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Green Business Model Navigator

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Executive summary
Rationale and introduction
The private sector as a job creator and innovation bearer plays an
important role to implement market-based approaches of the
Green Economy by supporting sustainable business activities and
green business start-up promotion. The promotion of ‘Green and
Inclusive Business Models’ is an effective way to combine
entrepreneurship and market development objectives with
environmental concerns and with social issues.
Green business models build upon conventional business models.
‘Green’ refers to the improved quality of business activities which
deliver products and services with a better economic,
environmental, and social value proposition. Like other
entrepreneurs green entrepreneurs look for business opportunities
emerging from drivers such as changing customer behaviours, new
or changing regulations, societal and environmental issues.
Many examples demonstrate the value and viability of green
business models in developing and emerging countries. However,
the development, implementation and scaling up of green business
models are still facing technical, market, economic and regulatory
barriers.
There are an increasing number of tools and concepts to assist
practitioners with solving their challenges and to tap into new
market opportunities. It can be difficult to get a quick overview of
existing concepts and to identify the right tools serving one’s
interests and needs.
The Navigator
This Navigator is an all new innovative knowledge sharing
product in the form of an interactive ‘Navigator’. It gives a
practical introduction to green business models, outlines the
benefits, challenges, and scaling up strategies of green
business models, and the role of different stakeholders in this
process. The Navigator includes a database with existing
tools to assist in the development and implementation on
green business models.
The key target groups of this Navigator are entrepreneurs,
development organisations, consultants and service providers.
However, large businesses, innovation centres and financial
institutions are also expected to benefit from the use of the
Navigator.
CLICK HERE TO GET INSTRUCTIONS ON HOW TO USE THIS NAVIGATOR
CLICK ON ANY ITEM IN THE START MENU TO NAVIGATE
DIRECTLY TO THE TOPIC OF YOUR INTEREST
Start menu
Executive
summary
Instructions on how to use this Navigator
This Navigator is set up as an interactive publication which enables you to browse and
select topics of your interest, including a searchable database with existing green
business model tools.
You can get to each of the chapters and sections in this Navigator in various ways:
You can use the top menu to easily get to each chapter in this Navigator
The sections in each chapter are presented in the submenu
Interactive links in the text in the Navigator look like this ‘click here to go to start
menu’, and lead you to relevant chapters and sections
Linkages to more or related information are marked with
This Navigator is not modular nor sequential so you can view the specific topics of your
interest through links provided.
WHEREVER YOU ARE IN THIS NAVIGATOR, YOU CAN ALWAYS GO BACK
TO START MENU OR THESE INSTRUCTIONS BY CLICKING HERE.
TOP MENU WITH CHAPTERS
DEVELOPMENT
ORGANISATION
CONSULTANT
INNOVATION
CENTRE
LARGE BUSINESS
SUBMENU WITH SECTIONS
THIS INDICATES THAT MULTIPLE PAGES ARE INCLUDED IN A SECTION. YOU CAN BROWSE THROUGH THE PAGES BY CLICKING ON THE ARROWS
DO NOT FORGET TO CHECK OUT THE FURTHER
INFORMATION SECTION INCLUDING THE WORKING PAPER
In this Navigator these personas
show up where content is relevant
to specific stakeholders
ENTREPRENEUR
all photos © shutterstock
About this Navigator
This Navigator is an all new innovative knowledge
sharing product in the form of an interactive
‘Navigator’. It outlines the concept and benefits of
green business models, and guides practitioners to
existing tools to solve their challenges and to tap
into new market opportunities.
The focus of this Navigator is on innovative and
green business models, nevertheless taking into
account inclusiveness and poverty reduction as a
core principle of international development.
The concept underpinning green business models
is not something totally new, but it builds upon
existing entrepreneurship activities and
conventional business models. It is about an
improved quality of business activities which
deliver products and services with a better
economic, environmental, and social value
proposition.
Objectives of the Navigator
Provide a database with existing tools to assist with
the development, implementation, and scaling up of
green business models
Offer a clear introduction to green business models,
related concepts and practical examples
Present the rationale, benefits and drivers for green
business models
Outline the challenges, success factors and pathways
to scale up the positive impacts of green business
models
Summarise the role of key stakeholder groups in
scaling up green business models.
Target groups
Key target
groups of
Navigator
Entrepreneurs
Development organisations
Consultants and service
providers
Get clear(er) understanding of green business models and their benefits.
Find the right tools to assist with the development, implementation
and scaling up of green business models.
Get inspiration and ideas for business development opportunities.
Target groups
which also
benefit from
this Navigator
Large businesses
Innovation centres
Investors and financial
institutions
Learn about practical tools available to assist entrepreneurs and
businesses with scaling up green business models.
Gain a better understanding of concepts underpinning green business
models, including practical examples, drivers, and barriers.
Better understand your role to scale up green business models and
support entrepreneurial activities and innovation.
THE FINANCIAL SECTOR IS VERY SPECIALISED AND NEEDS CUSTOMISED TOOLS. THEREFORE, THIS SECTOR IS NOT INCLUDED IN DETAIL IN THIS NAVIGATOR.
