creating a sustainable business model is a top priority for many companies. A sustainable business helps the planet and may prove more successful in the long run; customers want to work with companies that care about making a positive contribution to the world.
Sustainability isn’t just for large corporations. Businesses of any size can work toward a sustainable business model by following specific practices and adopting a sustainable strategy.
What is sustainability?
Sustainable means the ability to be maintained at a certain rate or level, and sustainable development meets current needs without compromising future generations’ ability to meet their own needs.
However, we must dig a little deeper to understand how the concept of sustainability is relevant to business development.
What is a sustainable business model?
To Rex Freiberger, president of Superlativ Media, a sustainable business model helps generate value for everyone involved, without draining the resources that help to create it.
“A business model meant to capitalize on a trend isn’t sustainable, for example, because the social resources that get it started won’t exist in years or even months,” Freiberger said.
Lia Colabello, managing principal of Plastic Pollution Solutions, noted that there’s a difference between a sustainable business model — a business that will likely achieve profitable growth — and a business model that prioritizes sustainability.
“A sustainable business model is what every business leader hopes to achieve — a business that will turn a profit quickly and stay afloat for the long term,” Colabello explained. “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.”
Eco-friendly packaging practices are a way to commit to sustainability. Other methods include careful resource usage and donations to worthy organizations.
What makes a sustainable business model work?
There are four key elements of a sustainable business model.
1. A sustainable business model is commercially profitable.
You can make a profit and be socially responsible . No business can succeed or scale unless it attracts customers. What is your value proposition? Who are your target customers ? Why is your business valuable, and what niche do you fill?
2. A sustainable business model can succeed far into the future.
A trendy business or one that relies on limited resources may be profitable for a few months, but how will it fare in a year or two? Resource availability and pricing are never guaranteed or fixed; you don’t want to build your castle on a sinking rock.
3. A sustainable business model uses resources it can utilize for the long term.
You can’t have a sustainable business model without sustainable resources. Many business activities are limited by finite resources or exceptionally high prices. On the other hand, some resources may be readily available yet environmentally harmful.
Palm oil is a famous example of a cheap and plentiful resource. However, farmers are razing acres of land and causing severe environmental destruction by cultivating the crop. Cheap resources may be tantalizing for business, but consider the big picture instead of taking a shortcut now.
4. A sustainable business model gives back.
One theory is that a truly sustainable business model is one that gives as much as it takes. This concept is called the cyclical borrow-use-return model.
Bob Willard, expert and author on quantifiable sustainability strategies, contrasts this model with the current “linear take-make-waste model” that so many modern businesses are built upon, which he said is “culpable for contributing to [this world’s] unsustainability.”
Instead of taking from the Earth, a sustainable business “borrows” resources with the intent to replenish them. This concept of responsible consumption is one that both businesses and consumers can promote and practice.
Reducing resource burn — wasted time, money and other resources — is another way a business can prioritize sustainability.
What is a sustainable strategy?
A sustainable strategy takes the big picture into account. “A sustainable strategy is one that understands the flow of ‘in’ and ‘out’ — not just cash flow, but again, the resources, both tangible and intangible, that are required to create the product or service,” Freiberger explained.
Colabello noted that the most effective sustainability strategies start with an organization’s purpose. She encouraged businesses to ask these questions, similar to what you’d ask when crafting a vision or mission statement :
- Why does the organization exist?
- What problem is it solving?
- How is it going to improve the world, environment and society?
“From there, a strategy can emerge that engages the entire brand ecosystem — internally, the supply chain, its communities and its industry,” Colabello said. “The approach is prioritized and diagrammed out, complete with goals, KPIs [key performance indicators] and a timeline. These are communicated both internally and externally, in keeping with transparency.”
Why do we need sustainable business models?
There are many ways to approach the issue of sustainability, but the simplest one, which can unite all stakeholders, is this: Kind businesses attract more customers. According to the 2022 Global Buying Green report , 86 percent of consumers under 45 were willing to pay more for sustainable packaging, and 68 percent purchased items in the past six months based on companies’ sustainability credentials.
It’s OK to be open about your sustainability goals and use your sustainability as a selling point. Customers will ask, and the friendlier you are about it, the more likely they will be to share that news with their friends.
But maybe you’re not motivated entirely by money. Perhaps you’re driven by the desire to be the change you’d like to see in the world.
After all, the larger a business grows, the greater its impact is on the world and the people around it. And it’s better to start sustainably than to make the switch 10 years down the line — or when stakeholders begin pushing back on unreasonable business practices.
Going green can boost business and profits. Businesses are marketing green innovation to show consumers they prioritize environmental concerns.
How can you start and maintain a sustainable business model?
Getting started with a sustainable business model can be straightforward. Consider the following guidelines.
1. Plan your resource usage.
Consider the resources your business requires to operate, and then do the following:
- Make a list of the raw materials you’ll need. This list will vary dramatically by business type. Software-as-a-service companies, for example, don’t require the raw resources that clothing brands do.
- Consider where your materials might be sourced. Who is making or harvesting your product materials? How are they being sold?
