How companies can build business models that contribute to sustainable consumption

If current trends continue, the extraction of the world's natural resources will increase by 60 per cent by 2060 compared to 2020 levels, according to the latest report by the UN's International Resource Panel (IRP).  

How should companies go about reversing this trend and finding a place in a truly sustainable future world?

Shift the focus from making the current organisation better

 According to Dennis Pamlin, we need a systemic shift, essentially a reboot of our economic system, which has served us well in terms of material prosperity in the rich world, but is at the end of the road in terms of equity and ecological sustainability. He elaborates on his thinking by targeting traditional businesses:  

"Shift the focus from how you make the current organisation better, to how you best deliver solutions to human needs. That kind of drive is not inherent in our economic system today, where we have reduced everything to profit.  

The systemic shift that Dennis Pamlin hopes for would mean that companies would move away from aiming to sell as many products as possible, to looking at how their products or services can provide the best possible conditions for people to live meaningful lives.

From wear and tear to circular solutions 

Part of the systemic shift is the transition to a globally sustainable circular economy, characterised by business models that focus on optimal resource consumption in relation to human needs. Instead of wear and tear, it is about creating quality from the start, designing for longevity, with repair and upgrading, and remanufacturing, reusing and recycling. Ann-Charlotte Mellquist, a researcher and head of unit at RISE, sees a future in which companies need to make better use of existing resources.

"As an entrepreneur, I would like to earn money on the same product over and over again. The business model should always be based on the highest possible revenue per unit produced.  

Examples of this are product-as-a-service based models. This means that ownership and control of the product remains with the selling/manufacturing company.

"In this way, the same product can generate multiple revenue streams over time, rather than just once as in a linear model. At the same time, ownership of the product and the raw materials it consists of increases resilience to raw material shortages, inflation and geopolitical disruptions."  

Shoe companies can contribute to healthy lives 

And this is where the mindset of contributing to meaningful lives for people comes in. Dennis Pamlin and RISE are working with a range of companies to support them in their journeys of change towards true sustainability. One example is a shoe company that makes outdoor shoes.

"Such a company could aim to contribute to healthy lives, where people get value from being in nature with friends and family."

In the current system, sustainability efforts are often limited to making a more sustainable version of the product, says Mr Pamlin.

"This is not bad, but only a small part of delivering sustainability," he says, giving an example:  

"The company that sells shoes, for example, could start to complement that business by being involved in a subscription service that supports getting out into nature. It could include everything from an app that measures health to nutrition."

He believes that the path to a global societal transition rarely goes through the current sustainability department in companies. Instead, it is important to find people in the organisation who have the ability to think disruptively and creatively, outside the current framework.

"Today, sustainability work is often owned by people who do not know much about innovation or developing solutions. Such people are more likely to work as business developers, and they usually don't think about sustainability but about new technologies, business models, markets and opportunities."

"Difficult to make the transition in-house" 

In the circular transition required to reduce the consumption of the Earth's resources, Ann-Charlotte Mellquist believes that most of today's companies will not exist in 30 years. That's how disruptive she sees the future.

"I think it is difficult to make the transition in-house. Either companies will go under and others will grow, or the companies that exist today will buy up the new innovative companies or corporatise their own innovation projects," she says.

Ann-Charlotte Mellquist believes, despite the difficulties, that this type of social change is necessary and that legislation is the way to go.  

"I believe that humans are innovative and that sooner or later we will find ways to tackle the challenges, but it is urgent and to accelerate the transition from a linear to a circular economy, I believe in mandatory legislation combined with government financial support for research and new innovative solutions."

"Natural resources are too cheap and labour is too expensive. This has to happen at least at EU level, and I realise it is difficult, but I believe it is necessary."