WHY USE THIS NAVIGATOR?
The key target groups of this Navigator are entrepreneurs, development organisations, consultants and service
providers. However, large businesses, innovation centres and financial institutions are also expected to benefit from
the use of the Navigator. You check out in the table below what the Navigator can offer you. Click here to find out
more about your role in scaling up green business models.
Background information Green economy and private sector development
Sources: BMZ (2011). Green Economy, DCED (2015). Green Growth.
The concept of Green Economy (and Green Growth) and its implementation have been emphasised as one of the
main goals of international development since the early 21st century. Though a number of definitions exist, at
heart of a green development path is economic growth that is environmentally sustainable. While economic
growth is necessary for increased employment and poverty reduction, further environmental goals include the
mitigation of climate change, adaptation to climate change, the reduction of other pollutants, and a reversal of
biodiversity loss and growing fresh water scarcity, alongside social issues.
The private sector as a job creator and innovation bearer plays an important role in this context to implement
market-based approaches of the Green Economy by supporting sustainable business activities and green business
start-up promotion.
The promotion of ‘Green and Inclusive Business Models’ is an effective way to combine entrepreneurship and
market development objectives with environmental concerns (such as pollution, waste, resource efficiency,
biodiversity, climate change etc.) and with social issues referring to the ‘base of the pyramid approach’ (i.e.
integrating the poor and disadvantaged groups of society as producers and consumers).
Private sector development has an important role in assisting practitioners (e.g. entrepreneurs, government
agencies, service providers) with the development, implementation and scaling up of feasible green business
models. This role includes promoting and synergising learnings of successful green business models, facilitation
of multi-stakeholder processes, and fostering a marketplace for services necessary for developing green
businesses.
The UN Agenda 2030 for Sustainable Development and the 17 Sustainable Development Goals
Sources:
https://sustainabledevelopment.un.org/post2015/transformingourworld
http://www.un.org/sustainabledevelopment/sustainable-development-goals
In September 2015, all 193 Member States of the
United Nations adopted an ambitious plan for
achieving a better future for all, to end extreme
poverty, fight inequality and injustice, and protect
our planet: the Agenda 2030 for Sustainable
Development, entitled “Transforming the World”.
At the heart of the Agenda are the Sustainable
Development Goals (SDGs), 17 global goals which
clearly define the world we want, applicable to all
and leaving no one behind.
It is clear that governments alone cannot achieve this ambitious plan. We need all hands on deck: a new global
partnership bringing together business, civil society, citizens and governments must work together to realize
sustainable development for all. The private sector in particular has a central role to play in designing solutions to
address global challenges through innovative business models.
The promotion of green, inclusive and social business models provides an important contribution to the Sustainable
Development Goals. It is especially relevant to SDGs 8, 9, and 12, while green private sector development as a cross-
cutting theme in fact refers to all SDGs.
Helping you to find the right tool for the job…
Database of existing green business model tools
An introduction
The database is a an interactive Excel file with a compilation of existing tools
promoting the green economy through business models and associated
business opportunities.
A large proportion of tools in the database include conventional business
knowledge and practices (e.g. business plans, market research, management
systems).
Based on multiple choice questions, the user is guided to available green
business model tools.
a) What is the main target group for the tool use?
b) What is the main geographical focus?
c) What is the main targeted impact area?
d) For which activity do you need support and insights?
All tools included in the database are aligned with the criteria of the green
business model definition applied in this Navigator and concept of green
economy.
CLICK HERE TO DOWNLOAD THE TOOL DATABASE
THE TOOLS INCLUDED IN THE
DATABASE ARE RELEVANT TO
MULTIPLE STAKEHOLDER GROUPS
DEVELOPMENT
ORGANISATION
CONSULTANT
INNOVATION
CENTRE
LARGE BUSINESS
ENTREPRENEUR
all photos © shutterstock
Overview of tools included in the database
Ref no Tool name Publisher and year
1
Becoming a Climate Expert
GIZ (2013)
2
Bethnal Green Ventures
Social Innovation Camp (2008)
3
Brokering Inclusive Business Models
UNDP (2010)
4
Business Case for Eco
-Innovation
UNEP (2014)
5
Business Innovation for Sustainable
Scale-up - Online Scaling up Tool
CSCP (2013)
6
Business Planning Guide for Social Enterprises
Social Ventures Australia (2010)
7
Canadian Social Enterprise Guide
Social Enterprise Canada (2010)
8
Cooperation Platform for Northern Latin America (COPLAN)
BMZ (2012)
9
Ecodesign
Pilot and Assistant
Ecodesign (2000)
10
Entrepreneur’s Toolkit
IISD (2012)
11
Green Business Model Innovation and Corporate Social Responsibility
GIZ, EMM Network (2012)
12
Green Business Plan Guide
Greenforall
(2015)
13
Greening Business Development Services
BMU, UNEP, UNDP, IUCN (2002)
14
Greening the Entrepreneurial Spirit of the
Mediterraneans Guide
SCP
-RAC (2012)
15
Growing
Business with Smallholders - A Guide to Inclusive Agribusiness
GIZ (2012)
By searching the interactive Excel file, you can get access to further information on the tools summarised below and
the next two pages.