- Consider where the resources are coming from and how they are being transported. How far do they have to travel to arrive at your home or warehouse? How can you cut down on fuel miles? What are the riskiest resources on your list, and how can you increase their productivity while lessening your dependence on them?
After you address your resource usage, outline your manufacturing and business processes. Ask yourself these questions:
- Which manufacturing processes are the most wasteful? How can you mitigate the adverse effects of these processes?
- For physical materials, is it possible to source locally?
- How are you packaging your products? (Sustainable, biodegradable packaging can reduce the amount of trash stuck in landfills.)
- Which materials on your list are the riskiest or least sustainable? How might you replace them? Could you replace them now?
- What are the end products of these processes? How can you reuse waste material? Does it have to be thrown away?
- Can the produced waste be used as a resource or be fed into a different process to be used again? How can you reduce unusable waste?
- Where can you reduce waste? How can you stretch your raw materials? Can you lower the number of resources used to create a specific product while maintaining its quality?
- What are the labor conditions like? Are your laborers being paid fairly? Is their quality of life improving or worsening because of your business processes? Is their time being respected?
To make your business’s computing eco-friendly , implement cloud computing, allow your employees to work remotely, and eliminate paper from your workflow.
2. Consider alternative forms of company ownership.
The traditional top-down business model can create unreasonable wage gaps between those at the highest rungs of the ladder (CEO, other C-level executives, founders, managers) and those at the lowest (laborers tasked with creating raw materials or carrying out the manufacturing processes). Including everyone in your sustainability goals can help you keep your business on track and give those who are typically disadvantaged a larger say.
3. Engage your customers.
Going green can improve your brand reputation among consumers, but your dedication to sustainability may result in higher prices. But that’s OK; in a compelling blog post, series of posts or dedicated brand story page , tell your customers why they’re paying more for your products.
You might choose to engage customers by pledging a percentage of revenue to support a charity or by offering different shipping or packaging options. Customers who love your product can be converted into brand ambassadors when you create messaging that resonates with them.
If you involve your customers in your discussions about sustainability, they will become more invested in your company’s success and your products. You could also consider crowdsourcing sustainability ideas from consumers through a forum or online group.
Sustainable businesses must lead with transparency when dealing with customers and shareholders. This means sharing wins and being honest when things don’t work out as planned.
What roadblocks are there to a sustainable business model?
Building a sustainable business can be daunting. If your business is stuck, you may struggle with one or more of these issues:
1. You hold innovation meetings, but ideas don’t go anywhere.
Many good ideas arise when founders or leaders get together at a workshop or meeting. However, you must nurture these ideas and draft a plan of action.
2. Ideas are not implemented.
Another issue founders face is that the plans for change are never implemented. This could be because it seems too challenging to change the status quo or because the members of the company aren’t yet convinced of the need for a greener, kinder business model.
3. The implemented business models fail in the market.
Two of the most common reasons businesses fail to move toward sustainability include the wrong mindset and a reluctance to dedicate resources to change.
To address these issues, find your allies — those who believe sustainability is essential for the company’s bottom line and the larger world — and connect with them. Together, you can remove or alter harmful, outdated systems and encourage innovation.
Practicing and following through with your sustainability goals helps consumers feel closer to you and instills more trust in your brand. This is crucial at a time when customers expect more warmth and honesty from companies.
Why is sustainability important in business?
Shel Horowitz, an expert on green and transformative business profitability, raised three points about why sustainability is crucial in business:
- Sustainability allows you to be here decades from now because you’ve created something of lasting value.
- Sustainability makes you much more attractive in the eyes of customers, employees and other stakeholders who actively want to do business with companies that think beyond the single bottom line.
- Sustainability helps the planet and its creatures heal from the abuse humans have piled on it, especially in the past 250 years or so.
Aside from businesses’ immense environmental impact, Colabello noted these forces putting pressure on companies to build robust sustainability strategies:
How is a business sustainable?
Freiberger believes a business can make itself sustainable by focusing on the bare essentials it needs to survive and then growing from there. Make long-term projections, and keep an eye on the distant future instead of focusing on more immediate profits, he advised.
As part of making your business sustainable, consider these statistics from the SUMAS Sustainability Management School , and determine where you can cut back to reduce your business’s carbon footprint :
- An estimated 5 trillion plastic bags are used worldwide each year.
- 400 million tons of plastics are produced globally every year.
- Globally, only 9 percent of plastic ever produced has been recycled; 79 percent can now be found in landfills, dumps or the environment; and 12 percent has been incinerated.
- With rapid population growth and urbanization, annual waste generation is expected to increase by 70 percent from 2016 levels to 3.4 billion tons in 2050.
- If it continues at the same rate, the plastic industry will account for 20 percent of the world’s total oil consumption by 2050.
- The construction and later demolition of buildings produce 40 percent of all waste.
If you are thinking about implementing a sustainable business model, consider the short-term expenses you will incur. However, these costs are a small price to pay for a better future and a compelling brand value for increasingly eco-conscious consumers. In other words, sustainability sells.
Jamie Johnson contributed to this article.
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Investing for financial return is only part of the equation.
