Impact of Utilizing Sustainable Business Models

Impact of Utilizing Sustainable Business Models

More and more companies consider themselves engaged in ecological and social transformation. Although establishing a sustainable business model takes work, it offers competitive advantages. Climate change, inequality in working conditions, and corruption are now part of everyday media life. 

Therefore, sustainability is becoming an increasingly important priority for companies, alongside usual business objectives. Leaders are increasingly realizing that competitiveness and sustainability are inextricably linked. However, companies must realign their business models to master global challenges.

Sustainability as an integral part of the system of objectives

Some pioneering companies have already taken the next step. They have already developed new target strategies that will enable them to create a sustainable and comprehensive business model. However, this new business way may differ for each industry sector. 

For the automotive industry, this means using autonomous vehicles powered by clean energy and shared mobility. In the financial sector, on the other hand, this means, for example, aligning investment decisions with environmental and social objectives.

Six approaches for more sustainability

However, it is necessary to place the change process at the board level and involve influential thought leaders to actively support those responsible for innovation. Six strategic approaches help achieve both sustainability and business goals. It doesn’t matter how experienced or inexperienced a company is with sustainability.

1. Implement a Courageous Vision in a Controlled Way

Sustainability pioneers first design their future business model and then develop strategies to put it into practice. Among the companies surveyed, the number of those striving for a complete sustainability transformation will almost triple over the next five years, from 9% today to 26%.

2. Rethink customer loyalty

In the future, long-term customer loyalty will become the main driver of sustainable business success, even ahead of reputation and cost savings. Pioneers convince their customers with a holistic approach. Sustainable products are part of the value proposition, and the change process is accelerated by innovative product features and price advantages.

3. Fully involve partners

Many companies are using new forms of cooperation to fundamentally change their business ecosystem. 64% of study participants consider this change to be significant. Respondents plan to intensify cooperation with regulators, legislators, and competitors, among others, over the next five years.

4. Use new technologies responsibly

The use of innovative technologies must be designed in such a way that lasting successes are achieved quickly and without undesirable side effects on health and the environment.

Pioneers in this area include Apple, which uses recycling robots, and Google, which uses artificial intelligence to save up to 40% of the energy needed to cool data centers.

5. Redefine the nature of value creation

As part of their business strategy, pioneers go beyond pure financial ratios. The first large companies integrate environmental and social aspects into their investment decisions. They recognized this is much more than a simple trade-off between profitability and sustainability.

6. Adapt the main activity according to needs

90% of companies surveyed recognized that they needed to change their core business model to become more sustainable. 38% even consider that a radical transformation is essential. The change in strategy towards more sustainability can encompass products, customer relationships, and the core business.

Avoid mistakes to achieve long-term success

Companies that want to fundamentally restructure face the challenge of maintaining their current business model and, at the same time, advancing the transformation towards sustainability. The risk of failure is high. According to one study, only 4% of participants succeeded entirely in their transformation. 47% say they have failed so far.

This failure rate shows how difficult building a sustainable business model is. However, companies changing their strategies can now gain a substantial competitive advantage.

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