IF YOU DO NOT FEEL LIKE SEARCHING THE DATABASE, YOU CAN DIRECTLY OPEN THE WEBLINK FOR EACH TOOL HERE
continues on next page
Ref no Tool name Publisher and year
16
iceguide
Icehubs
Network
17
Inclusive Business Accelerator
BoPinc
, SNV, VC4Africa (2010)
18
Inclusive Business Challenge
WBCSD (2009)
19
Inclusive Business Finance Field Guide
UNDP (2012)
20
Inclusive Business: Mapping of Tools & Resources
WBCSD (2012)
21
Inclusive Markets Development Handbook
Private Sector Division, UNDP (2010)
22
Innovation Promotion in Micro, Small and Medium
-sized Enterprises
BMZ (2014)
23
Limas
Web Suite
LiMaS
Eco-innovation
24
LINK methodology: A Participatory Guide to Business Models that Link
Smallholders to Markets
Centro Internacional de Agricultura Tropical (2012)
25
Market Creation Toolbox
DIBD International Business Development (2011)
26
OECD Sustainable Manufacturing Toolkit
OECD (2011
)
27
PATRI Framework for Scaling Social Impact
Tayabali and Ashoka Globalizer Program (2012)
28
Poverty
-oriented Planning & Reporting for Development Partnerships
GIZ (2012)
29
Practitioner Hub for inclusive business
DFID (2010)
30
Responsible and Inclusive Business Hub South East Asia
BMZ (2013)
IF YOU DO NOT FEEL LIKE SEARCHING THE DATABASE, YOU CAN DIRECTLY
OPEN THE WEBLINK FOR EACH TOOL HERE
Overview of tools included in the database
continues on next page
Ref no Tool name Publisher and year
31
Short Guide to Green Business Model Innovation
Nordic Innovation (2012)
32
Start and Improve Your Business (SIYB) Programme
International Labour
Organisation (2014)
33
SMART Sustainable Entrepreneurship Start
-up training
CSCP (2012
)
34
Social Entrepreneurship Toolkit
UnLdt
(2012)
35
Start up 4 Climate
Borderstep, ADT, Universitat Oldenburg,
BMUB,
Nationale Klimaschutz Initiative (2015)
36
StartupWave
Intellecap, DFID (UKaid), GIZ (2014)
37
Supply Chain Sustainability
- A practical guide to continuous improvement
UN Global Compact, BSR (2010)
38
Sustainable Innovation and Employment
BMZ (2013)
39
Sustainable management in SMEs
- Guidance notes for sustainable
management
Verein
Deutscher Ingenieure (2006)
40
Tips and Tricks for Advisors
Corporate Social Responsibility in Small and
Medium
-Sized Enterprises
EC DG Enterprise and Industry (2013)
41
Toolbox for Promoting Innovation Systems
BMZ (2012)
42
UN Business Partnership Handbook
UN Global Compact (2013)
43
UNEP Eco
-Innovation Project
UNEP, EC (2014)
44
ValueLinks
2.0
GIZ (2015)
IF YOU DO NOT FEEL LIKE SEARCHING THE DATABASE, YOU CAN DIRECTLY
OPEN THE WEBLINK FOR EACH TOOL HERE
Overview of tools included in the database
Introduction to (green) business models
Green business models build upon conventional business models. ‘Green’ refers
to the improved quality of business activities that deliver products and services
with a better economic, environmental, and social value proposition, often to
more people over a wider geographic area, more equitably, and more
sustainably.
While the concept and practice of green business models is no longer new, it
can be difficult and confusing sometimes to see the ‘big picture’ and to link
green business models with other practices such as green entrepreneurship and
inclusive business development.
What is a business
model?
From conventional to
green business models
Definition of green business models
Green entrepreneurship and green business models
Inclusive and green business models
Challenges of green business models
A categorisation of green business models
Implementation pathways
to operationalise green
business models
Practical examples
Business
models Green business models explained Implementation
THE STORY LINE FOR THIS CHAPTER
What is a business model?
A business model is the rationale of how an organisation
such as an enterprise creates, delivers, and captures value for
itself, its clients, and society. Value can be defined as the
collection of products and services a business offers to meet
the needs of its customers, the environment and society.
Each organisation has its own business model and creates
value through it.
A business model can be described through 9 building
blocks. They demonstrate the logic of how an organisation
intends to develop a new business strategy or improve an
existing strategy to better meet market needs and
consequently increase value creation through better (e.g.
greener) products and services. These building blocks are
further explained on the next page.
Source: Osterwalder and Pigneur (2010). Business model generation.
HERE YOU CAN SEE A DETAILED DESCRIPTION OF THE
BUSINESS MODEL CANVAS AND ITS BUILDING BLOCKS
Key activities
Key resources
Customer segments
Costs
Value proposition
Revenue streams
Key partnerships
Customer relationships
Channels
Business model canvas and its building blocks
Source: Osterwalder and Pigneur (2010). Business model generation.
