Business models and

Sustainability
Sustainable Business
Dr Peter Bradley
 Learning objectives
• Understand what a more intelligent approach
to resource use might look like for businesses;
• Understand the use of business models for
sustainability;
• Look at some frameworks that can be applied
to explore business models.
 Introduction
• The scale of resource use to supply consumer goods
and services is the main reason that society stands so
close to breaching key global environmental pressures;

• A more intelligent approach to goods and services

provision is required (Clift and Allwood 2011).

• Straight forward approaches using technology and

resource efficiency are unlikely to be enough (See
Jackson 2009)
 Re-designing business models for
sustainability
• There is no universal consensus on what a
business model actually is

• A definition by Charles Baden-Fuller;

“The business model is the device of

configuration that connects a.) creativity or
technology with b.) customer satisfaction
and c.) financial stability”
 Business model configurations
• Baden-Fuller and Mangematin (2013) - 4 key
dimensions to look at in relation to business
models: Customer sensing; Customer
engagement; Monetisation; and Value chain
and linkages.

• Each of these relates to either value creation,

value capture, or both.
Four part typology for business models

By Baden-Fuller and Mangematin (2013)

 The Typology
The typology can be used to explain the various
ways in which different contexts, technologies
(or future technologies) and creativity, can be
connected to ensure customer needs and
provide revenues for the connecting enterprise.

Typology versus taxonomy (see Baden-Fuller and

Mangematin);
 A similar but alternative view
Combining Osterwalder (2004) and Doganova and
Eyquem-Renault (2009), Boons and Ludeke-Freund
distinguish elements of a generic business model concept
as:

1. Value proposition; - value embedded in

product/service
2. Supply chain; - upstream relations structuring and
management;
3. Customer interface – downstream…… “ ”
4. Financial model – Costs and benefits and distribution
across actors;
 Business models as a modelling tool
• Business models are seen by some as ‘a
modelling instrument’/tools – to explore
cause and effect. This is a more scientific
view.
• Comparative analysis – important in such
investigation;
 Alternative business models for
sustainability in Energy
Conventional approach

Fuel Boiler Heat Comfort

Separation of
responsibility
Supplier Consumer

ESCO approach

Fuel Boiler Heat Comfort

Separation of
responsibility
Supplier Consumer

Difference between Conventional and ESCO model

(see Narec.co.uk 2013)

See Thameswey energy for a company that applies such Energy serviceing contract
models http://www.thamesweyenergy.co.uk/
 Business models and incentives
• How would such a change in Business model
affect the incentives for the consumer and
producer?

• How would this influence environmental

sustainability of the business models?
Unsustainable business models (
Boons and Ludeke-Freund)
 Unsustainable business models for
telephony
• What might be an alternative business model
for mobile telephony?
 Business models for sustainability
“Whereas authors from the technological innovation
stream see business models as market devices to
support innovations, Birkin and colleagues as well as
Stubbs and Cocklin discuss sustainable business models
as an expression of organisational and cultural changes
in business practices and attitudes that integrate needs
and aspirations of sustainable development” (Boons
and Ludeke-Freund 2013, p. 15)
 Pilot frameworks for understanding and
designing business models for sustainable
development
 The ‘torch’ light framework

Cost Structure
Key resources
Key stakeholders and partners C C
Customer segments V S
K K
K C
R
C S A L Channels,
Value proposition R & value chain
C
C P & linkages
S

Key activities
Wider societal value Customer relationships
& sensing

worth capture & Customers

/stakeholders use of value proposition in their context

Value captured
by company

Bradley et al (2016)
 Coursework
• When you apply the Baden-Fuller and Mangematin framework in
your coursework, supplement it with data on economic, social and
environmental impacts associated with the business model.

• Company reports including Corporate Social Responsibility reports

may provide relevant environmental and social information as well
as their websites and other reports;

• You might make use of other secondary data and reports from
Bloomberg terminals ,NGOs and other sources;

• Start with industry level sustainability reports – they can help you
understand likely key impacts for your case study, see e.g.
https://dm.pwc.com/SDGSelector/ Also look at Truecost;
https://www.trucost.com/
 Environmental, social and economic
sustainability
• Given it is a small project it is ok for you to focus
primarily on Economic and social; or Economic and
environmental if you wish and on what you have found
to be the key impacts of your case study, but you do
need to at least look at the third aspect be aware of
likely key impacts;

