Sustainability is the mega trend of the 21st century: Climate change, droughts and floods, loss of biodiversity, migration, global injustice – these are all issues that are interwoven and also have an impact on business activity. The buzzword here is ‘decarbonization’, in other words a shift from the carbon economy to the green economy, thus reducing climate-damaging greenhouse gases to zero throughout the entire supply chain. By 2050 at the latest, if the goal of limiting the global temperature increase to well below two degrees by the end of the century is to be met. Beyond this threshold, there is a threat of uncontrollable tipping points in the global climate, beyond which our lives and also our economic activities would change dramatically. Economic efficiency and sustainability are, therefore, not mutually exclusive, but can rather give each other a boost. This opens up avenues for completely new business models that also include economic opportunities.
Two concepts play a prominent role in this transformation: Consistency and sufficiency. Consistency refers to compatibility with and orientation towards natural cycles, the circular economy. Sufficiency refers to strategies toward reduced material consumption through new products and services, e.g. the practice of sharing. Together, these concepts form the core element of new sustainability business models.
Companies can pursue four basic strategies of such business models:
- Cycling: the recycling of materials and energy through reuse and remanufacturing.
- Extending: extending product life cycles through modular and timeless design, as well as reparability and repair services.
- Intensifying: the intensification of product use through sharing solutions, where ownership is replaced by access and, for example, a car that might usually remain unused for up to 23 hours a day is transformed from a stationary vehicle into a moving vehicle.
- Dematerializing: the dematerialization of products into services as part of approaches such as XaaS (anything as a service).
By the way, topics like these and more are a central component of the new German-language Master’s program M.A. Sustainability & Business Transformation, which will be offered at ISM Dortmund, Stuttgart and Berlin starting in fall 2021. I’m really looking forward to exchanging ideas with the students, discussing and developing sustainable concepts.
Author: Prof. Dr. André Reichel