Sustainability is a measure of something’s ability to continue. The more sustainable something is, the longer it can go on for.
Here at THRIVE Project, we don’t just measure sustainability, we focus on thrivability. Sustainability is the bare minimum required to continue. This means that sustainability metrics focus on living hand to mouth, day by day. Thrivability is about going beyond break-even, flourishing. This encompasses the concepts of regeneration and resilience.
Past business models focused on creating value for the business owner. This was later expanded to include internal stakeholders such as shareholders. However, these business models are still incomplete. This is because they don’t calculate the effect a business has on the world, or the impact of those effects on the business itself.
A sustainable business is one that takes a holistic approach. No business operates in isolation; it exists within an ecosystem. At the very least, it relies upon a supply chain and a delivery chain. The sustainable value model shows how an organisation creates value from this ecosystem. To continue generating value from the environment, an organisation must calculate its effects on that environment (Evans et al. 2009).
Sustainable business models can therefore be conceptualised as complete or holistic business models. SBMs have evolved to include external stakeholders, such as society and the environment. This changes the calculation of any value creation model. A company must include the full impact of business practices on external stakeholders to determine the net value it produces.
Sustainable business models (SBM) articulate the strategy of an organisation. An SBM describes how an organisation goes about its business and provides the expected outcomes for any suggested sustainable practices.
Sustainable practices are specific things a business does that increase sustainability. Typical examples involve reducing, reusing and recycling materials or products. For example, a company may switch to using recycled paper which is more sustainable. Better still, it may stop using paper altogether by switching to digital communications. Similarly, switching from single-portion food products to bulk-buy products can reduce plastic waste.
Society is pressuring business leaders to look beyond creating shareholder value. People want companies to generate value for the environment and society as well. Long-term financial gain is only possible through sustainable development. Both start-ups and established businesses need to embrace SBM’s within the fabric of their organisation. It’s the only way to ensure long term survival and thrivability.
Companies that use sustainable business models are more likely to succeed (Lindgardt et al. 2009). Business sustainability is the single most effective way to ensure long-term success (Fedeli, MD 2019).
Economic growth needs to be coupled with social value and mitigation of environmental impacts. A sustainable business model identifies risks in the current supply and value chain. It then integrates innovation to combat those risks and ensure prosperity.
Adopting an SBM also helps to create a positive brand image. People are becoming more critical of corporate impacts on the global environment. SBMs are ethical business models, providing value to both shareholders and society. This makes them more attractive to eco-minded consumers, as well as potential employees.
Contrary to popular belief, sustainability does not come at a cost (Eccles, R. 2012). In the long term, sustainable practices offer greater economic returns than the status quo.
There are some initial costs involved, as with any business strategy. However, these are soon recuperated. Plus, there are many government incentives and subsidies that help minimise those costs.
Examples of more cost-effective sustainable practices include:
There are a variety of terms used to discuss sustainability in business. Some call it resilience, which is how well a system adapts to change. Others talk about a triple bottom line that encompasses social, financial and environmental value. Others still will engage in corporate social responsibility (CSR) programs, philanthropy or similar.
Greenwashing occurs when a company falsely claims to have become more sustainable. It may have changed one aspect of its business model without considering the full impact. For example, a coal mine might install solar panels. Yes, on its own, this is better than burning diesel to power a generator. But when you consider the whole impact of the coal mine, it is definitely not sustainable. This is why it is important to distinguish between weak and strong sustainablility. Weakly sustainable approaches invite substitution and are not truly sustainable. They are often used by organisations looking to greenwash their results.
CSR programs, philanthropy and other such initiatives are NOT sustainable practices. The only way to truly measure if an entity is sustainable is to take a holistic approach. This means you must measure its impact relative to its ecosystem. To measure water use accurately, the amount of water used must be compared to the total amount of water available. Reporting how much water you used this year versus last year might sound good, but it doesn’t tell you much.
There are over 45 sustainable business model patterns that have been identified. These have been sorted into specific groups that relate to how much value they produce in different areas – economical, ecological (environmental), and social.
Let’s take a closer look at some examples from the integrated forms of value creation: supply chain and community platform.
Uncertainty creates disincentives for business leaders to change. Transforming your business strategy is complex, making it difficult to move forward. We know that business model innovation can lead to improved sustainability performances. But how do you know which business models will be successful for your industry? And which business models are sustainable?
The answer lies in a transparent Sustainability Performance Scorecard tool. The THRIVE platform ranks corporate sustainability performance alongside the business model or strategy. This allows consumers to reward sustainable organisations.
Currently, the THRIVE platform is a conceptual tool, a proof of concept that is still being developed and refined.
The THRIVE platform is a free online sustainability performance scorecard. It is the only platform that links sustainability performance with business model strategy. The platform can provide the basis to assess business models according to their sustainability. It also uses machine learning to display which business models perform best within an industry. More than a predictive tool, it prescribes the trajectory forward by measuring and guiding entities towards sustainable development and beyond.
The platform is based on 12 Foundational Focus Factors. These factors are the necessary conditions to transform humanity towards sustainability and thrivability. The THRIVE Platform adopts a systems-thinking approach to predict and guide your startup. The tool will identify successful business models and strategies within your industry. It guides entities into adopting sustainable development strategies, transforming them into thrivable entities.
It showcases social floors and environmental ceilings, highlighting the safe and just operating space for humankind. It builds on donut economics, strong sustainability, and science and context-based approach. Furthermore, it is founded on the Framework for Strategic Sustainable Development and thus builds upon backcasting principles.
Accuracy will improve with more data and sophisticated machine learning over time. Accuracy depends on the amount of data and the breadth of scope of the machine learning or AI involved. As we collect more data and develop scientific understanding, the accuracy improves.
Anyone can use the THRIVE Platform from entities, analysts, researchers, governments, and consumers. Young entrepreneurs are encouraged to use the THRIVE Platform to measure any entity in a given industry. Adopting the SBMs that work in your industry will ensure long-term sustainability and prosperity.
For example, the THRIVE tool shows that the most sustainable enterprise in the Animal Source Food Production Industry is the Thai Union Group. They are responsible for brands like John West, Chicken of the Sea, and Red Lobster among others. They use the business models P5.1 (Green Supply Chain Management) and P3.2 (Maximise material productivity and energy efficiency). For more information on using the platform or various examples of sustainable business models, check out the video below.
Feel free to contact us if you want to learn more about how you can transform your business or startup into a sustainable one. You can also book a one on one demonstration to learn more about THRIVE Platform.