Customer
segments
An organisation may
service a specific market
niche or several markets
Value
proposition
Products and services
that produce tangible
assets and satisfy the
needs of customers and
society
Key resources
Assets required to offer and
deliver products and
services
Channels
Consist of communication, distribution,
and sale channels to best deliver products
and services
Key
partnerships
Relationships
established and
maintained with
various partners
(e.g. suppliers, clients)
Costs
For the organisation, environment and society
Customer relationships
Type of relationships established and
maintained with each customer segment
Revenue streams
Revenue streams result from value propositions
successfully offered to customers
Key activities
Key activities to deliver
value proposition
HERE YOU CAN SEE A DETAILED DESCRIPTION OF THE
BUSINESS MODEL CANVAS AND ITS BUILDING BLOCKS
The 9 building blocks are incorporated into a Business Model Canvas which is a strategic management and
entrepreneurial tool to describe, design, challenge, invent, and pivot your business model. These building blocks are
applicable to both conventional and green business models as shown on the next slide.
From conventional to green business models (2 pages)
Business model
building
blocks
Conventional
business models
Key
activities
Focus more
on short-term
management
-term strategic decision making
Key
resources
Use
of non-renewable and non-
recyclable materials and fossil fuels
Customer
segments
Focus on traditional
and mass
consumer markets
Costs
Missed
cost saving opportunities
through resource efficiency
measures
Building upon the business model building blocks, the table below outlines some illustrative differences between conventional
and green business models. This is a generalised and not all-inclusive list as each business model is unique.
continues on next page
Business model
building
blocks
Conventional
business models
Green business models
Value
proposition
Focus on maximising product
outputs and economic returns
Focus on value creation through delivery of
innovative and
green products and services
Revenue
streams
Key focus on delivering
economic
value to business and clients
Deliver economic, environmental,
and social
value to customers, the companies and
society
Key
partnerships
Partnership focus on stakeholders
directly linked to manufacturing
sales
of products (‘first tier
partnerships’)
Strategic
partnerships along the value chain,
including private and public sectors and
communities
Customer
relationships
Relationships
with core and
traditional customers based on
economic values
Long
-term customer relationships based on
environmental and societal values
Channels
Build on ‘open
-loop systems’
(extract, produce, use, and discard)
with significant waste along the
supply chain
Build on circular models facilitating the
reuse of resources throughout the value
chain
From conventional to green business models (continued from previous page)
Defining green business models
Source Green business model definitions
Nordic Innovation
Report (2012)
“Green business model innovation is when a business changes part(s) of its business model and thereby both
captures economic value and reduces the ecological footprint in a lifecycle perspective”
FORA (2010) “Green business models are business models which support the development of products and services
(systems) with environmental benefits, reduce resource use/ waste and which are economical viable. These
business models have a lower environmental impact than traditional business models
OECD (2010) “New (green) business models involve a radically different business model from the conventional ways of
providing products and services, with the potential to significantly improve environmental sustainability”
EEA-ETC/SCP
(2014)
A sustainable business model goes beyond mere improvements in resource efficiency. It supports individuals
in adapting to more sustainable lifestyles that influence their choice of products and services and the volumes
of products they consume”
Practical and simple definition used in this Navigator:
Green business models deliver products and services with economic, environmental and social benefits
to society and businesses along the supply chain,
and thereby increased competitiveness, inclusiveness, and innovation.”
There are many terms and definitions in the public and academic debate about how companies apply green business
models by operationalising their entrepreneurial activity with environmental goals. There is not yet an internationally
accepted definition. Therefore, common definitions were reviewed in order to arrive at an operational definition for
the Green Business Model Navigator focusing on the concepts of sustainable development, base of the pyramid and
inclusiveness, and sustainable supply chains.
Green entrepreneurship and green business models
Source: Linnanen, 2002, OECD, 2013, FORA, 2010.
FURTHER INFORMATION ON THIS TOPIC IS
INCLUDED IN THE WORKING PAPER
MOTIVATION
Like other entrepreneurs green entrepreneurs look for business
opportunities emerging from drivers such as changing customer
behaviours, new or changing regulations, societal and
environmental issues (e.g. climate change). In a market-based
economy, green entrepreneurs play an important and leading
role in the promotion and eventual adoption of green business
practices by other businesses. Green entrepreneurs often benefit
from competitive advantages as they offer products and services
with a better economic, environmental and social value
proposition to their clients and society.
What differentiates a green entrepreneur are the motives and
strategic objectives behind his/her decision to start a business,
as well as the value-based leadership that guides both the
entrepreneur and the organisations that he or she runs
(Linnanen, 2002). This does not necessarily imply that green
entrepreneurs do not intend to have financial return or
commercial viability as a motivation, though not without
environmental sustainability.
2 KEY GREENING APPROACHES
Green entrepreneurs can be grouped in terms of
how they serve the market through their
business model. These two approaches are also
reflected in the categories of green business
models.
OUTPUTS: Providing green and
environmentally friendly products and
services (e.g. waste management, renewable
energy, green technology, green business
development services, etc.).
