What is a sustainable business model?

Sustainable Business: Charting a Purpose-Driven Path to Prosperity

​

The science speaks clearly: the scale of human activity is pushing our planet's resources to the brink, with potential environmental collapse a reality.

 

In this pivotal moment, businesses globally face a defining challenge—embracing sustainability. Customers, employees, investors, and policymakers demand more than token efforts; they seek proof of authentic, sustainable practices beyond mere compliance. They want to see purpose embedded into organisations authentically and transparently.

 

The metamorphosis from the traditional to the sustainable business model rests on anchoring purpose at an organisation's core. This evolution transcends size; even small and medium enterprises hold transformative power. These enterprises, comprising over 99% of the private sector, collectively wield influence to shape our planet's social and environmental destiny.

 

Evidence mounts: failing to transition equates to missed opportunities. Building resilience, capturing value, and forging a sustainable competitive edge are the rewards of aligning with sustainability. The journey encompasses various maturity levels, from compliance through to an authentic purpose-driven organisation. Our Sustainability Health Check engagement tool helps businesses understand where they are now and, without judgment, helps to identify actionable insights to move towards the next level.

​

Reporting versus strategy: with calls to reduce carbon emissions and reach net zero, the landscape often prioritises reporting over strategy.

 

While there has been notable progress in defining metrics for sustainability and supporting them with increasingly relevant and better-quality data, this has inadvertently created an overemphasis on reporting and compliance. So instead of measuring action and progress against a strategic plan, environmental and ESG reporting metrics, for example, have become an end in themselves. The introduction of the EU's CSRD and focus on double materiality will hopefully influence a general pivot to strategy.

 

This pivot will help shift mindsets and the realisation that to make a substantial difference in this decade of action and reach targets to stay within the planetary boundaries - we need to transform the way we operate our business models, making them sustainable from the ground up. Essentially reengineering the whole process rather than adding bits on!

​

What is a Sustainable Business?

Becoming a sustainable business is about understanding material risks to your business but also taking responsibility, being transparent and accountable for your impact on the environment and communities you and your supply chain operate.

​

Adopting socially inclusive and environmentally sustainable practices not only helps to rebalance inequalities in the various ecosystems but organisations who commit to becoming sustainable businesses now will be well-positioned to meet the rapidly evolving legislation in their home and export markets. Being a supplier in a corporate supply chain means it is now imperative that you measure and report your GHG Footprint .
 

Large corporations have begun their sustainability journey; however, many SMEs who either are in a value chain or understand the value of becoming sustainable are unsure how to get there and where to make the necessary changes in their business. According to a survey reported in New Zealand, most SMEs are concerned by climate change, but 40% are without sustainable processes.

 

How do you transition to a sustainable business model?

Businesses can transition incrementally or disruptively; it depends on the appetite of the business leaders. Whichever route is taken, the end goal is to move from a linear (take-make-waste) economy to a circular one, reducing the impact on resources and the amount of waste.

 

When we think about the maturity levels of our clients, we obviously would like them to move into maturity level 5 as quickly as possible, but each business has its own journey to take.

 

In essence, leaders need to reimagine their corporate strategy by creating new modes of differentiation, embedding societal value into products and services, reimagining business models for sustainability, managing new performance measures, and reshaping business ecosystems to support these initiatives. This takes time, but with planning in place, the foundations can be built relatively quickly.

 

Five steps to sustainability transformation

 

1. Commit - create the business case and get buy-in from the entire business, Board through to new hires.

2. Act - explore the value chains and stress test them for social and environmental sustainability, risks and profitability. Create "imagine if……………." scenarios - "what happens if - XYZ trend emerged, and regulation came into play". Balance profits with purpose.

3. Empower - employees and stakeholders to focus on sustainability and believe in the integrity of the business, aligning purpose and business strategy. Make a good brand great, and focus on collective leadership.

4. Collaborate with employees, supply chain partners, NGOs and communities to fully understand, embed and be a force for good.

5. Communicate your journey authentically, internally and externally, creating one voice for sustainable development.

 

How we can help

As research underscores, the opportunity cost of ignoring sustainability is steep. Companies embracing sustainable models bolster their futures, creating social, environmental, and economic value.

 

Through our work, we have created a series of Adviser-Led programmes available on subscription. These programmes have been designed for businesses that are at different stages of their sustainability journey. Our focus is to give you the guidance, tools and resources to build capability over a twelve or six-month timeframe.

​

To truly embrace sustainability, reach out to experts like SDG Changemakers who can help you navigate this transformative landscape.