What do you do if you want to evaluate the economic feasibility of sustainable business models?

Identifying the goals and objectives of a sustainable business model pilot is key. We often expect sustainable business models to perform in the same way as many of our current unsustainable business models. This sets us up for failure. Yes, we need to consider the financial viability of it, but I think we need foundational work to understand what new business models support customer needs, societal needs, and ecological needs and goals need to be aligned with how a new model might solve for those needs.

Incorporate an analysis of externalities into your evaluation process. Externalities refer to the positive or negative impacts of business activities on society and the environment that are not reflected in market prices. For example, if your sustainable business model reduces carbon emissions, assess the potential social and economic benefits associated with mitigating climate change, such as avoided healthcare costs or enhanced resilience to extreme weather events.

En algunas aspectos, no deben existir cambios con respecto a otro tipo de evaluaciones similares en otros ámbitos, me explico: Los modelos sostenibles son integrales y transversales, eso sí, con la diferencia de no buscar (sólo) beneficios económicos, sino también considerando el impacto a largo plazo en la reputación de la empresa, la satisfacción del cliente y la resiliencia del negocio frente a futuras regulaciones ambientales. La sostenibilidad debe estar alineada con la visión y estrategia de la empresa, siendo parte integral de su cultura y operaciones, no solo un a?adido superficial.

Identify Your Goals: To evaluate the economic feasibility of a sustainable business model, it's crucial to outline your overarching business objectives and financial goals. What you aim to achieve will significantly influence the aspects you need to consider. Are you aiming for short-term profitability, long-term sustainability, increased market share, or boosting your corporate social responsibility image? Identifying your goals will lay the groundwork for your feasibility study.

Incorporate indicators. What is not measured can not be improved 1.- We must measure the impact of energy on our final product. 2.- Analytics Implementation (BMS). 3.- Apply energy efficiency measures. 4.- Measure the LCOE of the technologies that we are going to apply.

Once your goals are clearly outlined, identify the key performance indicators (KPIs) that will help measure the success of the sustainable business model. KPIs could range from traditional financial indicators such as revenue, profit margin, and return on investment, to sustainability-specific ones like carbon footprint reduction, water usage efficiency, and social impact.

It's crucial to consider several key indicators. Assessing cost-effectiveness is essential, analyzing the costs of implementing sustainable practices compared to conventional methods, including initial investments and ongoing operational expenses. Revenue generation is another critical factor, understanding potential income streams from sustainable products or services and market demand. Calculating return on investment helps gauge profitability and payback periods, while market analysis provides insights into consumer preferences and competitive dynamics. Effective risk management involves identifying and mitigating potential risks associated with sustainability initiatives.

Creo sinceramente que no se trata de elegir muchos, se trata de elegir los que nos aporten, en todo caso, información sobre impacto y progreso de la organización hacia sus objetivos. Que dichos indicadores sean totalizados a partir de los obtenidos vía E, S y G, adelante, pero no nos olvidemos medir el progreso. Por supuesto y con respecto a los granulares, debemos disponer de indicadores de calidad y que sean comparables.

Identify key performance indicators while having cost/benefit anlysis in mind so that economic feasibility is justifiably assessed. Industry sector norms alongside value chain analysis also need to be considered as the sustainable business model should be enhancing measurable value for identifiable stakeholders.

After the identification of ESG material topics and goals establish the set of business related indicators such as energy consumptions, water consumptions, inclusivity, energy conservation, employee turnover, diversity ratio, social benefits, productivity, market presence, market share, indirect economic impacts, etc.

Benchmark the sustainability framework for reporting. List out all the economic KPI's / Metrics necessary in accordance with the adopted framework. Establish a baseline and start collecting the data against KPI's. Data collection must be transparent and reliable as quality of data is critical aspect in establishing and analyzing economic dimension in context of sustainable business model. There are various methods of establishing data such as economic KPI's from SASB / GRI / PRI frameworks. After collection evaluate the data sets against benchmark standards.

The next step involves extensive data collection and analysis. Gather relevant economic data, market trends, consumer preferences, and industry benchmarks. Use financial modeling and statistical tools to analyze and interpret this data vis-a-vis your identified indicators. This comprehensive analysis will help evaluate if your sustainable business model is economically viable and aligns with your predefined goals.

Share the results of your analysis with key stakeholders - the management team, investors, employees, etc. Conduct brainstorming sessions to discuss potential improvements and adjustments to make your sustainable business model more economically feasible. Regular communication not only keeps everyone on the same page but also fosters a proactive approach in achieving sustainability goals.

Communicate the results either through annual sustainability reporting or flyers on economic impacts having sustainable business model. The reporting metrics should include KPI trends, ratios, averages, comparisons etc. The data visualization must be aligned with data sets to highlight improvement areas for stakeholders.

I would start by conducting a comprehensive analysis that considers various factors. This includes assessing the cost structure to understand the initial investment and ongoing operational expenses associated with implementing sustainable practices. Additionally, I would examine potential revenue streams, market demand, competitive dynamics to gauge the market opportunity for sustainable products or services. Calculating the return on investment (ROI) and conducting risk assessments are also crucial steps to understand financial implications and potential risks involved. Furthermore, I would evaluate environmental and social impacts of the sustainable business model to ensure alignment with broader sustainability goals and societal values.

The evaluation of sustainable business economic feasibility can be done by the following: - Define the scope of the evaluation and the specific objectives. - Identify the financial metrics of evaluating the economic feasibility of sustainable business. -Analyze the market conditions and trends of sustainable business. - Evaluate the costs associated with implementing and operating a sustainable business. - Develop a financial model that incorporates costs, revenues, and other relevant financial parameters. - Assess the non-financial benefits and value generated by sustainable business. - Make informed decisions regarding the economic feasibility of a sustainable business. - Continuously monitor the performance of the sustainable business.

Algunos consejos: 1) Analizar los costos y beneficios, esto implica identificar los costos de inversión inicial, los costos operativos recurrentes y los posibles ahorros o ingresos generados por la sostenibilidad. 2)Calcular el retorno de inversión esperado y compararlos con los costos de inversión inicial para determinar la rentabilidad financiera del proyecto. 3) Identificar y evaluar los riesgos potenciales y oportunidades para mitigarlos y aprovechar las ventajas competitivas. 4) Establecer métricas de impacto además de los financieros. Muchas veces los modelos que nacen para resolver problemáticas sociales o ambientales. 5) Buscar asesoramiento de expertos para obtener una perspectiva objetiva sobre la viabilidad económica del modelo.

Sustainability is a long-term strategy. The financial markets primarily focus on the current quarter or current fiscal year's performance. We need to move away from this short-termism to a long-termism mindset. It is a good business to be a good business.

When evaluating the economic feasibility of sustainable business models, it's important to also consider the scalability of your initiatives and the potential for market disruption. Tip: Assess the scalability of your sustainable practices to determine their ability to grow and adapt to changing market conditions, ensuring long-term viability and competitiveness.