By Jonatan Pinkse, Domenico Dentoni, & Rob Lubberink
Sustainable business models are all the craze right now. Firms are making many claims that their activities create social and environmental value. The realization has finally sunk in that business has a fundamental role to play in addressing the net-zero challenge and the sustainable development goals. John Browne, who in 1997 was the first CEO of an oil major to break ranks with his industry peers on climate change denial, recently repeated in the Financial Times that ‘business can be a force for change on climate’.
However, looking at these sustainable business models shows that the value firms promise to create can be quite limited. The majority focuses on cleaning up their own act but fails to assess how their business models are making a difference in tackling climate change, biodiversity loss, or global inequality at a societal level. In our latest publication in Business and Society – Dentoni, Pinkse and Lubberink (2021) –, we argue that there is a need for firms to start organizing their business models in such a way that they support the resilience of the socio-ecological systems – and not just improve their own sustainability performance.
Why is supporting socio-ecological resilience so important?
Sustainable business models tend to focus on improving firm-level social and environmental performance. However, designing business models for this purpose could have many unintended consequences that lead to a worsening of the capacity of social and environmental systems to cope with unforeseen disturbances. If a firm outsources manufacturing activities to suppliers that pay much less attention to climate change, they will only have worsened the climate emergency. For example, the UK has managed to reduce carbon emissions by replacing domestic production of steel and cement with imports from China.
To design sustainable business models that take socio-ecological resilience seriously, firms must start forming partnerships with people and organizations from public and non-profit sectors who have a better understanding of what makes certain communities or ecosystems vulnerable. Moreover, they must design their business models to better anticipate and adapt to potential unintended consequences. We argue, therefore, that firms need to see their surroundings as a complex adaptive system as it helps teasing out how best to organize all the relationships between firms, communities, and the natural environment.
Lessons for sustainable business model design
But what does it mean to be aware of complex adaptive systems and how will it help create partnerships and business models that support socio-ecological resilience? In our article, we present a detailed framework for the design of sustainable business models that benefit socio-ecological resilience. Let’s have a look at the key insights.
- To become aware of the complexity of their surroundings, firms should work with their partners to zoom in and out to get a better idea of what sustainable value is in the eyes of others. Instead of seeing sustainability as any other business issue, business should get a fuller picture by building bridges to organizations with very different views of the problem.
- To work with partners that have very different worldviews, firms must find new ways of talking about what sustainability means for them and for others. Collaboration across sectors involves breaking language and mindset silos: a continuous reflection of each other’s values and beliefs to get a better appreciation of what shared goals could look like. The rules for collaboration are not about firms calling the shots, but about giving voice to different, often unorthodox views.
- To learn from partners involved in the sustainable business model, firms must be open to engage in small, local experiments to see what works well or might lead to unintended consequences instead. The act of learning how to have a positive impact on socio-ecological resilience requires an active push for “unlearning”, too. It is not only about collectively gaining new skills but also about acknowledging what did not work, hence letting go of old bad habits.
Designing sustainable business models in the awareness of the complexity of the surrounding social and ecological systems is not easy. Anticipating how the business model might have unintended harmful impacts requires taking a careful approach and engaging in local experiments. Jumping to solutions will be misguided; addressing sustainability is simply too complex for straightforward solutions. But firms can think about how they can prevent making big mistakes and find the best route to more resilient societies and ecosystems. Our framework provides the guidance needed to design sustainable business models aimed at supporting socio-ecological resilience.
References
Dentoni, D., Pinkse, J., & Lubberink, R. 2021. Linking sustainable business models to socio-ecological resilience through cross-sector partnerships: A complex adaptive systems view. Business & Society, 60(5): 1216-1252.