Sustainable Business Model Canvas
Sustainable Business Model Canvas
A guide to developing your circular value proposition
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Introduction
All businesses need to provide products and services that align with customer needs and preferences. By prioritising the customer and delivering what they see as valuable for them, you will not only ensure your own sustainability but also drive profitability through enhanced customer loyalty and repeat business.
But before you head off into carrying out detailed market research, completing the Sustainable Business Model Canvas will help you make sure you understand your business model and who your customers are.
A Sustainable Business Model Canvas is a comprehensive framework that goes beyond traditional business model canvasing to encourage you to think about how you will deliver environmental, social, and economic value.
Did you know?
What are the benefits of using the Sustainable Business Model Canvas?
- It supports you to establish the foundation of your business, whether your business is established or evolving.
- It helps your business to communicate your sustainability efforts to your customers and define your unique selling point.
- It encourages you to consider the environmental, social, and economic elements of your operations.
- It facilitates the alignment of sustainability goals with the overall business strategy, ensuring that sustainability is integrated into the different key business operations rather than it being treated as a separate activity.
- It encourages you to understand different stakeholder expectations and think beyond your product or service, to consider your sales method and the different customer segments you can serve.
- It helps with assessing and identifying the potential environmental and social impacts and risks of your business.
Sustainable Business Canvas
Use the Sustainable Business Model Canvas template (designed by Loic Bar, an impact entrepreneur, you will need to input your email address to download the template). There are 11 elements within the canvas. Get familiar with the canvas then use our guidance below to help complete the template with your business information.
Step 1: Value proposition and your customers
There are four inter-related elements of the Sustainable Business Model Canvas that are important in developing a great Circular Economy Value Proposition. Look at what you are already doing and what you plan to do in the future. Add answers to the following questions to your canvas – noting there can be more than one answer.
Customer segments: What types of people do you think are willing to pay money for the unique solutions you’ve developed?
Customer relationships: How do you expect to acquire and retain your customer base?
Channels: How will you reach your prospective customers (e.g. online, retailers)?
Value proposition: What are your unique solutions that you’re looking to bring to your customers?
Step 2: Revenue and costs
Think creatively about revenue streams whilst being realistic to ensure that costs do not outweigh the income you generate. Add answers to the following questions to your canvas.
Revenue streams: How will your business make money (e.g. pay per use, subscription service). What are customers willing to pay? What evidence is there that they will pay in practice?
Cost structure: Fixed, variable, and other costs to your business (e.g. salaries, rent, materials). What do customers currently pay for and how do they like to pay?
Step 3: Positive and negative effects of doing business
All businesses, even ones adopting circular strategies, will have both positive and negative effects of doing business.
Making sure you are aware of the negative effects of your business will also help you better position your business and counteract any claims of “greenwashing”. Add answers to the following questions to your canvas.
Positive externalities: What are the ecological or social benefits of your business model?
Negative externalities: What are the ecological or social costs of your business model?
Step 4: Creating value for your customers
Understanding who you rely on will help you understand who or what you need, to help you improve customer experiences of your products and services. Ask yourself the following questions and add answers to your canvas.
Key resources: What resources do you need to run your business (e.g. funding, engineering team)? Who do you need to have strong relationships with? Who can help overcome negative externalities?
Key activities: What activities enable you to provide products and services to customers (e.g. sales, manufacturing)? What do you need to keep a close eye on to manage costs and negative externalities?
Key partners: Which external resources will help you to deliver your business model (e.g. suppliers)? Who do you need to have strong relationships with?
If you need help getting started, check out the example mapped out below. It explores the business model for a fictional fashionwear rental company.
Step 5: Feedback
Once you have a first draft of your Sustainable Business Model Canvas, it’s worth getting feedback from your team, advisor, or trusted individuals and friends to give you confidence that you’ve covered all the bases. This may help with:
- Gaining valuable insights that can be used to refine and enhance your business model.
- Identifying blind spots or areas of the business model that may have been overlooked when it comes to embedding circular economy principles.
- Identifying areas where there’s a chance you could get called out as “greenwashing”.
- Identifying potential risks and challenges associated with your business model. By addressing these concerns early on, you can proactively manage risks and ensure the viability of your circular strategy.
Did you know?
What is greenwashing?
Greenwashing can be understood as “behaviour or activities that make people believe that a company is doing more to protect the environment than it really is”. Businesses may be intentionally or unintentionally greenwashing through exaggerating or misrepresenting their sustainability efforts.
This can range from labelling products as “green” or “ecofriendly” without sufficient evidence to back it up, for example, making misleading claims about reducing carbon footprints. Ultimately, businesses that engage in greenwashing risk damaging their reputation and credibility in the long run.
For customers, greenwashing can foster confusion and distrust. They may unknowingly support companies that aren’t genuinely committed to sustainability or circularity, undermining their own efforts to make more conscious choices. It can lead to complacency, as customers may believe they’re making a positive impact when, in reality, they’re not.
The UK’s Competition and Markets Authority published a “Green Claims Code” to help businesses comply with the law.
The Green Claims Code sets out the following principles:
- Claims must be truthful and accurate;
- Claims must be clear and unambiguous;
- Claims must not omit or hide important relevant information;
- Comparisons must be fair and meaningful;
- Claims must consider the full life cycle of the product or service;
- Claims must be substantiated