PROCESSES: Delivering products or
services through environmentally friendly
processes (e.g. eco-tourism, resource-
efficient production).
Source: Extracted from Endeva (2012). Policy Measures to Support Inclusive and Green Business Models.
FURTHER INFORMATION ON THIS TOPIC IS
INCLUDED IN THE WORKING PAPER
Inclusive and green business models
Are poverty alleviation and environmental sustainability
conflictive objectives? Or do these goals support each
other? Strategies to alleviate poverty and achieve
environmental sustainability are often highly interlinked
and definitions by both policy and businesses of one
strategy often cross-reference each other. Many examples
demonstrate the value and viability of green business
models in developing and emerging countries. However,
the challenge is to scale up and multiply these green
business models in these countries. Scaling up is
necessary to enable populations, especially the poor, to
benefit from innovative ways to produce and consume
green products and services.
TRADE OFF
While there are examples of viable and scalable business
models that satisfy both social and environmental criteria,
in practice the two objectives often collide. Like all
economic activity, the consumption and production
activities in developing and transition countries, which
cc | Department of Foreign Affairs and Trade
inclusive business models facilitate,
require natural resources, and tend
to create emissions and
environmental pollution. It may be
argued that inclusive business
essential to lifting people out of
poverty can only be realised at
the cost of the environment.
Inclusive business models without greening can lead to
environmental pollution, degradation of ecosystems,
and depletion of natural resources. A focus only on
green business models without considering developing
and transition countries can create political difficulties
and negative impacts on the living conditions of the
poor.
continues on next page
Source: Extracted from Endeva (2012). Policy Measures to Support Inclusive and Green Business Models.
Inclusive and green business models (continued from previous page)
FURTHER INFORMATION
Recognising the importance of the topic of
inclusive and green business models, further
information can be found in the supporting
working paper, Endeva reference below, GIZ
(2013) and GIZ (2014).
SYNERGIES
Including the poor in green business models can support the
implementation of environmental projects. Avoiding exclusion
can also reduce political resistance and avoid reputational
damage once the social implications of some green business
models surface. Making inclusiveness an integral part of green
business models can also expand the consumer base beyond the
upper and middle class, thus increasing the market size and
expanding opportunities for businesses. The poor can and should
be included both as ‘green’ consumers and producers .
Realising synergies between inclusiveness and greening requires
innovation on multiple levels (e.g. local, regional, national, and
international), and cooperation among a variety of stakeholder
groups (e.g. policy makers, businesses, NGOs). The private sector
has significant potential to contribute to and synergise inclusive
and green development through innovating technologies,
products and services, and supporting business models.
FURTHER INFORMATION ON THIS TOPIC IS
INCLUDED IN THE WORKING PAPER
Challenges for scaling up green business models
Although there are increasing benefits and drivers for green business models, practitioners still face challenges in the
development, implementation and scaling up of green business models. The challenges are described from an internal
(referring to enterprises) and external perspective (referring to the ecosystem in which the company is operating in). The
combination and extent of challenges will vary on a case by case basis. Success factors for scaling up impacts and overcoming
challenges are provided in a subsequent chapter of this Navigator. We encourage you to explore the tool database included in
this Navigator to find the right tool to assist with solving your challenges.
Category
Internal /
external
Short
description of challenge
Technology
and R&D
Internal
challenges
Lack of technological understanding and competency to develop sustainable products and services.
External
challenges
Difficulty of green business models may not fit with existing infrastructure systems.
Limited availability or access to R&D infrastructure and supporting innovation systems.
Knowledge,
communi-
cations and
mindsets
Internal
challenges
Traditional and short-term mind-set among businesses in the supply chain and supporting
stakeholders.
Lack of knowledge on green business opportunities and associated economic benefits.
Lack of skills to properly communicate and market the full range of economic, environmental and
social benefits of green business models.
External
challenges
Lack of awareness and connections between relevant actors in the supply chain to implement
collaborative green solutions
Lack of robust methodologies and case studies on green business models.
continues on next page
Source: Based on OECD (2011), OECD (2013), Nordic Innovation (2012), and interviews with selected stakeholders.
Category
Internal /
external
Short
description of challenge
Finance and
markets
Internal
challenges
Limited access to finance due to the relative immaturity of the market and associated challenges
in accurately pricing the risk of investments in green business models.
External
challenges
Low awareness of business and end-consumers on green products/services and difficulty to
change purchasing behaviour.
Limited knowledge among stakeholders on economic benefits of investing in green businesses.
Regulations
and policies
Internal
challenges
Lack of awareness on available government schemes that support green business development.
External
challenges
Product market regulations which limit competition or reinforce position of incumbent firms to
act.
Environmental regulations which protect or favour incumbent firms and impose more stringent
requirements on entrants
Lack of governmental action and commitment for reforms towards green business models
Challenges for scaling up green business models
A categorisation of green business models
There are multiple ways of presenting and categorising
business models. The categorisation will depend on the
focus and context in which business models are
discussed. In this Navigator, we focus on innovative and
green business models.