14 Best Sustainable Business Examples to Follow
Updated on February 27, 2023
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If you are geared towards achieving a sustainable business, you might want to get inspiration from others who have blazed the trail. Some have achieved environmental stability and now gain from the green economy. So, what are some sustainable business examples to follow?
We have prepared a list after careful research on specialized and global businesses. Read on to find out how they are achieved through sustainable efforts and follow their sustainable business examples!
What is Sustainability in Business?
A sustainable business is one in which profitability, environmental concern, and social commitment are in harmony. In other words, it involves the coordination of business activities without having negative impacts on the environment, society, and economy.
Business sustainability is achieved when an enterprise has minimal or zero impact on the global and local environment, community, society, or economy. That is why it is sometimes referred to as a green business.
To create a sustainable business, you should observe all three pillars. The pillars of sustainable investing are environmental, social, and governance (ESG).
Benefits of Business Sustainability
Your corporate sustainability initiatives come with many benefits to your business. We may not discuss them all in detail, but we will just highlight a few.
The following are the apparent advantages of a green company:
- Improved brand image and competitive advantage
- Increase productivity and cost reductions
- Increase business ability to comply with regulation
- Attract employees and investors
- Reduce waste and greenhouse gas emissions
- Good impression on shareholders
- Enjoy tax benefits
- Attract more consumers
- Ensures the continuation of the business
What Can Your Organization Do to Achieve Sustainability?
There are many things you can do to show your sustainability efforts. That will, however, depend on your industry. But many sustainability practices apply to any industry.
You can do the following to become a green business:
- Use sustainable materials in the production
- Reduce food waste
- Responsible use of natural resources
- Choose renewable energy to reduce your carbon footprint
- Introducing a recycling program.
- Minimize travel or use of fossil fuels
- Proper waste management
- Take part in community projects such as tree planting.
List of Sustainable Businesses to Follow
You can identify a sustainable business strategy from examples . That ensures the continuation of your business and environmental conservation for future generations. The following are the best sustainable business examples to follow:
IKEA is one of the few business examples known worldwide for its efforts in achieving sustainability throughout its supply chain and operations. The furniture giant appeals to employees, customers, and stakeholders through its sustainability practices.
The Swedish furniture maker sources almost half of its wood from sustainable forests. The same goes for its cotton suppliers. They all adhere to the better Cotton Standards that minimize water pollution through organic farming practices. The use of chemical fertilizers and pesticides is limited.
When you visit the IKEA store, you will readily see their commitment to environmental sustainability . They source clean energy from solar. Plans are also underway to sell solar panels to customers in the UK and other countries.
The 2012 declaration of IKEA was that it would become 100% powered by renewable energy sources by 2020. It has put efforts towards that goal as part of achieving corporate sustainability .
The second on our list of sustainable businesses is Unilever – one of the biggest multinationals in the world. This British company has invested heavily towards environmental sustainability, and it has received its rewards for that. In fact, Unilever has become synonymous with sustainability.
Unilever has a Sustainable Living Plan, a program that sets a sustainable business strategy. It ensures all business operations from material sourcing to supply chain to production go according to the set goals. That also covers energy, water usage, community interaction, and other sustainability ideas.
The main goal of Unilever set in 2010 was to double the business’s size while reducing its environmental effect by half. Over the years that followed, Unilever used its resources in supporting corporate suitability initiatives.
Today, Unilever is one of the globally recognized sustainable companies. Its CEO received the Champion of the Earth Award in 2015. That is a prestigious award that every business leader dreams about.
Panasonic may not be as recognized as one of the sustainable companies in the world, but it still sits high on this list. That is because experts have consistently ranked it high for its efforts in reducing environmental impact .
Like all the companies appearing on our list, Panasonic’s energy goals can never be underestimated. Whether you want to rate it on energy efficiency or renewable energy use, it will still score high.
Its main contribution towards conserving our environment for future generations is making environmentally friendly products. If you follow Panasonic closely, you will recognize its unique ESG efforts. It has set a hallmark on how similar corporations should embark on sustainable development.
Panasonic has made several moves to stop its employees from driving to work . That is one of the ways to keep carbon footprint in check.
One of Panasonic’s latest developments is its partnership with different companies. The aim is to make a demo Sustainable Town in Japan. That will be the world’s first example of how sustainability can be achieved.
Allergan is a Botox producer that has consistently scored high for many years. We cannot list sustainable companies without recognizing Allergen. Its impacts on the environment are remarkable.
This California-based pharmaceutical giant has proven its efforts towards sustainability for over two decades now. It participates in water conservation, reducing waste and air emissions. It is determined to keep water, land, and air clean.
Allergan has a strict ESG reporting policy on its operations and supply chain. It was awarded for its positive impact on the environment. It received the Environmental Protection Agency’s EnergyStar Award in 2016, its fifth title.
Allergan has consistently taken its sustainability initiatives seriously. And as a result, it achieved energy efficiency.
Seventh Generation
Seventh Generation is a true example of what sustainability means. It not only uses sustainable practices but also creates space for green products. Its house cleaning products have stood out as eco friendly among others with a negative impact on the environment.