• Projects that demonstrate more holistic understanding

and initiative will be given credit;

• When looking at business model change attempt to

demonstrate potential changes in the three areas;
 Economic measures
• Measures for these are provided in appendix 1
of Bradley et al (2017);
 Environmental sustainability
• A strategic approach to get a handle on key environmental impacts would be to
look at:
• The organisations key material flows – (quantitatively if possible) – including
water use;
• Emissions – what are the key emissions and do they occur during production,
delivery or use of the product or service? CO2/food/paper waste etc.?
• You might use the ECO LCA tool to look at typical direct but also supply chain
impacts for the relevant industry.
• http://www.eiolca.net/Method/index.html (uses life cycle analysis LCA)

• http://www.eiolca.net/cgi-bin/dft/use.pl

• You might like to look at the GRI standards, but don’t go mad as they go into a lot
of detail and depth and remember you are writing a short report
• https://www.globalreporting.org/standards
 Life Cycle Analysis (LCA) for looking at
environmental (and sometimes social) impacts
 Social sustainability
For social impacts you might look at some of the
measures looked at in the GRI
www.globalreporting.org/standards or https://dm.pwc.com/SDGSelector/

Or social measures that I identify in Bradley et al

(2017) – this is uploaded on Blackboard.
 Potential social measures you might
look at from ISO 26000
Human Due diligence
rights
Human rights risk situations
Avoidance of complicity
Resolving grievances
Discrimination and vulnerable groups
Civil and political rights
Economics, social and cultural rights
Fundamental principles and rights at work
Labour Employee and employment relationships
practices
Conditions of work and social protection
Social dialogue
Health and safety at work
Human development and training in the
workplace
• Which areas are most relevant to your case study?
• How does your proposed change in business model impact these?
Fair operating Anti-corruption
practices
Responsible political involvement
Fair competition
Promoting social responsibility in
the value chain
Respect for property rights
Community Community involvement (Phils
involvement framework)
and Education and culture
development
Employment creation and skills
development
Technology development and
access
Wealth and ioncome creation
Health and safety at work
Socail investment
Consumer Fair marketing, factual and unbiased
issues information and fair contractual practices
Protecting consumers health and safety
Sustainable consumption
Consumer service, support, and
complaint and dispute resolution
Consumer data protection and privacy
Access to essential services
Education and awareness (e.g. smoking
pictures)
The Prevention of pollution
environment
Sustainable resource use
Climate change mitigation and adaptation
Protection of the environment,
biodiversity and restoration of natural
habitats
 Barriers to sustainable business
models
• Care of products - when changes in
ownership;
• Potentially higher transaction costs;
• Changes in industry structure and
consumption – impacts on growth?
• Regulatory barriers;
• Technological barriers;
• Co-operation along a supply chain;
 Opportunities for more sustainable
business models
• Cost reductions and profitability;
• Changes in the regulatory environment that
favour more environmentally sound
companies;
• Move towards certification and environmental
credentials;
• Consumer demand
 Conclusions
• Variety of perspectives on how to define business models – this is fine –
depends on context and use.

• The development/application of business models in conjunction with

technological and social innovations are central to achieving sustainable
production and consumption;

• A variety of frameworks for exploring business models exist, only a few are
currently fit for investigating business models for sustainable development
(need environmental, social and economic considerations) – including
Baden Fuller and Mangematin – this is why you will nee to supplement
with measures of social and environmental impacts etc.;

• The subject of business models for sustainability is an important but under

researched area; we must progress this!
 Business models essential reading
Baden-Fuller C. and V. Mangematin (2013). Business models: A challenging agenda.
Available at:
http://www.cass.city.ac.uk/__data/assets/pdf_file/0004/194467/Business-Models-
WEBSITE-CASS-A-challenging-cognitive-agenda-SO!apbox-2013.pdf

Bradley et al (2016). A framework for understanding and designing business models

for sustainable development. UWE economics working paper. Uploaded onto
blackboard for you.

Boons F. and F. Lüdeke-Freund (2013). Business models for sustainable innovation:

state-of-the-art and steps towards a research agenda. Journal of Cleaner Production,
Vol. 45, pp. 9-19.
Available at: http://www.sciencedirect.com/science/article/pii/S0959652612003459

Clift and Allwood (2011). “Rethinking the economy”. The Institution of Chemical
Engineers, TCE, Issue 837, pp.30-31.
 Economic/Environmental Impact Tool
• http://www.eiolca.net/