The next page illustrates a categorisation of innovative
green business models along the value chain. The
business models are grouped in this Navigator according
to their value chain focus (i.e. production, use, end-of-
life) and their core focus in creating value
(products/services versus processes). Furthermore, the
categorisation recognises that business models apply to
both outputs (products and services) and processes (e.g.
production and economic activities).
Product
service
systems
Green
product
design
Collaborative
consumption
Waste
as a
resource
Consumer
choice
influencing
Prosumers
and
co-creation
Many case studies demonstrate how business can
support the transition to a green economy. However,
the challenge is to scale up the impacts from these
good practices. Click here to get an overview of
scaling up pathways.
It is important to recognise the range of positive
impacts on the society that green business models
can generate. These societal impacts can also be
viewed as indirect benefits.
Each business model category is detailed in the
practical examples, scaling up pathway, innovation
aspects, and positive societal impacts.
Green,
efficient &
localised
production
Source: Based on EEA, CSCP, CRI (2014) and interviews with selected stakeholders.
End-of-life
Core focus of
business model
Product
service
systems
Green
product
design
Collaborative
consumption
Waste
as a
resource
Processes
Products &
services
Key focus of efforts in value chain
UseProduction
Consumer
choice
influencing
Applicable to both profit and non-profit organisations.
Applicable to both business-to-consumer (B2C) and business-to-business (B2B)
Prosumers
&
co-creation
Green,
efficient &
localised
production
CLICK ON EACH BUBBLE TO GET FURTHER
INFORMATION ON EACH BUSINESS MODEL
Based on the explanation on previous page, the diagram below illustrates a categorisation of innovative green business
models along the value chain.
Implementation pathways to operationalise green business models
5 implementation pathways to operationalise green business models can be differentiated by looking at their
organisation processes, and level of organisational change. These pathways are illustrated in the graph below.
Each implementation pathway can occur through various categories of green business models, resulting in positive
impacts to the environment and society, as illustrated in the practical examples included in this Navigator.
Source: Adapted and expanded from GIZ (2014). Toolbox for Promoting Innovation Systems.
Full integration:
Environmental and
social considerations
are integrated at the
core of the business
model’s structure and
value chain.
Partial integration:
Conventional businesses
green selected aspects of
their business model and
associated value chains.
Business model improvement:
Businesses that undertake specific
actions to make their business
model greener or add green
business practices to their existing
activities.
Spin-off business:
Organisations that add a green and inclusive business
model to their corporation as an additional branch of their
business.
LEVEL OF ORGANISATIONAL CHANGE
ORGANISATIONAL
PROCESSES
Optimise
existing
activities
Develop new
business
activities
Incremental
change Radical
change
Start-ups:
Setting up new green
businesses by entrepreneurs.
Designing and delivering products made with
fewer resources (e.g. raw materials, water, and
energy), that are more resource-efficient during
the use phase, and allow effective recovery and
recycling at their end-of-life phase. A key feature
of this business model is that the entire life-cycle
of a product is taken into account, from extraction
of raw materials to production, distribution and
utilisation, all the way to recycling and disposal.
Florex (Costa Rica): Production and
marketing eco-friendly cleaning products and
services for homes and industries in the
Central American region, using the Design-
for-Sustainability (D4S) methodology.
USE OF
RESOURCES
COMMUNICATION
HEALTH
EDUCATION &
SKILLS
Green
product
design
Key
resources
Reduced environmental
impacts of product during
production and use
Increased durability and
efficient use of product
Value
proposition
BUSINESS
MODEL
CATEGORY
Full integration: Environmental
and social considerations are
integrated at the core of the
business model structure and
value chain.
Product substitution
Efficient use of products and services
Efficient end-of-life strategies
INNOVATION IN
BUSINESS MODEL
POSITIVE
SOCIETAL IMPACTS
PRACTICAL EXAMPLE OPERATIONALISATION
IN PRACTICAL EXAMPLE
SCALING UP PATHWAY
IN PRACTICAL EXAMPLE
PRACTICAL EXAMPLE
BUSINESS
MODEL
CATEGORY
OPERATIONALISATION
IN PRACTICAL EXAMPLE
Partial integration: Conventional
businesses green selected aspects of
their business model and associated
value chains.
Resource efficient and cleaner production
Efficient end-of-life strategies
INNOVATION IN
BUSINESS MODEL
POSITIVE
SOCIETAL IMPACTS
SCALING UP PATHWAY
IN PRACTICAL EXAMPLE
The continuous improvement of production
processes to deliver ‘conventional’ products and
services from an economic, environmental, and
social perspective is truly embedded into the
business model of the company. This means that
products are produced in the most resource
efficient manner with lowest negative
environmental and social impacts possible,
preferably from locally sourced resources.
Reduced environmental
impacts of product
during production
Key activities
More efficient
production processes
Costs
Reduced production costs
as a result of more efficient
use of resources (e.g.
energy, water, materials)
Andhikhola Hydel Rural Electrification Scheme
(Nepal): This scheme is operated by Butwal
Power Company Ltd. Innovative design features
in the energy generation / distribution system
and tariff structure ensure efficient production
of electricity and enable very low income
subsistence farmers to access electricity. The
scheme also provides water for gravity irrigation
of 280 hectares of land.