We are all aware of how we use cleaning products at home . We wash them down the drain and hope that sewage treatment plants will do their work perfectly. Despite these efforts, chemicals still find their way into the groundwater and waterways.
Water pollution by string and toxic cleaning agents is still a concern in different parts of the world. Luckily, Seventh Generation has set in with greener versions of the products to save our planet for future generations.
The Seventh Generation has met the demand for eco-friendly cleaning products. People have also received them well, showing how people are committed to environmental sustainability.
Patagonia is in the limelight of the move towards negative environmental impact by encouraging responsible consumption. Their current running advert encourages people to buy what they need to minimize waste, even if it is their product.
Patagonia has also implemented a program that encourages people to recycle, reuse, and repair their products instead of buying a replacement. The goal is to reduce the environmental footprint through waste reduction.
Patagonia has shown its sustainability efforts through its products and how to reuse locally available materials. The wetsuits are made of rubber, and plastic bottles are used for making parkas. That is a clever way of turning waste into a product worth buying.
This company has gone the extra mile of involving politics in achieving environmental sustainability. It advocates for electing leaders who are environmentally responsible.
This tech giant is also not left behind. It has proven from time to time its commitment to business sustainability.
IBM has invested in corporate social responsibility and environmental stewardship since the 1960s. Its relentless efforts have been recognized by people worldwide.
IBM’s first sustainability report in 1990 and energy efficiency of its data centers won the company an award from European Commissions. Despite the success in achieving business sustainability, IBM has never looked back.
Its current smart buildings strategy reduces demand for natural resources, encourages green procurement, and enhances water resource management. It is one of the most comprehensive approaches to achieving business sustainability.
New Belgium Brewing
New Belgium Brewing is a Colorado-based brewing company that has set itself as the brewing industry leader in corporate sustainability. It may not have much to show, but its efforts are impossible to ignore.
New Belgium Brewing encourages its employees and customers to ride instead of drive. What other clever way can you reduce your carbon footprint in the brewing industry than that? But that’s not all!
New Belgium Brewing diverts almost all its wastes from landfills. That is an approach to reduce land pollution and conserve it for the future.
Also, the brewer has made energy efficiency an integral part of its operations. It is also a vocal company that speaks loudly about climate change . New Belgium Brewing has partnered with like-minded companies to make a better world for us.
The IT giant has been mentioned as the greenest company by Newsweek, which speaks volumes about its efforts towards achieving it. This well-deserved accolade follows its eco-friendly operations and innovations.
Adobe has achieved LEED certifications for most of its workstations. An example is retrofitting a historic building in San Francisco.
Adobe also has ambitious sustainability goals that warrant its ranking on this list. It has set a net-zero energy consumption and reduced packaging. The company has realized how its plastic packaging has been hurting the environment. As a result, it has embarked on changing the story.
Another commendable approach to business sustainability by adobe is the reduction of water usage. The company has consistently tried to use less water since 2000 and is still putting more effort towards achieving the set goals. It opted for installing eco-friendly fixtures and using native plants for landscaping.
Well-known Nike became the top outdoor clothing brand on Morgan Stanley’s list in 2015. It is not well known for achieving corporate sustainability (in fact it has a reputation for the opposite), but it has since striven to re-write its story.
Nike’s success in this area over such a short time is due to its dedication to ESG reporting on supply chains and production practices. Its mobile application helps designers and consumers to compare the environmental impact of different fabrics.
Nike has also followed the trails of other sustainable businesses in encouraging consumers to recycle or reuse their products. It is an effort to reduce waste.
Nike redesigned its boxes and packaging materials to reduce solid waste. It also committed to reducing chemical effluents from its manufacturing process and invested in energy-efficient equipment.
Lastly, Nike is a key player in the intended innovation to ensure sustainable processing of raw materials into products. These are enough efforts that put it right above many sustainability companies.
PepsiCo is one of the world’s leading food-processing corporations with remarkable sustainability goals recently introduced. It is one of the sustainable businesses examples on this list that submit its sustainability goals annually.
Among the company’s immediate goals are to develop a diverse workforce and improve human rights.
This enormous global brand has adopted sustainable business practices to minimize greenhouse gas emissions and the overall impact of climate change . It operates in such a way to reduce its demand for natural resources, thereby protecting the natural environment.
PepsiCo plans to drastically reduce sugar and fats in its soft drink products by 2025 – not only does this reduce the need for resources, but it also makes for healthier consumers, which has countless positive knock-on effects on a societal level. Its other plan is to adopt a new sustainable design that will see all its packaging materials recyclable.
Ford is one of the most reliable companies in the automotive industry. Most of its models are used worldwide, but that is not why it appears on this list.
Ford as a company has increased the use of renewable materials in making automobiles. They have some remarkable statistics to back that up.
Ford managed a global waste reduction by 5.5% in 2018 only and a resounding 14.5% in water usage reduction since 2011. It aims at achieving 100% renewable energy for all its manufacturing factories by 2035.
We are also aware of the millions the company invests in the sustainable design and manufacture of electrified vehicles. Lastly, its effort in public support is not news anymore. It celebrates diversity and improves people’s lives for the better.
