In many businesses, sustainability work has been separated from other activities. Various sustainability initiatives have been implemented together with the development of sustainability strategies. The sustainability strategies have been separated from the company's business strategy and have largely dealt with, somewhat rhetorically, where we make donations, how we improve energy efficiency with the help of energy mapping, and how we reduce our air travel.
It has become clearer to more and more organizations that they need to include sustainability in their strategy, as part of the future development of their business. Apart from saving the planet and people, there are many other reasons for doing so, such as strengthening their brand, attracting customers, engaging employees, finding new business opportunities, and reducing costs. In addition to these factors, it is also about risk minimization. Companies that do not have control and management of their own operations and the expectations and demands of the outside world run a high risk of getting into trouble.
A strategy is an action plan for how companies will achieve their vision and long-term goals. It describes how a company competes in the market and how it plans to use its resources to achieve the desired results. A strategy is tailored to the specific needs of the company and should be regularly reviewed and updated to ensure it remains relevant and effective. It should be flexible and adaptable to changing market conditions and customer needs. It should also be measurable so that the company can monitor its progress and adjust as needed.
When companies choose to integrate sustainability into their strategy, they first need to consider what their business models look like today. How does the business model affect different sustainability aspects such as working conditions and health and safety, gender equality, business ethics and anti-corruption, material use, and climate impact? To find out, a mapping of the business's value chains needs to be carried out. The company's value chains include, for example, raw material production, material procurement, design, production, resource use, and waste management. The purpose of the mapping is to understand how different sustainability aspects affect, both positively and negatively. This is followed by a dialogue with the organization's stakeholders. It provides answers to what is essential for the stakeholders. The mapping of the value chains and the stakeholder dialogues are combined into a materiality analysis. This identifies the sustainability issues that the business should work on from both a sustainability and financial perspective, as both opportunities and strengths can be identified. The materiality analysis is a piece of the puzzle for further developing the strategy and the associated business model.
Today, we hear more and more about circular business models. They are seen as the opposite of traditional, linear models. In a linear business model, simply put, raw materials are extracted and transformed into a product, which is then sold to a company or consumer to be used and finally discarded. In a circular business model, again simply put, raw materials are extracted and transformed into a product, which is sold to a company that rents the product to a consumer. When the product breaks down, it is designed to be easy to repair, allowing it to live on for a while longer. When the product is no longer fit for use, it is taken apart and parts of it are used to make new products; other materials are recycled and become raw materials used to make new products. The idea of the circular economy is that no waste is created. Products and raw materials move in circles: reducing resource use, reusing, repairing, and recycling.
A circular business model is based on using products as efficiently as possible. To do this, we need to understand our value chains. Where does the material come from? How can it be recycled when the product can no longer be used? How do we design a product to be easy to repair? Should the customer be able to repair themselves or should we have a service where we repair the products? How do we make money if we cannot capitalize on new products that are purchased because our old product feels outdated?
In summary, when creating a circular business model, we need to consider the environmental impact of the activity, the sustainability of the resources used, the potential for reuse and recycling of materials, and the potential for creating a closed system. In addition, it is important that the business model is economically viable and can create a competitive advantage. Of course, the circular business model should also have a positive social impact.
An organization that chooses to transform from a linear business model to a circular one needs to establish a strategic plan that describes the way forward with measurable goals and clear actions. The sustainability strategy thus becomes a business strategy that includes sustainability.
