Connect Environmental Analysis to Your Business Strategy with Business Model LCA

Developing more sustainable products is good — but it is no longer enough. The real leverage for climate work and increased resource efficiency lies in the business model itself, and in how value is created, delivered, and captured between producer and consumer. The business model and the resulting profit are what motivate companies’ operations. In a world where companies need to continue to exist, but only within planetary boundaries, a company’s profit must be decoupled from increased environmental impact.

It is also necessary that the results from LCA and other environmental analyses have real influence on the decisions made within companies, not least at management level. For that to happen, environmental analysis must speak the language of management. This is where Business Model LCA (BMLCA) comes in.

What Is Business Model LCA?

BMLCA is a method for analyzing the environmental performance of entire business models, not only individual products or processes. The method was developed by Daniel Böckin, together with Henrikke Baumann and Anne-Marie Tillman at Chalmers, among others, and was published in the article “BMLCA – A Method for Analysing the Environmental Performance of Business” (Böckin et al., 2022). It builds on the logic of LCA methodology, but shifts the focus from “a product during a life cycle” to “a business model that creates value over time.” This is done by basing the functional unit of the analysis on the company’s profit instead of the production of a product. We follow the monetary flows and material flows between different actors.

This means that questions can be asked such as:

• How is the environmental result affected by different revenue models?
• What role does ownership versus access play, for example leasing, sharing, or performance-based contracts?
• How are resource flows and emissions affected when the business model is scaled up?

Why Is BMLCA Important?

Traditional LCAs help us understand the environmental impact of a product, but not the logic that drives environmental burden. BMLCA goes one step further and maps the entire architecture of value creation: customers, partners, suppliers, usage patterns, and revenue flows.

This makes the method particularly relevant for companies that want to:

1. explore and evaluate circular business models, such as reuse, sharing, or performance-based sales
2. compare alternative business strategies from an environmental perspective
3. seek decision support for innovation that is both economically and ecologically sustainable
4. work with strategic sustainability analysis or business development linked to climate targets

What Insights Does the Method Provide?

By combining the structure of the business model, for example according to the Business Model Canvas, with quantitative LCA data, it is possible to:

• identify which parts of the business model drive emissions or resource use
• simulate how changes in value proposition, pricing, or ownership model affect the environmental result
• quantify the system effects of circular solutions — for example, how a leasing model affects material flows over several life cycles
• support decision-makers in choosing business strategies that actually lead to reduced impact

In short, BMLCA connects environmental analysis with business strategy.

When Is Business Model LCA Relevant?

BMLCA is best suited when companies are facing:

• strategic transformation, for example from product sales to services
• innovation in value propositions
• development of circular solutions
• evaluation of business potential linked to sustainability

It is also a valuable tool in the early phases of sustainable business development — before investing in full-scale production or implementation.

Further Reading

Böckin, D., Goffetti, G., Baumann, H., Tillman, A.-M., Zobel, T. (2022) Business model life cycle assessment: A method for analysing the environmental performance of business. Sustainable Production and Consumption.

Goffetti, G., Böckin, D., Baumann, H., Tillman, A.-M., Zobel, T. (2022) Towards sustainable business models with a novel life cycle assessment method. Business Strategy and the Environment

Baumann, H., Böckin. D., Goffetti, G., Tillman, A.-M., Zobel, T. (2022). Switching the focus from product function to business profit: introducing Business Model LCA (BM-LCA). E3S web of conferences, 349, 06004.

Böckin (2021) Towards empirically grounded guidance for resource efficiency – Applying, developing and synthesising environmental assessments