Switching the focus from product function to business profit: Introducing Business Model LCA (BM-LCA)

¹ Environmental Systems Analysis, Chalmers University of Technology, 41296 Göteborg, Sweden
² Miljögiraff, 414 62 Göteborg, Sweden
³ Department of Earth and Environmental Sciences, Università degli Studi di Milano-Bicocca, 20126 Milan, Italy
⁴ Business Administration and Industrial Engineering, Luleå University of Technology, 97187 Luleå, Sweden

^* Corresponding author: henrikke.baumann@chalmers.se

Abstract

Recent years have seen much interest in business models as vehicles towards sustainability, cf. [1]. Conventional LCA, however, fails to properly capture the environmental impacts of a business model. Here, we introduce the background and the principles of Business Model LCA, a new LCA methodology for the assessment of environmental performance of business models. Methodological innovations are based on an understanding of the difference and relatedness between product and business. The key innovation is that BM-LCA centres its analysis on the ’business model’ instead of the ’product function’ as in conventional LCA. This requires the functional unit to represent the business (e.g., as ‘profit per time unit’) and the need to couple the monetary flows of the business to the material and energy flows of the product system via a set of ’coupling’ equations. BM-LCA contributes to environmental business analysis and could open up a new avenue of research where LCA and business analysts collaborate on business model innovation for sustainability.