As corporations increasingly embed sustainability into their long-term plans and decision-making processes, new business models are emerging that promise to deliver financial and non-financial (such as environmental and societal) values while working toward a net-zero emissions economy.
A new paper by Volans, commissioned by the Business and Sustainable Development Commission, calls these “Breakthrough Business Models.” As Volans chairman John Elkington writes in an article on Medium: “As leaders learn to ‘Think Sustainably,’ they will also need to learn to ‘Think X,’ shorthand for ‘Think Exponential’ … And in Thinking X, business leaders need to focus on four key domains where the X agenda is already playing out.”
Tesla is an example of one of these exponential companies. As the report says, Tesla and its founder Elon Musk are “thinking big and betting big” on the company’s mission to accelerate the global transition to clean energy by integrating cars, batteries, grids and solar power.
The four “exponential” characteristics of breakthrough business models, as detailed in the report, are:
“Project Breakthrough is really about bringing disruptive thinking to companies,” said Volans’ Jacqueline Lim in an interview. “We think about disruption in three areas. One, the exponential mindsets that are necessary to drive change to reach the scale that the UN’s Sustainable Development Goals demand. Second, we think that disruptive technologies are going to be playing a huge, crucial role in terms of helping us achieve the SDGs. And finally we need business models that are fit for purpose and give businesses a new language when they think about sustainability.
“It’s no longer about trying to build a business case for sustainability. There are huge opportunities — financial and non-financial — in evolving these new business models.”
In addition to Tesla, another example of a breakthrough business model is a partnership between European energy company Enel, the UK’s National Grid and Japanese automaker Nissan. The three organizations are working to turn vehicles into mobile power sources by allowing drivers of Nissan Leaf battery-powered cars and e-NV200 electric vans to sell excess energy during periods of peak demand.
“Here you see three different companies from three different countries and three different industries coming together to build and share a business model that can deliver exponential growth,” Lim said.
So how can other corporations embed these characteristics into their own business models?
Lim says joining the UN Global Compact is a good start. In joining the global corporate sustainability initiative, companies agree to set goals in each of the Global Compact’s 10 principles regarding human rights, labor, environment and anti-corruption, and to publicly report progress every year. The Global Compact, in turn, helps its member companies develop strategies to implement sustainable practices into their operations.
There’s also a need to change how executives think about — and develop strategies around — sustainability.
“First and foremost, businesses need to start changing the way they talk about sustainability,” Lim said. “Leaders need a change of mindset, from a glass half empty perspective to a glass half full. What are the positive impacts we can create through our business?”
This echoes another business initiative launched in June called the Net Positive Project. This coalition of companies aims to go beyond reducing their negative sustainability impacts to contribute in a “net positive” way to society, the environment and the global economy. This coalition is developing a framework on how to scope, measure, and communicate net positive outcomes.
BSR is one of the group’s coordinating the Net Positive Project’s efforts.
In announcing the business coalition BSR senior vice president Eric Olson cited the Paris climate agreement and the UN Sustainable Development Goals. “Business has a clear mandate to create sustainable technologies, products, and services that can help the world meet these goals.”
With the Paris climate deal going into effect next month, and a growing number of corporations realizing the business opportunity in the Sustainable Development Goals, we expect to see these and other “breakthrough” business models gaining traction among forward-thinking companies.