General Mills
These days, General Mills mainly focuses on climate change , water conservation, and supply chain improvement. The company supports the humane treatment of animals and improves the social and economic impact of its products.
Today, most products used by General Mills are sustainably sourced, and it aims at making it 100%. The company invests millions in sustainability initiatives and sustainability development. What it covers includes health human rights support. It also puts much effort into improving its global responsibility issues whenever possible.
See Related: Different Sustainable Infrastructure Examples
Xylem is a water technology provider that ensures quality and safety while reducing waste. It has a team responsible for sustainability performance and reporting. The company always strives to make one of the valued world’s resources available now and in the future.
Xylem is committed to optimizing water management, pollution, and reducing waste in landfills. Through its efforts, Xylem has achieved remarkable milestones in water usage reduction and greenhouse gas emissions.
Xylem’s efforts have been recognized by Forbes, Fortune, and Global Water Awards as one of the world’s leading companies that focus on the safety of the local community and global community.
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5 Examples of Successful Sustainability Initiatives
- 22 Oct 2020
The world is in flux—the United Nations predicts that in just over a decade , damage to the planet caused by climate change will be irreversible. Social issues also threaten to divide communities and countries, and the coronavirus (COVID-19) pandemic jeopardizes global health. The need to come together and work toward collective change has never been more pressing.
Consumers contribute to causes they care about by “voting” with their dollars. By choosing to purchase products and services from brands working toward environmental and social sustainability, consumers can make a significant impact. For instance, following the death of George Floyd and the new wave of Black Lives Matter protests in June 2020, Yelp reported a 7,043 percent increase in support for Black-owned businesses on its platform.
This creates a unique opportunity for businesses to pivot their strategies to reflect their values and use budget, resources, and influence to make positive change.
Harvard Business School Professor Rebecca Henderson seeks to debunk the myth that sustainability isn’t a wise investment for organizations. In the online course Sustainable Business Strategy , she explains that the intersection of “doing good” and “doing well”—called the creation of shared value —is often highly lucrative.
“You don’t have to leave your values at the door when you come to work,” Henderson says. “Solving the big problems opens up opportunities that can enable you to have a successful and rewarding business career, while also helping to build a just and sustainable world.”
Access your free e-book today.
Benefits of Running a Sustainable Business
While often expensive, running a sustainable business can pay off in the long run—both financially and environmentally.
Research in the Harvard Business Review demonstrates that sustainable businesses see greater financial gains than their unsustainable counterparts.
The research also shows that consumers’ focus on buying from sustainable brands is on the rise. For instance, products with an on-package sustainability claim delivered nearly $114 billion in sales in 2019—a 29 percent increase from 2013—and products marketed as sustainable grew more than five times faster than those that weren’t.
Additionally, a recent survey conducted by blockchain-based clean energy company Swytch found that nearly 70 percent of employees report that their company’s strong sustainability program impacts their decision to stay with it long term.
Although lofty sustainability goals cost money to implement, strategizing for sustainability can pay off in the long run in the form of product sales and employee retention.
Here are five examples of businesses with successful sustainability initiatives to inspire your organization’s strategy.
Related: 5 Tips for Formulating a Successful Strategy
5 Examples of Businesses with Successful Sustainability Initiatives
One example of a company with sustainability at the heart of its strategy is Rothy’s, a retailer that uses recycled plastic bottles as a production material for shoes, bags, and, recently, face coverings.
“Every minute, one million water bottles are sold globally,” the company states on its website . “Which is why we knit our styles to shape with recycled materials like plastic water bottles.”
On its website , Rothy’s details the process of how used plastic bottles are sliced, pressurized into pellets, and spun into thin, durable thread before they’re knit into shoes, bags, and face coverings. The company reports having recycled nearly 70 million plastic bottles so far.
Rothy’s has also committed to using recycled materials to package products, and it’s partnered with the Envira Amazonia Project to conserve tropical rainforests and offset the carbon emissions released during shipments.
Related: 3 Examples of Corporate Social Responsibility That Were Successful
2. Bank of America
Bank of America is tackling sustainability from the top down by providing other businesses with the funds to reach their sustainability goals.
In 2014, Bank of America launched the Catalytic Finance Initiative , which has directed $10 billion to investments deemed too high risk by many standards but ultimately worked toward the United Nations’ sustainability goals.
By investing in typically high-risk sectors, such as early-stage clean energy companies, Bank of America has effectively de-risked sustainable investments. The success of companies and products funded by the initiative has paved the way for greater cash flow to projects that positively impact the planet.
Since 2016, the Catalytic Finance Initiative has comprised of 12 partners that support investing in high-risk, high-impact sustainability projects, furthering the precedent that investing in sustainability is worth it.
Etsy is the first major online shopping destination to offset 100 percent of carbon emissions from shipping.
Etsy is a platform that enables individuals to sell their artwork and creations to the public, generating a large number of packages shipped daily.
To counteract carbon emissions released into the environment by package shipments, Etsy has partnered with renewable energy company 3Degrees to fund verified carbon emission reduction projects, such as protecting forests, sponsoring wind and solar farms, and developing greener methods for auto part production.
