Sustainable Development and Business: How does a Business begin the Journey towards Sustainability?

This is the third article in a series about sustainable development and business. and it examines how a business can begin the journey to sustainability.

Previous articles have looked at consumer demand for sustainable products, and the global policy framework that is driving sustainable legislation.  This article looks at the steps a business needs to take in its strategy development and how managers can change their thinking to work more sustainably. This change involves transitioning from a linear to a circular business model.

What are the Linear and Circular Business Models?

A linear business model works as follows:

Source ➡ Produce ➡ Sell ➡ Use ➡ Incinerate/Landfill

This is an unsustainable way of using resources and creates significant environmental problems.  The build up of single use plastic in the world’s oceans is a good example of the linear economy’s environmental impact.

In contrast a circular business model (often referred to as a circular economy) is one where we recycle and recover materials to reuse in manufacturing processes.  In the UK the government represents the circular economy as:

Figure 1: The Circular Economy [1]

It can also be described as a model that borrows raw materials, uses them, and returns them to be used again. 

A business operating a linear business model will often set short term goals, focusing on current shareholder value.  Business goals are often set internally and benchmarked against their industry peers.

In contrast a business operating a circular business model will think longer term, focusing on both current and future stakeholder value.  They will collaborate extensively with other organisations to reuse resources, often forming long-term relationships.  

How Does a Business make the Change to a Circular Business Model?

The transition from a linear to a circular business model is not going to happen overnight.  It requires a real change in how business is conducted and requires a carefully thought-out transition plan. 

It requires a change in how strategy is developed and how managers think about the business process.  The SDG Compass [2] is a guide for business that shows how a business can set their sustainability goals.  It recommends a different way of thinking to devise a business strategy.

Figure 2 How to Set Sustainable Business Goals

Figure 2 illustrates the way in which managers set their business goals should change for a business to become sustainable.  It illustrates that becoming sustainable is as much about culture change within an organisation, as it is about adopting sustainable practices. Making the change to become sustainable will reap rewards though, as discussed in the previous article Sustainable development and Business: the advantages of being an early adopter

The next article in this series will look at COP26 and the Climate Hub, a resource for SMEs.

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Paul Beers

August 2021

 

Sources

[1] HMSO (2018) Our Waste our Resources a Strategy for England [online] available at: Our waste, our resources: a strategy for England (publishing.service.gov.uk)

[2] SDG Compass The guide for business action on the SDGs [online] available at SDG Compass – A Guide for Business Action to Advance the Sustainable Development Goals

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