Every day, we hear new companies’ climate commitment announcements, ESG integration plans, or new standards and regulations for social and environmental reporting. In addition, governments and corporate coalitions such as the British Malaysian Chamber of Commerce and World Economic Forum International Business Council are working to help the companies to solve sustainability challenges. Consumers and employees are urging companies and brands to include environmental and social elements in decision-making. All these factors force businesses to rethink their business model and transform the models for sustainability.
It takes time and a load of work to transform. The management and company leaders need to have an in-depth understanding and knowledge of the sustainability challenges and dynamic analysis of the internal and external environment to address the sustainability issues and produce innovative yet profitable solutions. Nevertheless, innovating into a sustainable business model will create competitive advantages for the companies. This article shares the three steps companies can follow to transform into a sustainable business model.
Step 1: Gain Clarity
Gaining clarity is significant for companies to lead you to a sustainable and profitable future. Clarity means the gaps between the market demand and expectations for sustainability and companies’ current advantages, business model and offerings.
So, how can you gain clarity? You need to develop a significant understanding of the internal and external stakeholder ecosystem to gain clarity. Then, to understand how environmental and societal issues affect the ecosystem. This understanding helps you to identify the risks and opportunities for a new sustainable business model.
Step 2: Innovate
After gaining clarity, you can seize the opportunities identified. Turning the opportunities into potential environmental and societal value and financial returns. While how to turn the opportunities into values?
There are several ways to achieve it. Firstly, consider starting from origins, where you look inwards to your operation and production to generate environmental and societal values. For example, you invest in your production facility and process to reduce carbon emissions or plastic usage.
Secondly, you could localise your business to enhance environmental and societal values. In this method, you restructure your value chains closer to home. For instance, you prioritise local collaborations and partnerships in your value chain rather than looking outwards overseas to solve local social and environmental issues.
Step 3: Implement and Refine
The last stage of transformation is to implement and refine. You test, iterate and refine your business model ideas to continuously improve. You ensure that the ideas and plans yield the intended environmental and societal benefits. At the same time, the benefits convert into material values for the company. This step is vital to building the resiliency of the business model for the company.
This article’s three steps to transform into a sustainable business model aim to provide an overview of how companies could integrate environmental and societal impacts into a business model. Many companies are competitive with their business advantage. However, they might need to be more knowledgeable about transforming their business to optimise environmental, social value and business value. It is where BBC becomes the know-how and implementor to help you transform your business model.
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