Etsy’s funding of these projects has been purposeful and helped the company ensure it counteracts at least the amount of carbon emissions its shipping creates.
Related: Why Is Strategic Planning Important?
4. AstraZeneca
Pharmaceutical company AstraZeneca operates with health at the center of its work, which is why funding a project that increases Kenyans' health while aiding the environment made sense for the organization.
AstraZeneca partnered with Kenyan company Biogas International and the University of Cambridge’s Institute for Sustainability to install biogas stoves in rural communities in Kenya. The biogas stoves replaced firewood and charcoal fires, which were releasing harmful CO2 into the environment and causing Kenyans who were standing over the fires cooking—namely, women and girls—to experience detrimental respiratory issues.
By helping fund the installation of biogas stoves in these communities, AstraZeneca stayed true to its value of putting the health of others first. In addition, the company gathered data about the detrimental impact of CO2 on the respiratory system for future pharmaceutical work.
5. Ben & Jerry’s
Ice cream brand Ben & Jerry’s has taken a stance on climate change and social justice in recent years, and it stands out as a provider of educational resources for people who want to take action.
“If it’s melted, it’s ruined,” reads a statement on the company's website . “It’s true for ice cream, and it’s true for the planet.”
The Ben & Jerry’s website features facts about the current state of climate change, how it disproportionately impacts underserved communities, and a list of ways to combat it.
The company outlines global goals for everyone to work toward, including:
- Reduce carbon emissions by at least 45 percent by 2030
- Transition to 100 percent renewable energy by 2050
- Stop using coal entirely
- Divest fully from the fossil fuel industry
- Stop deforestation of old-growth tropical forests
- Ensure support for developing countries’ mitigation and adaptation
The company’s goal is to use 100 percent clean energy by 2025, which it’s on its way to accomplishing through solar panels, bio-digesters that turn emissions into clean energy to power ice cream plants, and new green freezer technology.
“As a food company, many of the partners in our value chain, including our fair-trade suppliers in the global south, are at real risk from a warming planet,” the company states on its website . “And because climate change is a risk to people in our supply chain, it’s also a risk to our business.”
Ben & Jerry’s also implores the public to support clean energy movements, read articles about climate change and climate justice, and learn about other brands and organizations fighting for the same cause.
Craft a Sustainable Business Strategy
If your organization has yet to set sustainability goals and formulate a strategy to reach them, start by honing your strategic thinking skills and learning about your industry’s sustainability issues before having a conversation with your team.
These five organizations can serve as inspiration and proof that it’s possible to “do well” while “doing good.” They also demonstrate that running a sustainable business can benefit not just your organization but the planet.
Are you interested in making a difference as a purpose-driven leader? Explore our three-week Sustainable Business Strategy course to learn how to create shared value at your organization.
About the Author
A business model for sustainability
It is impossible to outsource corporate responsibility - businesses must take the lead in moving to a sustainable future. Image: REUTERS/Jorge Luis Plata
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39 Green Business Ideas for Sustainable Entrepreneurs
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An eco-friendly business, or "green business" is one that demonstrates a commitment to an environmentally sustainable future. Green businesses strive to have a positive impact on the environment and their community. This can be achieved through many practices and strategies, from recycling to sourcing local products to promoting energy efficiency.
Sustainable and green business ideas combine your commitment to the environment with your goal of starting a business. Beyond that, they also deliver on revenue and profit. A study by Nielsen revealed that 66% of global consumers are willing to pay more for sustainable products. If you want to launch a green business, get started with this article containing our top sustainable and green business ideas.
39 green business ideas
Here are 39 sustainable business ideas for you to consider if you want to go green.
1. Energy auditing and green consulting
Work with businesses or individuals to help them implement strategies to reduce their carbon footprint.
2. Garden planning
Landscape eco-friendly, sustainable gardens for families and businesses to feed themselves.
3. Environmental law
Provide legal services to protect the environment or hold entities accountable for violating environmental laws.
4. Composting business
Provide a service to pick up compost or a place to drop it off.
5. Green cleaning
Use eco-friendly products to clean homes and businesses.
6. Air duct cleaning
Dust and dirt can easily accumulate in air ducts, preventing the air conditioning system from working properly and thereby increasing energy consumption. Start an eco-friendly small business that serves to regularly clean air ducts to reduce energy consumption.
7. Fundraiser or grant writer
Many environmental organizations could use help getting funding . Start a career as a freelance grant writer to help them out.
8. Eco-friendly food supplier
Deliver food from local sources to people or businesses who need them. Farm-to-table restaurants are some of the businesses that you could help supply.
9. Eco restaurants
Open a restaurant that uses only locally sourced food and sustainable products and processes.
10. Organic nutritionist
This is a powerful sustainable business idea. Help people eat clean — it’s better for their health and our earth.
11. Wind power development
Build wind farms that produce sustainable energy.
12. Geothermal developer
Build power plants that use steam produced from reservoirs of hot water found a couple of miles or more below the Earth's surface.
13. Solar panel manufacturer
Produce the energy-saving panels for homes and businesses.
14. Plant delivery service
Start an eco-friendly small business that sources and delivers plants to people or businesses that will help clean the air around them.
