Characteristics of a sustainable business model

Even at a time where climate change is marred with politics, we are finding that people have increased consumer awareness. There are now even organizations whose fundamental purpose is to consolidate globally boycotted brands and even countries to educate the public. We find that consumers are vocal about how brands affect individuals on several levels. There is now more talk about businesses disclosing their employee’s working conditions, their pay, if they use inhumane ways to acquire products and their carbon footprint. 

In light of this progression about consumers caring about multiple aspects of their purchase, businesses are finding that they too have to evolve. In this era we find that customer experience is of primary importance. People are gravitating towards bands that show that they care about the people working for them, who they sell to and what they are doing to give back.

Therefore, brands are better off, in the long run, adopting sustainable business models. It is what people care about in the modern age. To do that companies have to find a cause beyond making profits and make it about helping all stakeholders. A company working in cross border tax planning can support a local shelter with their services and attract more clients than one where the evidence points towards profit margins. 

Competition persists, and sustainability is an additional aspect to uphold. Doing it earlier ensures you do not wind up on a boycott list. Equally, you don’t want angry people targeting you both online and in person due to questionable business practices that should have been phased out decades back. As you venture to make the transition, let us explore the various characteristics of sustainable business models.

However, let us first delve into what a sustainable business model is.

Definition

A sustainable business is one that aims to minimalize the negative impact on the environment, the people and the economy either on a local or global scale. They typically have environmental or human rights policies guiding their business model. Another name given to them is green businesses. One finds sustainability governs decision making in providing products and services. The intention of going green is to phase out brands that do not uphold these values.

Characteristics of a sustainable business model

A study Unilever published in 2017 states that a third of consumers now opt for brands they consider sustainable. As social awareness continues to penetrate all social groups, this number is likely to grow in the coming years. The respondents stated the payoff for purchasing a sustainable brand as feeling better. They are happy that in their way they are improving the world and are supporting brands doing the same.

Given how smart customers now are, it is not enough to use buzzwords to show you joined and support the bandwagon. They are quick in their research and once found out the backlash from the public is usually immense. Even more, in some instances, it leads to legal action being taken. The result is a product removed off the shelf, bankruptcy or a company closing. These are the eventual outcomes, even though it takes decades.

To avoid being locked out of the race, businesses now ought to ensure they formulate a sustainable business model with the below characteristics. Though not exhaustive, it creates are precedence on the direction to take.

Supports Sustainable Development Goals

Global Goals came about in 2015 when global leaders came up with 17 goals to make the world a better place. The set date to a transformed world is 2030, and thus we have some ways to go. The goals fall under three themes: ending poverty, stop climate change and fight inequality. There is much organizations can choose to align themselves with. They may even purpose to affiliate with the organizations directly working in their way to bring the global goals to pass. They can instead serve as an inspiration on the tangible changes they can bring

Creating a business model that supports Sustainable Development Goals in some ways is how the current generation can guarantee a safe future. The current trajectory is both promising and apocalyptic, depending on whom you ask. For one, technological advancements promise longer life, but a warmer planet is bringing weather that wreaks havoc globally. A sustainable business model consequently aims to reduce the negative impact on generations to come and pass on the positive aspects of where we are. 

It is profitable

There is somewhat an incorrect association between sustainability and pricing. Though organic foods and solar panels are expensive, people’s failure to see the long term gain deters them from making these choices. The reality is different. Organic foods make you healthier. You get to spend less on hospital bills, are more productive and live longer. With solar panels, after installation, reduce or eliminate your energy bills.

Businesses ought to adopt the same thinking. Transitions are typically hard, but worth the while. The bottom line in a few years will be higher, just as the consumer saves money from making bold moves to making sustainable choices. The profits thus come from savings but also delivering on what consumers need for sustained businesses. The cost-benefit analysis equally ought to be part of marketing and advertising. People are more willing to make purchases when they understand the value.

