Making Money Through Sustainability: A Guide

In today’s rapidly changing business landscape, engaging in sustainability efforts has become a crucial aspect of corporate responsibility. Companies are increasingly recognizing the importance of integrating environmental considerations into their value creation models to not only mitigate negative impacts but also to seize opportunities for increasing value. By building on different value creation models, companies can generate income while supporting environmental efforts in a meaningful way.

There are four broad types of value creation models that companies typically operate within: value chains, value shops, value access, and value networks. Each of these models is driven by distinct economics and presents unique opportunities for engaging in sustainability efforts. Let’s delve into each of these models to understand how companies can best contribute to sustainability while creating value.

1. Value chain companies, creating value through ‘product economics’:

Product-based companies operate within a value chain model, where they transform inputs into outputs that customers are willing to pay for. These companies create value through developing innovative products, efficient operations and logistics, robust marketing strategies, and optimal service. However, they also have a more visible environmental footprint compared to other types of companies, which often leads to societal pressure to take responsibility for their emissions and waste.

Companies in this category have significant potential to contribute to a sustainable future by focusing on materials, designs, and suppliers. They can explore using novel, less wasteful materials, conceptualize new, more sustainable products, and develop cleaner production methods and systems. Embracing the circular economy concept can help these companies devise more repairable, re-manufacturable, and recyclable products, minimizing waste and environmental impact.

For example, Trane Technologies, a company that develops heating and cooling equipment, has adopted circular design principles and developed more efficient equipment to reduce emissions and waste. By integrating sustainability into its product development process, Trane has not only reduced its environmental footprint but also created new business opportunities, such as cooling systems for food transport to help reduce food waste.

Similarly, outdoor brand Patagonia has been continuously improving its business practices to align with environmental goals. By sourcing organic or regeneratively grown materials and seeking alternatives to fossil-based materials, Patagonia has reduced its environmental impact. The company has also funded research to move away from harmful chemicals, such as PFAS, and offers free repairs for life, reinforcing its commitment to product quality and reliability.

These companies demonstrate that by focusing on innovation, materials, and supply chains, product-centric businesses can develop more environmentally friendly products and processes. By leveraging their internal expertise and creativity, collaborating with value chain partners, and embracing sustainability, companies can not only reduce waste and enhance efficiency but also build stronger relationships with suppliers and customers.

In conclusion, engaging in sustainability efforts by building on value creation models is not only a responsible business practice but also a strategic opportunity for companies to create value and contribute to a sustainable future. By integrating environmental considerations into their value chains, companies can drive innovation, reduce waste, and build stronger relationships with stakeholders, ultimately leading to long-term success and positive impact on the planet.