15. Open a used bookstore
Recycle old and gently books for a fraction of the price. You could do this either online or in-person with a brick-and-mortar location.
16. Green gift shop
As mentioned earlier, green products are a selling point. Why not open a store full of them?
17. Sell bicycles
One way to reduce carbon emissions is to reduce the number of people driving cars. One way to do that is by encouraging more people to ride bicycles.
18. Sell scooters
While scooters do emit carbon dioxide, they are much more energy-efficient than cars.
19. Energy-efficient car sales
Of course, people still want to drive cars. Why not sell more environmentally friendly car options?
20. Open a consignment or thrift store
How many clothes do you get rid of each year? Recycling old clothes is a great way to reduce the carbon footprint of each clothing item so they don’t go to waste.
21. Manufacture or sell eco-friendly fashion design
Many designers are making clothing from sustainable materials. You could be one of them, or you could sell them.
22. Environmental blog
Publish information and news about climate change and subjects of interest to the environment. Reap advertising payouts from your visitors while informing the public.
23. Advertising agency specializing in green business
With all the new green businesses and initiatives forming, they’re going to need someone to know how to bring all the good they're doing to a large audience, you could start a green business advertising agency.
24. Give bicycle tours
This is a great sustainable business idea for bicycle enthusiasts! Bike tours in your city are way more environmentally friendly than big ole bus tours or long joy rides.
25. Eco-travel planner
Plan eco-friendly travel destinations and activities for tourists.
26. Sustainable events planner
Offer event planning services that guarantee a reduced carbon footprint from the event.
27. Open an organic spa
Harsh chemicals are bad for your skin just as they are for the environment.
28. Recycled furniture and home goods
Use recycled materials to build furniture and home goods people use in their everyday lives. Or open an antique shop reselling older furniture or refurbishing it and reselling it.
29. Eco-friendly kids toys
A great eco-friendly small business idea for parents. Mainstream children’s toys use a ton of unsustainable materials. Why not give parents an environmentally conscious option for their kids.
30. Handmade clothing
If you've got a knack for sewing you can sell your handmade clothing online. A bonus if it’s from recycled materials.
31. Green remodeling
Green remodeling is the perfect green business idea for the handy entrepreneur. Take a worn down home and make it something new using sustainable materials and updated appliances that reduce carbon footprints.
32. Green architecture
Design new homes using sustainable methods.
33. Solar panel installation
Install solar panels for sustainable energy in homes or businesses.
34. Start a cooperative
Communal living easily reduces the carbon footprints of those living in them because everything is shared and the values of the building uphold sustainability.
35. Green venture capitalist
Invest in helping other people get their green business ideas off the ground.
36. Green financial planning
Sell “green bonds” to those looking to add environmentally conscious businesses to their portfolio.
37. Software
Build software programs made specifically to help businesses or individuals with environmental activities and initiatives.
Develop mobile apps designed to help people with environmentally friendly functions, like finding recycling centers or learning about the environmental practices of different brands.
39. Refurbish/recycle tech
Take people’s old and unused technology and recycle the parts or make something new.
Hopefully, these green business ideas have you excited about the possibilities — not only for profit but the pleasure of running a business that helps people lead greener lives and combining what you do with what you believe in. A value-led company is attractive to consumers — why not create one?
Benefits of starting a sustainable business
Green and sustainable business ideas deliver more than profits. Beyond the feel-good impact that comes with making the world a better place, environmentally conscious and green businesses cater to a rapidly growing market.
“Despite the fact that millennials are coming of age in one of the most difficult economic climates in the past 100 years,” according to a recent Nielsen global online study, “They continue to be most willing to pay extra for sustainable offerings — almost three-out-of-four respondents in the latest findings.”
Generation Z does not want to be left behind either: The rise in the percentage of respondents ages 15 to 20 who are willing to pay more for products and services that come from companies who are committed to positive social and environmental impact hovered around 72%.
Businesses that establish sustainable or green values or practices have an opportunity to grow market share and build loyalty among consumers now and in the future.
Now is the time to pursue your sustainable business idea
There's never been a better time to launch a green or sustainable small business. We’ve undoubtedly seen a ton of change in the last year toward climate solutions and policy, especially as the implications of the Paris Agreement reverberated through businesses, industries, and investors.
“Companies continued to ratchet up their commitments and achievements on renewable energy, greenhouse gas emissions, sustainable supply chains, water and land stewardship, the circular economy, and other aspects of a sustainable enterprise,” according to GreenBiz . “Technology continued its inexorable march, accelerating sustainability solutions in energy, buildings, transportation, food, and just about everywhere else.”
However, global indicators continue to trend in troubling directions. Concentrations of carbon dioxide are unprecedented compared with the past 800,000 years according to the U.S. Environmental Protection Agency, even after accounting for natural fluctuations. Global temperatures continue to rise, and other metrics — on coastal flooding, heat-related deaths, wildfires, polar sea ice, biodiversity, and more — are just as harrowing.
Suffice it to say that we have a major challenge on our hands. Of course, no one is going to solve climate change on their own. But if you’re looking for green business ideas you can do your part and start an environmentally conscious business.
