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We need to become more sustainable – it almost sounds like a mantra by now. Because in the year 2024, one thing is crystal clear: the non-committal attitude has now gone. With 2030 approaching, more and more companies are pulling out all the stops to achieve the objectives of the climate agreement.
Encouraging in itself, Joran Zandbergen agrees, but he does have a reservation. “Because all the attention is focused on the climate, a kind of tunnel vision is created: companies focus entirely on the environment, while sustainability is of course much broader scope – think of the impact that you as a company have on your own employees and the broader society.”
For his master thesis research he compared sustainable business models among companies within the energy sector. These are classified within the literature under three types of innovation: environmental, social and economic.
“Environmental innovations focus primarily on reducing emissions, resource use and waste, social innovations on how a company interacts with its customers and other stakeholders, and economic innovations on how the sustainable innovation is organized internally,” Joran explains.
Within each type of innovation, three business model archetypes can be distinguished. These include maximizing energy and material efficiency (environmental), providing functionality rather than ownership (social) and inclusive value creation (economic).
To compare the total of nine sustainable business models, Joran first looked at their impact – and that yielded a striking conclusion: “What I discovered is that sustainable business models that focus on the environment hardly create any impact on other sustainability areas, but conversely, sustainable business models with a social or economic approach do have a broad positive impact – including on environmental aspects.”
As an example, he mentions the ‘HVC’, a company that generates energy by burning waste. “They have switched to a different system for collecting waste: people now pay each time they discard residual waste, which means they seperate their waste better and discard less residual waste. That saves a lot of trips with the garbage truck, and thus also expensive fuel and CO2 emissions. So it has economic as well as environmental impact – but it is a social innovation, because it influences user behavior.”
Joran conducted his research with support from Been Management Consulting, a consulting firm that helps companies achieve sustainable change. Supervisor Gijs-Jan Otten, despite all his experience, was surprised by the outcome.
“You would expect that a social business model in particular creates social impact, an economic business model in particular creates economic … and so on,” he explained. “But Joran’s survey of 15 companies in the energy sector reveals a different picture.”
In retrospect, he does have an explanation for the asymmetrical impact. “Environmentally-oriented business models are often technological in nature. Think of wind turbines: you don’t realize unexpected social benefits as quickly with those. But social business models have a broader impact: if you buy locally, you invest in the local community and employment, but you also save on transportation at the same time.”
The advice to companies in the energy sector – and beyond – is therefore to look beyond the environment. “We understand that 2030 is coming, but if you focus purely on CO2 savings, you are primarily concerned with complying with laws and regulations. That doesn’t make you a sustainable company,” Joran states. “Sustainable companies have a positive impact on people, planet and profit.”
However, the fact that social and economic business models create broader impacts does not mean that the focus should be entirely on those two types of business models. Above all, Joran and Gijs-Jan argue for a holistic approach in which different business models can reinforce each other.
“Don’t put all your eggs in one basket”, Gijs-Jan emphasizes: “Don’t go all-out for environmental, social or economic, but look at where you as a company can and want to add value, and preferably bet on a healthy mix of all three. That also makes you immediately more robust toward the future.”
However, Joran’s research did not stop there. Because implementing such a sustainable business model is far from easy, he also zoomed in on the various barriers companies encounter. And Joran did not expect the resulting conclusion.
“I divided the implementation barriers into two main categories,” Joran explains: “Internal and external barriers. Internal barriers relate to the organization itself and the behavior of the employees. External barriers logically lie outside the organization – think, for example, of impeding laws and regulations, a lack of technological knowledge or difficult market conditions.”
Such external barriers appear to have a negative impact on business model innovation: “The higher the barrier, the lower the sustainable impact you can realize. And if the barrier is removed, the impact increases,” Joran said.
So far, nothing surprising. That only came when Joran analyzed the survey results on internal barriers. “With a higher organizational or behavioral barrier, you would naturally expect implementation to be more difficult – and sometimes that was the case, but in other cases we saw exactly the opposite: more impact was actually made.”
“ How is that possible?” was, of course, the question that immediately arose. “We discussed that for quite a long time,” Gijs-Jan explains. “And eventually we came to the conclusion that this illustrates precisely why organizational change is so complex: there is no ‘one size fits all’ approach to business model innovation and implementation – every organization is different.”
Seen in that light, the finding suddenly fits very well with the years of experience of Gijs-Jan and his colleagues. “It confirms what we see time and again in practice: organizational change – and in this case sustainable business model innovation – is never a piece of cake. Some managers still think: ‘It’s simple, our people are reluctant to change and we have to break through that.’ That’s not the case – you have to look at each company to see what the situation is and what that situation requires.”
Part of the complexity lies in the interaction between all those organizational and behavioral factors, he explains. “That’s what our approach at Been is all about. We often say, ‘We involve people with head AND heart in the transformation.’ In other words, we don’t just come up with a new process, but also look at what is needed on the people side. Do they have the right knowledge and skills Do they display the desired behavior? And what is the leadership’s attitude?”
With this, Gijs-Jan also immediately hints at a clear link between the two main conclusions of Joran’s research. For as different as they seem, both can be read as a plea for a holistic view: when innovating a business model sustainably, companies can best look holistically at sustainability, and in achieving the transformation needed, it is crucial to address all organizational and behavioral elements in conjunction.
“ It’s not something you do on the side,” Joran argues. “It has to be integrated into the business model and into all layers of the organization.”
He hopes his research can push companies in the right direction, towards a holistic sustainable business model. This is not only good for people and the environment, but also attractive from a commercial perspective: “Several studies show that companies can improve their competitive position with the adoption of sustainable business models.”
For many companies, sustainability seems to be a matter of complying with regulations. Joran and Gijs-Jan see a hopeful development in the recent introduction of the Corporate Sustainability Reporting Directive (CSRD), which requires large companies to report on sustainability in a broad sense.
“That could really have a big impact,” Gijs-Jan expects. “Not only does the CSRD look beyond environmental aspects, but the regulation also puts sustainability on the CFO’s plate. The CFO has to report on it, making it part of the core business – you can no longer just do it on the sidelines.”
Joran, too, is positive – however with a side note: “I do believe that sustainable change can ultimately create the greatest impact when it is achieved from an intrinsic motivation. But until we get there, this is certainly a step in the right direction. I am very curious about what organizations will do in the coming years.”
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