USE OF
RESOURCES
ENERGY
GENERATION
URBAN & RURAL
DEVELOPMENT
NUTRITION, FOOD
& DRINK
Green,
efficient and
localised
production
Value
proposition
PRACTICAL EXAMPLE
BUSINESS
MODEL
CATEGORY
OPERATIONALISATION
IN PRACTICAL EXAMPLE
Efficient use of products and services
Longer use of products and services
INNOVATION IN
BUSINESS MODEL
POSITIVE
SOCIETAL IMPACTS
SCALING UP PATHWAY
IN PRACTICAL EXAMPLE
Product
service
systems
This model is also known as the function-
oriented business model. The focus is on
providing the function and benefits of a
product instead of physical product itself.
Product service systems take into account the
physical use of a product and its services
necessary to satisfy the customers’ needs.
Chemical leasing (e.g. Egypt, Mexico, Russia,
Sri Lanka, Serbia, Brazil, Croatia): Customer
pays for benefits obtained from the chemical,
not for the substance itself. The economic
success of the supplier is no longer linked
with product turnover.
Business model improvement:
Businesses that undertake specific
actions to make their business
model greener or add green
business practices to their existing
activities.
USE OF
RESOURCES
EMPLOYMENT
AND WORK
CONDITIONS
COMMUNICATION
EDUCATION &
SKILLS
Increase number of
consumers are prepared to
opt access over ownership of
products
Customer
segments
Address potential rebound
effects associated with
efficiency measures
Value
proposition
PRACTICAL EXAMPLE
BUSINESS
MODEL
CATEGORY
OPERATIONALISATION
IN PRACTICAL EXAMPLE
Resource efficient and cleaner production
Product substitution
Shared use of products and services
INNOVATION IN
BUSINESS MODEL
POSITIVE
SOCIETAL IMPACTS
SCALING UP PATHWAY
IN PRACTICAL EXAMPLE
Prosumers
and
co-creation
Consumers are not just consumers but producers as
well. Value is created through localised production
and delivery of services and products. This can help
eliminate or reduce costs of associated utility
infrastructures. Prosumerism is not a new concept in
itself. Societal changes (e.g. increasing consumer
awareness, demand for locally produced goods)
have contributed to the expansion of prosumerism
and associated business models.
USE OF
RESOURCES
URBAN & RURAL
DEVELOPMENT
HEALTH
NUTRITION, FOOD
& DRINK
V-Roof (China): Creating rooftop
gardens and foster enhanced community
ties and knowledge of urban farming.
Start-up: Setting up new green
businesses by entrepreneurs.
Individuals, in addition to
being customers, start playing
an active role in co-production
of products they consume
Localised production
and use of products
and services
Reduced costs for large scale
infrastructure to support
traditional supply chains
© shutterstock
Customer
segments
Key activities
Costs
PRACTICAL EXAMPLE
BUSINESS
MODEL
CATEGORY
OPERATIONALISATION
IN PRACTICAL EXAMPLE
Product substitution
Efficient use of products and services
INNOVATION IN
BUSINESS MODEL
POSITIVE
SOCIETAL IMPACTS
SCALING UP PATHWAY
IN PRACTICAL EXAMPLE
Consumer
choice
influencing
Companies engage with consumers to increase their
environmental and social awareness and influence
their purchasing behaviours. For consumer choice
influencing to be a business model, this engagement
should be fully integrated in the company’s
communication and decision making processes. This
business model is particularly relevant to retailers
which are uniquely positioned to influence
sustainable consumption choices and connect the
producer with the end consumer.
Advise consumers during
consumption phases, thus
improving the efficiency of
product use and end-of-life stage
and reducing overconsumption
USE OF
RESOURCES
HEALTH
NUTRITION, FOOD
& DRINK
COMMUNICATION
REWE Group (Germany): The company
promotes sustainable products through a
‘Hallo Erdecampaign. As part of its Pro-Planet
label, environmental and social aspects of the
entire value chain of selected products are
assessed including international supply chains.
Partial integration: Conventional
businesses green selected aspects
of their business model and
associated value chains.
cc Eurext | Rewe essen steele 06 2014 2
Value
proposition
Offering better and more choices
of eco- and socio-efficient
products and services
Customer
segments
PRACTICAL EXAMPLE
BUSINESS
MODEL
CATEGORY
OPERATIONALISATION
IN PRACTICAL EXAMPLE
POSITIVE
SOCIETAL IMPACTS
SCALING UP PATHWAY
IN PRACTICAL EXAMPLE
Collaborative
consumption
A business model based on sharing, swapping,
bartering, trading or renting access to products (or other
commodities such as land or time) as opposed to
ownership. Technologies (in particular ICT) and peer-
to-peer communities have enabled older market
behaviours of sharing of products to be reinvented. A
number of innovative models supporting collaborative
consumption are emerging, including collaborative
workspaces, book swapping, carpool/ride sharing, bike
sharing, garden sharing, clothes swapping, peer-to-peer
renting, or swapping of accommodation.