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Sustainable Business Model Examples
Depending on who you ask, there are two prevalent definitions of a sustainable business model .
The first definition posits that a sustainable business model is one that creates value for all stakeholders without depleting the resources that produced it.
The second interpretation is much simpler and one that many are more familiar with.
In this context, the company prioritizes sustainable, positive, long-term impact by striving to balance economic, social, and environmental pillars.
With those definitions in mind, below is a look at some sustainable business models from companies in a variety of industries.
PepsiCo’s business model is built around a belief that there is an opportunity to improve how the world produces, distributes, consumes, and disposes of food and drink.
The company’s strategy permeates every aspect of its circular value chain to reduce GHG emissions, recycle packaging materials, and rejuvenate vital water supplies.
In 2021, the company announced the pep+ (PepsiCo Positive) strategy to drive positive action for people and the planet.
Among many other initiatives, Pepsi wants to improve farming communities that provide crucial raw materials and inspire customers to make sustainable choices that benefit the planet.
The “Move to Zero” sustainability campaign is part of Nike’s commitment to reduce its carbon emissions and waste production to zero.
Importantly, Nike realizes that its sustainable business model can only work if the entire industry works together.
To that end, the company plans for its factories in Vietnam, China, and Indonesia to be 100% solar-powered by 2025 .
Nike is also revolutionizing its manufacturing and fabric production processes.
For one, it is reducing the size of its cardboard shoe boxes so that less tissue paper and wrapping are required.
The company also eradicated single-use plastic bags at the end of 2021 and has implemented a system where customers can identify which of its products contain more than 50% reused materials.
Ford has a broad sustainability strategy based on three key aspects:
- Hard data – Ford employs a team of climate scientists to predict its future carbon emissions. Then, the team works backward to determine the acceptable fuel efficiency that all future vehicles need to demonstrate.
- Short-term and long-term challenges – while Ford is taking advantage of the hype surrounding electric vehicles, it is also enhancing its internal combustion engine fleet with advanced technologies and innovation .
- Pragmatism – Ford acknowledges that while 9 billion will be on the planet by 2050, this is not an open invitation for it to sell more cars. Here, Ford is placing the needs of the planet and society above revenue and market saturation.
Ben & Jerry’s
Ice cream brand Ben & Jerry’s has a long history of utilizing a sustainable business model .
As early as 2002, the company was implementing carbon offset programs and investing to increase the efficiency of its supply chains and manufacturing operations.
The company’s main environmental impact stems from dairy cow emissions on farms in which it sources milk and cream.
Like Ford, Ben & Jerry’s has established science-backed GHG reduction goals which are verified by third parties.
Specific actions to reduce emissions include no-till cropping, crop rotation, and investment in manure separators and digesters that limit the amount of methane gas produced.
Key takeaways:
- Sustainable business models are those that create value for stakeholders without depleting the resources that produced them. Other definitions incorporate value creation that is sensitive to environmental, social, and economic factors.
- PepsiCo’s sustainable business model permeates every aspect of its value chain to change the way people consume and dispose of food and drink. Nike’s model relies on industry cooperation and alignment to be successful.
- Sustainability at Ford involves setting realistic, relevant, and science-based objectives. Ice cream manufacturer Ben & Jerry’s has also utilized scientific research to develop ways to reduce methane emissions.
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In this example, a few of the SIPs for our CPG company are as follows: shifting to new packaging formats; setting up plastic collection initiatives; lobbying for government programs like deposit return systems; joining precompetitive coalitions that invest in recycling infrastructure and new recycling technology; and educating and nudging …
There are four key elements of a sustainable business model. 1. A sustainable business model is commercially profitable. You can make a profit and be socially responsible. No business can succeed or scale unless it attracts customers. What is your value proposition? Who are your target customers?
The following are the best sustainable business examples to follow: IKEA IKEA is one of the few business examples known worldwide for its efforts in achieving sustainability throughout its supply chain and operations. The furniture giant appeals to employees, customers, and stakeholders through its sustainability practices.
Examples of Sustainability in Business Many successful organizations participate in sustainable business practices, however, no two strategies are exactly the same. Sustainable business strategies are unique to each organization as they tie into larger business goals and organizational values. For instance, sustainability in business can mean:
5 Examples of Businesses with Successful Sustainability Initiatives 1. Rothy’s One example of a company with sustainability at the heart of its strategy is Rothy’s, a retailer that uses recycled plastic bottles as a production material for shoes, bags, and, recently, face coverings.
The Business and Sustainable Development Commission has estimated that meeting the SDGs could add some $12 trillion and 380 million jobs to the global economy by the end of the next decade. With so much to gain – and to lose from inaction – the private sector is beginning to focus on the connection between profits and sustainability.
31. Green remodeling. Green remodeling is the perfect green business idea for the handy entrepreneur. Take a worn down home and make it something new using sustainable materials and updated ...
PepsiCo’s sustainable business model permeates every aspect of its value chain to change the way people consume and dispose of food and drink. Nike’s model relies on industry cooperation and alignment to be successful. Sustainability at Ford involves setting realistic, relevant, and science-based objectives.