Section 6.1: Business models and incentives for sustainability

A business model is a plan by which a company determines how to run its operations to create value for its shareholders and stakeholders. This means that companies must identify sources of revenue, a viable customer base, what products or services to make, and how to finance them. This week, we will examine several different frameworks that businesses use to create a business model that is sustainable from an economic, environmental and social perspective.

“Going green” in business is no longer just a matter of improving a company’s reputation and image, or fostering good community relations. In almost all cases, sustainability also has to make good economic sense. As such, businesses have both financial and non-financial incentives for strategic sustainability management to minimize the impact of their operations on society and the natural environment.

Financial and non-financial strategic incentives for sustainability

Financial Incentives
Revenue Increase
Production/ operations cost reduction
Tax breaks/credits
Loan guarantees/subsidies
Resource use efficiency
Avoidance of penalties/fines
Reduced emergency/ remediation/ insurance costs
Access to capital/investor relations

Non-financial Incentives
Risk management
Reputation management
Employee satisfaction
Human Resource Efficiency
– Employee commitment and retention (reduced turnover)
– Increased employee satisfaction/productivity/morale
– Access to talent
Improved stakeholder trust
Pre-empting of upcoming regulations
Social license to operate (ongoing stakeholder/community approval and acceptance)

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