USE OF
RESOURCES
URBAN & RURAL
DEVELOPMENT
NUTRITION, FOOD
& DRINK
HOUSING
MOBILITY
Easyway (Colombia):Promoting and
facilitating car sharing through through a
virtual platform. The company started in
Bogota and is already planning to expand
throughout the country.
Start-up: Setting up new green
businesses by entrepreneurs.
Efficient use of products and services
Shared use of products and services
Longer use of products and services
Shared use of products
among consumers
Key partnerships
Business opportunities to
facilitate sharing of products
and services
Value
proposition
INNOVATION IN
BUSINESS MODEL
PRACTICAL EXAMPLE
BUSINESS
MODEL
CATEGORY
OPERATIONALISATION
IN PRACTICAL EXAMPLE
INNOVATION IN
BUSINESS MODEL
POSITIVE
SOCIETAL IMPACTS
SCALING UP PATHWAY
IN PRACTICAL EXAMPLE
Waste as
a resource
Conventional business models are often built on
‘open loop systems’ (extract, produce, use, and
discard) resulting in significant waste generated
throughout supply chains. The focus of this
business model is to create ‘circular and closed
loop systems’ by reducing waste in production and
consumption systems where technically and
economically feasible. Where waste does arise, it
is either re-used or recycled. This business model
is closely linked to the circular economy concept.
EcoPost (Kenya): Use of waste plastic as a
resource to manufacture eco-friendly plastic
lumber and create jobs.
USE OF
RESOURCES
EMPLOYMENT
AND WORK
CONDITIONS
URBAN & RURAL
DEVELOPMENT
Efficient end-of-life strategies
Resource efficient and cleaner production
Start-up: Setting up new green
businesses by entrepreneurs.
Displace virgin resources with
secondary materials in
production of new products
Value
proposition
Business opportunities
associated with the re-use and
recycle the increasing amounts
of waste generated by society
(e.g. WEEE, textiles, C&D
waste, plastics)
Key
resources
Rationale, drivers and benefits
Value creation by businesses is often associated with the generation of economic benefits (e.g. return on investment,
increasing revenues, and cost savings). In addition to economic benefits, green business models can provide a range of further
values such as environmental and social benefits, strengthened competitiveness, and new market and business development
opportunities (OECD, 2013).
As noted in the previous chapter, the implementation and scaling up of green business models are subject to a number of
challenges and therefore there is no guarantee for all green business models to be successful. These challenges need to be
taken into account when assessing the rationale, drivers, and benefits of green business models provided in this section.
“We are inventing too much and too many things for nothing. Sustainable innovation is to think if what we
are developing adds value and is really fulfilling the needs of the society. We need to shift the way we think,
meaning a radical change of mindset, and accept the consequences this change brings about.
Mr. Luis Neves. Group Climate Change and Sustainability Officer. Deutsche Telekom.
Drivers for green
business models
THE STORY LINE FOR THIS CHAPTER
Benefits and positive impacts
Direct benefits
to business and its immediate stakeholders
Positive impacts on society
Rationale….Why
bother with green
business models?
We only have one planet
Increasing market and
business opportunities
RATIONALE FOR GREEN BUSINESS MODELS:
We only have one planet
Today the quantity of resources that we consume
globally and the waste we generate require the
equivalent of 1.5 planets. This means that it takes the
Earth one year and six months to regenerate what we
use in a year.
Source: Global Footprint Network (2014). Footprint Basics.
Consumption patterns are not equal across the globe. The
highly industrialised and developed countries (e.g. in
Europe, North America, and Australia) consume
significantly more than transition and developing
countries in South America, Africa and large parts of Asia.
Our ecological footprint has been consistently on a rise.
Consumption patterns are increasing rapidly in transition
economies due to the growing middle class consumers
and associated demands for supporting services and
infrastructures (e.g. China, India).
Green business models provide a means to address these
unsustainable consumption and production patterns and
make positive impacts in society.
cc Faisal Akram | flickr.com | 7998673399 cc Jaro Larnos | flickr.com | 200880966
The market opportunities for green business are clearly on the rise (UNEP, 2013):
The global market in low-carbon and energy efficient technologies, which include
renewable energy supply products, is projected to nearly triple to US$ 2.2 trillion
by 2020.
Many suppliers are rendering their practices more sustainable in order to secure
their positions within international supply chains. This is illustrated for example by
the 1,500 per cent increase in global ISO 14001 certifications on environmental
management awarded between 1999 and 2009.
The global market for organic food and beverages grew to US$ 105 billion in 2015,
from the total value of US$ 62.9 billion in 2011.
RATIONALE FOR GREEN BUSINESS MODELS:
Increasing opportunities for green businesses
Source: IP Checkups CleanTech PatentEdge
Database
Source: Prepared by Asad Naqvi, Pratyancha Pardeshi based
on the data from A. Sahota (2009). Cited in Green Economy
Report (UNEP, 2011), p 49.
Source: German Ministry for the Environment,
Nature Conservation, Building and Nuclear
Safety (BMUB)
Source: New Climate Economy Report