Business Model Life Cycle Assessment as a Tool for Sustainable Business Model Innovation

Other conference contribution, 2026

In the context of escalating environmental challenges, companies are increasingly pressured to adopt strategies such as circular economy (CE) initiatives and sustainable business models (SBMs) to improve resource management and reduce environmental impacts. Changes to business models are widely recognized as a fundamental lever for achieving sustainability. However, research suggests that many business model innovations fail (Geissdoerfer, Vladimirova & Evans, 2018) as sustainable business model innovation faces several challenges, including balancing sustainability objectives and the limited availability of tools that systematically integrate sustainability (Evans et al., 2017). Existing tools for business model innovation, such as the Business Model Canvas developed by Osterwalder and Pigneur (2010) and its sustainability-oriented variants, enable qualitative and visual exploration of business model elements (Evans et al., 2017) but they often lack the quantitative assessment provided by methods such as Life Cycle Assessment (LCA) (Goffetti et al., 2022).  
LCA has long been a well-established method for quantifying environmental impacts across a product’s life cycle, however, it is often limited in providing guidance on business model elements outside of product design choices and associated technical processes (Goffetti et al., 2022). In recent years Business Model Life Cycle Assessment (BM-LCA) has been developed to evaluate the environmental performance of the business models themselves (Baumann et al., 2022, Böckin et al., 2022). This is achieved by using a functional unit that represents the business (e.g. profit per time unit), and by coupling the monetary flows of the business model with the material and energy flows of the product system through a set of coupling equations (Böckin et al., 2022, Baumann et al., 2022). Studies suggest that BM-LCA can help fill the gap between conventional LCA and qualitative business model innovation tools (Baumann et al., 2022, Böckin et al., 2022, Goffetti et al., 2022).
Overall, the literature indicates that while sustainable business models are increasingly needed, business model innovation for sustainability remains challenging due to the lack of tools that combine business relevance with quantitative environmental assessment. Beyond evaluating environmental impacts, BM-LCA has the potential to support sustainable business model innovation by linking business decisions to environmental outcomes. This study therefore explores how BM-LCA can be used to alleviate key challenges in sustainable business model innovation and to support decision-making during the development of sustainable and circular business models.