Finding a quicker route to sustainable development

It is hard for small enterprises to make money by working with the environment as a prime concern. This is the opinion of Marcus Linder who in his doctoral thesis has looked at the profitability of small Swedish environmental technology companies and investigated the opportunities and challenges for companies that desire to develop business models that protect the environment. Marcus believes that the strong drive of many firms to achieve profits can, and should, be leveraged when working to minimise environmental problems.

Finding a quicker route towards sustainable development is important to Marcus. In the end, this is the way he hopes that his research will impact the wider community. Even if his doctoral thesis shows that it is hard for companies to make money from environmental differentiation, he is at pains to point out that solid research indicates that the most important step towards finding a solution is often a proper formulation of the problem itself. It is Marcus's hope that the thesis becomes part of a solution through formulating part of the problem – namely that many small environmentally focused companies are today failing to capture enough of the value they create.

"Even though I have noticed a lot of difficulties for such companies there is also many profitable examples. For example, I'm convinced that it will be very profitable for those companies which, in an intelligent way and at an early stage, design their products and customer relations for effective recycling and remanufacturing. They are able to close the loop of their material flows using circular business models. This means that economic efficiency is improved and the environmental impact is minimised," Marcus says.

Intention to involve decision-makers

To achieve his goals he wishes to influence business leaders. Also political decision-makers might potentially have to be engaged in this issue. The study of profitability amongst environmental technology companies, in the opinion of Marcus, may also be relevant for the venture capital fund for environmental technology companies, recently proposed by Sweden's Minister for IT and Energy, Anna-Karin Hatt.

"If the goal of the fund is only to obtain a financial return, then my findings suggest some cause for caution when defining the specific type of companies to invest in. As I point out in my thesis, many environmental technology companies are not very profitable. On the other hand, I don't think that one can take for granted that the goal of such investments is financial profitability. The goal of such public funds may equally well be to steer society in a certain direction," Marcus points out.

Hard for firms to assess some business models

One of the problems with circular business models, in his opinion, is that they are frequently hard to evaluate in advance; this implies a higher risk for companies than investing in traditional linear business models.

"I have studied the possibilities for entrepreneurs to proactively assess circular business models. It turns out that such proactive assessments are often quite difficult for circular business models in particular. This is one of the first explanations as to why, until now, we have not seen more companies invest in circular business models," Marcus maintains.

Plans to write a book and to save the planet

Confirmation of the importance of his research came to Marcus through the award of an environmental research stipend of SEK 100 000 kronor from Renova. The award is now being used to write a book on circular business models which is aimed at chief executives.

"The book, in an easily digestible way, will compile research results from all over the world that deal with the economic opportunities and difficulties associated with circular business models," Marcus states.

Furthermore, he has embarked on a new research project, together with his colleague Mats Williander who is active at the Center for Business Innovation (CBI) at Chalmers as well as at the research institute Viktoria Swedish ICT.

"At the same time as I am writing the book, I shall attempt to save the planet together with Mats. We form part of a research group, which Viktoria Swedish ICT has now kicked into life. We will focus on the challenges to practical implementation of circular business models together with well-established companies. It will be really exciting to be involved and influence Swedish companies to both increase their competitiveness and reduce their environmental impact," he says.

Provided by Chalmers University of Technology