Charitable

Giving back is a significant issue that people look at when they choose to rally behind a brand. They want those that are socially conscious and in tune with what their customers experience daily. A business should thus not just take from the customers, and the environment as that is considered greed. Instead, there should be a cycle that all players benefit from creating a balanced ecosystem.

When coming up with a passion project, the relevant players must find ways to make it an integral part of a sustainable business model. The danger of doing one-off events, especially those that attract media attention, is they are considered as nothing more than a PR stunt. The consumers will not fall for it, at least not for long. As a result, giving back should be part of what your brand does all the time.

All inclusive

In the current social, economic and political climate, one cannot get away with being prejudice toward a people or a group of people. Sexist ads such as these would never cut a creative idea in today’s world. In places they do, it means the people are coming up with and creating the content is blind to reality. The criticism would be severe and would even lead to a national or global match boycotting the brand and the messaging. We know this because it continues to happen. 

Brands have to have diversity at the table to avoid insensitive content from circulating. Consumers are increasingly sensitive to what brands put across. That means they can quickly tell messaging that reflects a company’s values. Given that the world operates in a competitive state, one cannot afford to drop the ball when it comes to being diverse in the journey to sustainability.

Transparency

Another characteristic of a sustainable business model is being open about the processes going on in your business. People find brands that are open more trustworthy and find those that are secretive the exact opposite. Transparency extends internally and externally and affects both the employees and customers alike. It touches on the aspects mentioned; you cannot be deceptive stakeholders from an extended time without a scandal breaking out.

In business, one will not always get it right especially where information is lacking. Should there be a hitch when implementing the sustainable business model; one should be open about the realities of what took place. Even in the era of business intelligence, things outside our control take place. However, this characteristic of a business model equally dictates a company’s fate.

Adaptive

How fast the world is changing cuts across everything primarily due to the circulation of knowledge is the highest it’s ever been. In the same way, what constitutes for sustainable business a decade ago is radically different from what we have now. Equally, an acceleration in natural disasters, wars, political and social unarrest, and the awakening of what it means to live in this decade is also pushing organizations to adapt and quickly.

With this progression, brands are finding that they can no longer look the other way when it comes to all these issues. They are increasingly taking a stand on issues including politics and social norms. That plays into the earlier mentioned need to do things that feed into the Global Goals. An uncomfortable reality is some brands choose to stand by policies and norms that continue to disenfranchise people or a group of people.

Strategic partnerships

Thus far the primary focus has been on what an organization can do internally and the type of relationship they ought to have with their customers and the public. In this characteristic of what a sustainable model is, the focus is on partnerships that propel two or more businesses forward. There are many facets to collaborations, but in a sustainable model, the center is on working with like-minded organizations.

In the vetting process, the person championing partnerships ought to undertake due diligence to avoid embarrassing scandals in the future. An example of an ideal partnership is one where a company that uses recycled products working with manufacturers that produce or collect them. One that would be entirely problematic is where under the same dynamic the manufacturer uses toxic chemicals during the process. 

Authenticity

The last characteristic of a sustainable business model ties all other aspects together. The authenticity comes from a company’s mission and vision, and not something attached later as part of keeping up with business trends. The vision is what drives all strategies drafted in all departments. For that reason, when making the transition, the corporate mission and vision statements might need to change to accommodate your contribution to society and all its facets.

Passion is what ultimately drives brands to make tough decisions even when it costs them for the sake of long term gain. It is the desires to leave the world better for future generations that will make businesses make the right call. Businesses then take a stand for the sustainable development goals they can rally behind.

Conclusion

Surviving in the current business sphere requires making tough calls amid comfort. When a brand does not evolve amid rapid global changes, they risk being overtaken. A sustainable business model is one route to take if you choose to remain relevant and appeal to new customers. It is in the keeping at it and not deviating that does guarantee buyers remain loyal and even reach out to others to support you.

The ultimate goal of a business is to make profits. This article explores one of the routes to getting there. It also offers a long term strategy to expand and ways to guarantee that the business thrives long after the founder leaves. Start-ups and small business can potentially witness acceleration and a faster growth rate when they use sustainability as a core part of their entire business model.

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.