Contemporary business models aim for constant growth and profit maximisation but pose great environmental and societal challenges. The report identifies five unsustainable characteristics that companies must address to thrive in a sustainable economy: linearity, short-termism, growth and profit maximisation, exploitative and unequal distribution of value within the supply chain, and operational efficiency. The Doughnut Economics model is a sustainable and distributive economy framework, calling for a shift in focus to regenerative, efficient, and non-polluting production. The report makes recommendations for how business models need to change to thrive in such an economy.

Sustainability challenges of contemporary business models:

The focus of contemporary business models is on growth and constant profit maximisation. The challenges presented are:

1. Linearity: A take-make-waste structure that only fuels further production, consumption, and waste, resulting in a negative impact on the environment.
2. Short-termism: A short-term focus discounts the relevance of environmental and social externalities and need to make short term sacrifices for long-term gains and business resilience.
3. Growth and profit maximisation: Business models should not only focus on growth and profit maximisation but instead consider the balance between economic, social, and environmental impact.
4. Exploitative and unequal distribution of value within the supply chain: The supply chain often concentrates value, creating inequality that disproportionately harms those dependent on the supply chain.
5. Operational efficiency and win-win incremental approaches: Although some companies focus on operational efficiency and win-win incremental approaches, such as reducing waste or energy use, these are often relatively insignificant and ignore the core impacts of the business model (i.e. how companies make money).

Recommendations

The report presents a business model canvas that can help companies and investors to align and assess the viability of the business model in a sustainable economy. The canvas addresses the five characteristics of a sustainable business model:

1. Purpose: A sustainable business model must be purpose-driven, promoting social and environmental value beyond just making a profit. Companies need to create and distribute value more equally in the supply chain, ensuring that the created value is sustainable and sufficient.
2. Organisation: A sustainable business model must have an organisational structure that recognises how it affects value distribution in the supply chain, networks, and cooperates within and across industries. The ownership model should promote stewardship, not continuous growth in material throughput. Companies should encourage sufficiency and tackle overconsumption and dependence on unsustainable practices.
3. Circular and regenerative production: A sustainable business model must aim for a circular, regenerative, clean production process. Circular practices aim to minimize waste by keeping products and materials in use as long as possible. Companies must design for circularity using renewable and natural processes rather than unsustainable, artificial production systems.
4. Delivery of Products/Services: A sustainable business model must encourage sufficiency in the consumption of its products and services. Companies need to offer circular user models such as sharing and leasing models, while also designing for circularity by taking back, reusing, and recycling products where possible.
5. Impact: A sustainable business model must evaluate its total impact, both positive and negative and account for the long-term costs. Businesses must consider the social foundations and ecological ceilings needed to be sustainable.

The report provides a series of case studies that demonstrate how businesses are applying one or more of these characteristics.  By addressing these five areas, businesses can contribute to creating a new economy that meets the essential needs of both people and the planet while creating social and environmental value. However, creating a sustainable business model requires significant transformation in the structures of ownership, governance, and finance, beyond mere words and commitments.

1. Things to learn
   
   The report will be most relevant to finance professionals in the following areas:
   
   The importance of good governance, stewardship, and ethical leadership – The report discusses the importance of corporate governance and how it can be used to support sustainable business practices. It also highlights the need for stewardship and ethical leadership among management and board members.
   
   The risk and return benefits of sustainable investing – The report provides insights into the role of sustainability in investment decisions, including discussions on integrating environmental, social, and governance factors into investment processes and measuring the impact of sustainable investments.
   
   Solutions and alternatives to current business, finance, and economic systems and theories – The report offers case studies and examples of companies that are redesigning their businesses to be more sustainable and promote social and environmental value. It also provides suggestions for circular and regenerative business models that support a sustainable economy.
   
   Status and relevance of environmental issues for finance and business – The report explores the impact of climate change and ecological breakdown on businesses and the economy. It highlights the need for businesses to adopt regenerative and circular practices, reduce carbon emissions, and minimise waste.
   
   Status and relevance of social issues for finance and business – The report provides insights into the importance of considering social issues such as inequality, poverty, and labour rights in business practices. It also explores the role of business in creating and distributing social and environmental value.
   
   While the report provides some information on policy, frameworks, regulation, and standards, and trends in demand, products, and practices, these topics are less relevant to finance professionals trying to understand the relevance of ESG and sustainability issues in different finance practice areas.
2. Action to take.
   
   The report provides clear guidance or step-by-step guides for finance professionals to take action in the following areas, in order of relevance:
   
   Assess and integrate ESG risks and opportunities when investing / lending / underwriting. (Refer to pages 30-31, 48-50, and 79) The report suggests that finance professionals must evaluate the companies they invest in based on these factors before making investment decisions.
   
   Drive organisational change through improved governance and culture. (Refer to pages 50-51) The report discusses how modern company directors must balance a range of interests and objectives that can best be satisfied by positioning the company to thrive within a sustainable economy. It recommends that finance professionals must assess their total impact as it evolves, ensuring that their organisation continues to deliver on its purpose and that it minimises negative externalities while promoting positive ones.
   Improve my organisation’s reporting and target setting (and avoid greenwash). (Refer to pages 52-53) The report recommends that companies use complementary sustainability frameworks like the Integrated Reporting (IR) Framework, the Sustainable Accounting Standards Board (SASB), and the Global Reporting Initiative (GRI) to ensure that their actions are aligned with a sustainable economy. The report also emphasises the importance of sustainability reporting and promotion of accountability.
   
   Collaborate with stakeholders, peers, and clients for positive change. (Refer to pages 3-4) The report suggests that businesses and finance should transform to belong in the economy of the future point to a redesign of business that gets into the structures of ownership and governance and critical relationships with finance. The report aims at creating a regenerative and distributive economy based on models like steward-ownership, platform cooperativism, social enterprise and employee ownership.
   
   Create positive impact through my organisation’s investments / lending / insuring. (Refer to pages 30-31) The report offers insights for finance professionals on how considering environmental, social and economic costs and benefits over long-term investment horizons can steer capital towards sustainable business practices.
   I could not find clear guidance or step-by-step guides in the report for the following areas: Engage with companies and investees to influence change, Provide ethical and responsible financial advice, Develop and market sustainable products and services, Implement sustainability guidelines and standards, and Test and verify the impact of our business / investing / lending / insuring.